Tuesday 13th Nov 2018 - Logistics Manager Magazine

Eastern expansion creates boost for sea transport

EU enlargement has seen growing trade with new member countries in Central and Eastern Europe, according to global property adviser DTZ. These countries are acting as a gateway between Europe and non-EU countries, particularly Russia, and provide access to a wider market with undeveloped road and rail networks. This has resulted in the potential for smaller ports to play a more significant role in the distribution of goods.

The past few years have seen significant growth in cross-border trade, with an increase of 37 per cent between 2002 and 2006 between Europe and non-EU countries. This has led to a growth in the importance of new sea routes and the overuse of large feeder ports which have struggled to cope. Big European feeder ports such as Rotterdam have become overburdened and this has provided smaller ports, particularly in Central and Eastern Europe, with the opportunity to pick up excess shipping.

With growing demand from Central & Eastern European countries there has been a growth in ports in places such as Rostock, which are picking up the overflow of shipping. This will provide opportunities for companies to shift their supply chainsThe growth of smaller ports means companies could shift their supply chains to ensure efficiency. By focussing on smaller ports, companies will be able to take advantage of cheaper prices and greater efficiency, thus providing low-cost, good access to key markets.

Simon Lloyd, director at DTZ, explains the value for companies.

”The growth in European trade has made sea transport appear more attractive for companies to move their goods,” he says. ”With the growing demands from Central and Eastern European countries there has been a growth in ports in places such as Rostock, which are picking up the overflow of shipping. This will provide opportunities for companies to shift their supply chains and ensure efficient supply in the future.

”It will also lower the cost for some routes such as Ireland where the transfer of goods to seaways rather than the land-ferry route via England will save €700 to €900 per trip. The increase in sea transport and the growth of smaller ports will therefore ensure lower costs for firms transporting goods.”

Motorways of the Sea is part of a set of pan-European initiatives inspired by the EU White Paper entitled ”European Transport Policy 2010: time to decide” which had three main goals – to promote technical innovation, to implement a shift towards the least polluting modes of transport and to promote co-modality.

The ports targeted by the Motorways of the Sea initiative will be good locations for establishing warehouses and distribution centres because it can be difficult to locate logistics facilities near ports in the West as land prices are often kept high by port authorities and there is sometimes a lack of suitable sites. Consequently, logistics facilities may be located some 70km away from ports.

According to DTZ, logistics operators could benefit from locating near ports such as Rostock, Lubeck and Sassnitz in Germany, Tallin in Estonia, Gdansk, Gydnia and Scezin in Poland as well as Ventspils and Riga in Latvia.

But Lloyd has a warning.

”While the potential to exploit these changes exists, it will be essential for other infrastructural benefits to be introduced,” he says. ”Without the improvements in road and rail across Eastern and Central Europe, the benefits of sea transport will be diminished and the value of European transport schemes will be lost.”