Begegnungen
Schriftenreihe des Europa Institutes Budapest, Band 28:173–180.
JÚLIA TARNAI
The Development of Logistics Services in the Countries of South-Eastern Europe
The European Community promised long-term assistance and ensured the possibility of future accession to the European Union for the countries of the region in the spirit of the Southeast European Stability Pact signed in 1999, at the time of the European Union Presidency of Germany. In return the Southeast European countries committed themselves to reforms and regional co-operation.
Initially, the countries of the region had to solve tasks of direct crisis management, reconstruction and political stabilisation. Nowadays the tasks concentrate on the consolidation of institutions, economic development and the strengthening of regional co-operation.
Factors Provoking the Development of Logistics
Economic and political reforms implemented in the recent years in the countries of the Southeast European region are laying down the foundations of economic development, and offer safeguards to international co-operation as well as to competitiveness. As a result, tendencies provoking a rapid growth of logistics in the West European countries in the 1970s and 1980s and in the Central East European countries in the 1990s (the spread of the market economy; globalisation; European integration) are increasingly dominant here, too.
As a consequence of the spread of the market economy the companies are in quest of the preservation and enhancement of their competitiveness in an ever keener market competition. As technical and technological opportunities of development are about to be exhausted, the logistics methods and procedures represent the means which are increasingly coming to the foreground for raising company competitiveness.
As a result of the processes of globalisation taking place in world economy the markets of purchase and sale are being expanded, and the ever growing international division of labour leads to the emergence of international production networks.
As an outcome of the processes of European integration economic co-operation among the European countries is increasing and becoming more profound. Already in the early 1990s the transfer of certain production units of West European companies began to the Central East European countries. This process was further strengthened by the 2004 enlargement of the EU. The internal market of the EU was expanded by about 75 million inhabitants with the accession of ten new countries. The expansion of West European industrial, commercial and service companies towards Eastern Europe was also becoming faster. This process has produced a significant growth of demands for cargo transport.
Under the influence of the trends outlined above the demand for logistics development has been increasingly prominent also in the countries of the Southeast European region, though to a different extent, depending on the development of the economy and the advancement of the EU integration processes.
The different levels of economic development in the countries of the region are well reflected among others by the significant differences in their per capita GDP.
The situation of the individual countries is largely different in respect of EU integration, too. Slovenia leads which has been an EU Member State since May 2004, Romania and Bulgaria are expected to become members in 2007, and Croatia is expected to join the EU in 2009. Enlargement involving the other countries is not on the agenda for the time being.
Intermodal Transport/Logistics Services
Presumably, the Southeast European countries will be able to join the realisation of the connections of the European logistics systems most effectively by the development of intermodal transport/logistics services in the near future. Due to their favourable geographic position they may play an important linking role between Europe and East Asia. The significance of this role is expected to grow further in the future, and container traffic from North and Southeast Asia to Europe would especially increase. It is primarily the north Adriatic ports (particularly Rijeka and Koper) that may be significant competitors of the Dutch and north German ports in this traffic, partly because they are closer to the progressing East European economic regions, and partly because they shorten the duration of marine transport between Europe and Asia by about six days.
As a result of the growth of intercontinental traffic container traffic would significantly grow also between the ports and the European hinterland.
Due to the increasingly intensive economic relations with the EU Member States demand for transport between the Balkan countries and the West as well as the Central East European countries is expected to grow significantly. (The most important foreign trade partner of most of the Balkan states is already Germany, about 25 to 31% of the total of their foreign trade is realised with Germany.) These tasks can also be performed effectively and in an environment-friendly way by multi-modal (road/railway) transport because of the relatively great distances.
The following is necessary to the development of intermodal transport/logistics services:
– The development of the transport infrastructure (road/railway tracks);
– The development of combined terminals (combi-terminals in brief) (container, Ro/Ro/, Ro/La, Huckepack, i.e. piggy-back system terminals) creating the connections between the different branches of transport;
– To acquire special transport means, such as transport vehicles, containers, swap-body containers necessary to intermodal transport.
The most urgent task in each country is to develop the transport infrastructure, primarily along the main Pan-European transport corridors (IV, V, VII, VIII, X) constituting the spine of the European transport network and crossing the region. This is revealed by the relative points presenting the development of the transport infrastructure (Table 2). The situation is particularly bad in respect of the quality and density of public roads as well as the length of highways.
Nowadays the combined terminals have to perform other basic and supplementary logistics services besides transhipment tasks. To that proper facilities, loading equipment, materials handling machines as well as up to date information and management systems of the terminals are needed.
In Croatia the development of the port of Rijeka is a particularly important priority project among the terminals (including the development of its container and Ro/Ro terminal), because they are in continuous competition with other north Adriatic ports, primarily with the Italian Trieste and the Slovenian Koper for the management of the growing north Adriatic marine traffic.
In Romania the port of Constanţa plays an important role in the handling of the country’s foreign trade. Almost 60% of the foreign trade turnover goes through this free trade zone. In addition Constanţa handles significant international traffic, too. Today it is already the biggest port not only of the Balkans but of the Eastern part of Europe, as well. Its container traffic has been almost trebled between 2002 and 2004 (its annual turnover was 136.3 thousand TEU in 2002 and 386.3 thousand TEU in 2004). Constanţa as the biggest port (Hub) of the Black Sea according to perspective development may play the role of the Black Sea gateway of the Central and Southeast European region in realising transport connections with the Far East.
The two most important sea ports of Bulgaria are Varna and Burgas, and though their aggregate turnover is less than one quarter of the port of Constanţa, they may in the future take up an important share in performing the gateway role of South-Eastern Europe.
Combined terminals linking to the lines of the AGTC (Agreement on Important International Combined Transport Lines and Related Installations) may make participation possible in the international road/railway combined transport, for example:
– There are regional combined terminals in Romania in Bucharest, Constanţa, Craiova and Oradea, and in addition loading is done at another thirty combined terminals;
– In Croatia five railway container terminals are in operation in Zagreb, Nasice, Osijek, Rijeka and Split, but the development plans contain the building of ten more;
– In Bulgaria intermodal terminals were established in Sofia and Dimitrovgrad.
The road/railway combined companies of three Southeast European countries are members of the UIRR (International Union of Combined Road-Rail Transport Companies); the Adriacombi (Slovenia, it joined as the successor of Yukombi in 1992), the Crokombi (Croatia) since 1999, and Rocombi (Romania) since 2000.
In the Southeast European countries (Romania, Bulgaria, Croatia) acceding to the EU in the near future those subsidies may give significant impetus to the development of intermodal transport/logistics services that may be obtained during the next, 2007–2013 budgetary period of the EU partly from the Cohesion Fund, and partly from the European Regional Development Fund, as well as from the Marco Polo II programme and the R&D Framework Programme No. 7 by application.
Changes in the Logistics Service Market
The experience of the developed West European countries shows that the market demand of industrial and commercial companies for logistics services grows parallel to economic growth. In Germany, the market leader in logistics services of Europe, for instance, today the logistics service sector is the fourth biggest one after vehicle, electronics and engineering industries, and its turnover was about 166 billion Euros in 2004.
The East European logistics services market is also increasingly attractive for the West European logistics service-provider companies. Though according to the analysis of the experts of the Technische Universität Berlin today the size of this market (about 30 billion Euros/year) is much smaller as yet than the West European logistics market, but the expected 14.3% annual growth of that market is a promising one for investors as only an annual growth of the market of 5.7% was prognosticated for other EU Member States. According to the experts the greatest market growth can be expected in the Central East European countries, but presumably the Southeast European countries would also catch up after accession to the EU.
In Romania it is mainly Bucharest and its vicinity that is primarily recommended for the establishment of logistics service company seats. It is here where the economically most significant industrial (first of all companies involved in engineering and the food industry and companies manufacturing electronics consumer goods) and commercial companies are located. More than half of the already established logistics service company seats are in Bucharest and its vicinity. Most of these facilities are located in the northern and western parts of the city. They offer good supplies for the inner city, and have eminent transport connections towards the western part of the country, too.
Regions that may be recommended for the above purpose inside the country are: the district of Argeş (the Renault/Dacia car factory is here in Piteşti), further on the district of Brasow and Iaşi near the Moldavian border, and the district of Arad, Timişoara and Oradea.
In Bulgaria relatively fewer companies have established themselves compared to the Central East European countries due to the backwardness of industry in the 1990s. The industrial basis of Bulgaria has been strengthened only recently as a result of some foreign, primarily car factories establishing themselves there. In addition, demand for cargo transport has been growing due to the Bulgarian expansion of international commercial networks (such as Billa, Metro). The big international logistics service companies react on the development of domestic and international commerce by establishing high capacity distribution centres. The Willi Betz Company, for instance, enlarged its storage base to fifty thousand m2 in Sofia by the end of 2004.
It is primarily the region of Sofia and Plovdiv that is recommended for the establishment of logistics service company seats; it is here that the big food and engineering industry companies are located. In addition, the neighbourhood of Varna and Burgas may also be considered. It is in these two ports that about 60% of the international commercial turnover is transhipped.
The vicinity of the Sofia airport is a particularly favoured place for the establishment of logistics service centres. The Swiss Militzer & Münch logistics service-provider company has, for instance, overtaken the operation of the former Balkan Air two years ago. The KI-Logistics Bulgarian company started to operate a 17 thousand m2 store in late 2005. The Tishman Management Company of London would soon begin the building of the Airport Sofia Centre of an area of 140 thousand m2, which is going to be the hitherto biggest logistics service centre established by private investment in Bulgaria.
Croatia may also represent an attractive market for the logistics service-providing companies with its stable, approximately 4% rate of economic growth and its favourable geographic location along the main European transport corridor X. The main European transport corridor X ensures an important linkage from Salzburg through Ljubljana, Zagreb and Belgrade as well as Thessaloniki and Sofia between the West European market and the upcoming markets of Southeast Europe towards Turkey.
In addition to the capital city of Zagreb which is the economic, political and cultural centre of the country with one million inhabitants, logistics service companies would presumably settle down in the port cities of Rijeka and Split. Several companies have decided to establish new logistics service-providing seats near Zagreb because due to the proximity of the border they can serve the Slovenian markets, too, and can expand towards the neighbouring Bosnian market in the future.
In the Southeast European countries the big local industrial companies are still at the beginning of introducing such modern strategies and procedures of production organisation like concentration on core competence, make to order, and the just in time material supply strategy, which have been extensively applied in the West European countries, and in the case of which the demand for complex services of logistics systems would emerge. Therefore at present the local industrial companies mostly do the logistics tasks themselves, because they have not yet introduced concepts of modern production organisation. They mostly avail themselves of the basic logistics services (like transport and storage) of the local logistics companies. There are already some exceptions primarily in Slovenia: such as the logistics of the frozen goods at Mercator, the largest retailer, or spare parts management at Gorenje.
For this reason the local logistics service companies mostly offer basic services only. At the same time the Western companies investing here (Renault, Volkswagen, Aldi or Carrefour) require complex logistics services, and often bring with them the service providers they are used to, which use some basic logistics services of the local companies but offer complex value-added ones.
In summary, the comprehensive SWOT-analysis of the entire Southeast European region from the angle of the development of logistics services is given in Table 3.
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