Eastern promise

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With the established European market showing few signs of a substantive upturn, logistics companies are pursuing their growth strategies in faster developing regions. Central and Eastern Europe has been one of the main focal points for investment following the accession of the candidate countries to the EU in early May. TNT has announced new hubs and services into the region in order to cope with forecast increase in demand. Likewise Schenker has opened a new hub in Slovakia for its international traffic. The company hopes to take advantage of the fast growing automotive sector which is developing in the country.

Outside of Europe, the main market attracting companies’ attention is Asia Pacific. Kuehne & Nagel became the first global logistics operator to be awarded a Class A licence in China which allows the company to increase its ownership of subsidiaries in the country to 100 per cent, a considerable competitive advantage. Panalpina is set to follow suit. A range of other companies, including DHL and German automotive specialist BLG have also announced that they will be stepping up their investment in the country.

Shipping lines have been amongst the largest beneficiaries of the rising volumes in and out of the region. Capacity constraints have led to soaring rates and increased profits. Air cargo carriers however are not seeing the same benefits and despite rising traffic levels, excess capacity has led to falling yields.

In Europe, a strike at Fiat demonstrated the fragility of modern supply chains. Production throughout Italy was brought to halt as protesters blockaded one of the automotive manufacturer’s key component plants leading to attempts to fly out key parts in helicopters. The week long disruption is likely to have particularly affected TNT which manages Fiat’s complete logistics operations through a joint venture.

In other news, two of Europe’s largest transport and logistics companies look likely to benefit from a major increase in capital. Deutsche Post World Net is set to float part of its Postbank subsidiary on the German stock exchange in the next few weeks. This could net the company as much as 3billion. Given DPWN’s appetite for growth and the desire to dominate the industry it could use this money for further major acquisitions. The management of fellow German company Deutsche Bahn, owner of Stinnes and Schnenker, is also keen to raise money from the market. Despite still recording losses, there are plans to float the company in 2006.

John Manners-Bell


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