Since the EU’s enlargement last year, there has been strong trade between EU25 members. This is good news for operators as increasing trade in Europe is a critical catalyst to growth in the logistics market, with businesses operating on a European and global scale. The enlargement has supported a growing logistics market in new member countries within the Central and Eastern Europe. These countries provide a gateway between Europe and non-EU countries, particularly Russia, and access to a wider market represented by an increased population of 74 million to more than 456 million.
Stronger expected economic growth and a rise in trade will increase the importance of transport and logistics leading to the need for pan-European transport issues to be addressed. This is important given most of the new member countries have undeveloped infrastructure and the ports have potential to play a major role in the distribution and logistics industry’s future growth.
Heathrow is the most expensive distribution location in Europe, more than double those in Frankfurt, Munich, Amsterdam and Vienna, and almost treble those in Paris, Brussels and Lyon. Rental strength in the UK is supported by a strong economic performance.
Many eastern European cities saw improved rental levels during 2004 including Moscow, Kiev, Warsaw and Istanbul. Strong rental levels in Moscow follow a long period of inactivity, which has been spurred back to life by a severe shortage of stock and a significant rise in pre-lets.
Rent increases in Barcelona and Madrid are due to a lack of modern logistics facilities. In Copenhagen and Helsinki rents are under pressure, although their importance as major ports will provide a strong basis for improved occupier interest.
We believe an expected 38% increase in EU25 trade by 2010 will lead to a shift in transport mode used for moving goods between countries. Belgium, along with the Netherlands, is felt to be the Gateway of Europe and will benefit from growing traffic.
Less developed ports have a chance to gain a competitive advantage through the EU’s ‘Motorways of the Sea’ initiative.
Current EU transport policy has led to the dominance of road transport at the expense of other modes, resulting in increased congestion and bottlenecks that have had harmful effects on the environment.
The EC White Paper on European Transport Policy for 2010 set several targets to ensure competitive and sustainable mobility in Europe. Fundamental to this was the creation of the Trans-European Network (TEN) programme, incorporating rail, road, waterways and shipping channel projects and addressing issues such as accessibility, multimodal links, cross-border connections, congestion relief and satellite navigation system Galileo.
The ‘Motorways of the Sea’ are expected to improve short-sea shipping by offering efficient, simplified services and becoming an integral part of door-to-door logistics chains. The chosen ports connected at either end of the ‘motorway’ must have efficient hinterland connections with well developed local logistics markets and rapid administrative procedures.
They must also have enough land available to develop a dedicated terminal with several berths and a waiting zone for vessels.
The importance of this latter point was seen in March at Calais when a berth was damaged when a loading bay collapsed at the port.
In the 1990s the feeder or Hub ports emerged which serve as the gateway to Europe. The predominance of container ports from Le Havre to Hamburg, is one reason for the increase in North-South traffic on routes already stretched to capacity.
The EU suggests four major routes – Motorway of the Baltic Sea; Motorway of the Sea of Western Europe; Motorway of the Sea of South East Europe; and Motorway of the Sea of South West Europe. The Baltic route presents the greatest opportunity – 40% of freight in new member countries is carried by rail. Major operators could benefit from locating near to Rostock, Lubeck, Sassnitz, Tallin, Riga, Gdansk, Gdynia, Sczezin and Ventspils.
Another problem for the logistics sector is poor hinterland links and lack of multimodal platforms, although implementation of the ‘Motorways of the Sea’ initiative and the Marco Polo programme, should increase the ports’ attractiveness.
The entry of ten new countries to the EU presents both a challenge and a long-term opportunity for logistics. To eliminate major bottlenecks at borders will require a _90Bn investment by 2015.
There is an opportunity to take advantage of their growing port traffic.
The logistics sector is well established with a strong appetite for investment, which will expand further to central and Eastern Europe. Therefore the ports targeted by the ‘Motorways of the Sea’ initiative will be good locations for establishing warehouses and distribution centres in the future. n
Robert Hall and Simon Lloyd are industrial & logistics directors at DTZ Debenham Tie Leung.
Tel: 0207 408 1161.