Two recent reports on European logistics have highlighted the opportunities for third party logistics companies and distribution warehouse developers.
Savills’ latest European warehouse report stresses that increasing trading volumes and the pressure for better performance of the supply chain in a competitive market has led to alternative distribution strategies for logistics operators across Europe.
It says: “Logistics operators are under increasing pressure to reduce costs and shorten lead-times through decentralisation of distribution centres, collaboration and outsourcing of services. Companies are not only forming partnerships and collaborations but outsourcing will have reached 175.5 bn euros by 2008 (45 per cent of total logistics spend), and the importance of third-party logistics is increasing.”
Eri Mitsostergiou of Savills European research says: “According to the European Union, ‘distance intensive’ strategies in freight transport will be gradually substituted by sourcing goods over shorter distances to avoid congestion delays, reduce energy use costs and environmental impacts. Countries with effective infrastructure and communication stand to benefit from this.”
Demand is rising for satellite operations with large distribution centres closer to the import and export hubs such as ports and airports.
With this in mind it is not surprising that according to Cushman & Wakefield Healey & Baker’ European Distribution Report, Belgium comes top in a ranking of the best countries in Europe to locate a distribution or logistics centre.
Belgium’s strengths are its low rents and good accessibility. In second place, comes France, which has lower building costs and land prices than Belgium and scores well in terms of property and market size, followed by The Netherlands, where there has been a relative improvement in cost competitiveness.
In terms of individual factors, Poland has the lowest property costs, Russia the lowest labour costs, Belgium the best access, the UK the largest freight market and Austria the best land/property supply ratio.
According to Savills, Germany alone accounts for around a quarter of the total value of the distribution sector. Its logistics output reached 115 billion euros in 2004, around 6 per cent of the national GDP. Major international developers such as ProLogis, Gazeley and Slough Estates are acquiring land and developing new facilities.
Despite a relatively static market, signs of increasing exports indicate Greece is gradually becoming a distribution centre, especially for the Balkan countries, and improvements in rail and road networks will create more demand.
The Netherlands has experienced positive demand for logistics space and currently has more than half of American and Asian European logistics centres, for example, FedEx, Cisco, Hankook, Nissan, Ricoh, Daewoo, EMI and Panduit.