Logistics market expects growth amid uncertain economic outlook
What is your view on the development prospects for the Romanian logistics market in the next three years?
The logistics market in Romania grew rapidly from 2000 until 2008. The economic crisis in the last few years has triggered a standstill in the market, and many companies and shippers have had to consolidate. However, these negative aspects also generate a positive signal. The crisis has squeezed out the weaker companies in all sectors; not only in the logistics sector, but also in retail, trade, wholesale, distribution and so on. The only way to survive in an open, competitive market is to improve continuously the processes, optimize the supply chain, and reduce costs in stock and distribution. Companies can only win this competition, battle as it were, by focusing on core businesses and outsourcing as much as possible non-core activities to logistics service providers. The logistics market in Western Europe has already proven the soundness of such a strategy. In Romania, only up to 10 per cent of non-core businesses have been outsourced, while in Western Europe the level has reached roughly 85 per cent of the non-core activities. So the trend in the coming years is to outsource logistics activities.
What are the aspects that could turn Romania into an attractive investment destination for logistics, compared to other emerging markets such as the Czech Republic or Poland?
First of all, to be honest, the comparison with Poland, the Czech Republic and other emerging markets is a false one. Although these countries are emerging markets, the investment parameters differ completely. In the case of Poland and the Czech Republic the logistics business has a domestic dimension, while in Romania the market is both domestic and international. That positively singles out Romania from other countries.
The second difference is that Romania can learn from the mistakes made, for instance, in Poland, where large logistics parks have been developed in areas that are not logistics hotspots, lacking connection to multiple transport modalities.
Uncontrolled and overdue developments of single-type logistics facilities all over Romania are a severe threat to investors. My advice to developers and investors is to incorporate geo-economic and socio-economic forecasts into their investment decisions.
During the years of rapid growth in real estate there were still comparatively few logistics projects. Why do you think there have been fewer investments in that segment? What aspects should be improved so the local logistics market can attract more investment?
The logistics market in Romania grew rapidly from 2000 until 2008. The economic crisis in the last few years has triggered a standstill in the market, and many companies and shippers have had to consolidate. However, these negative aspects also generate a positive signal. The crisis has squeezed out the weaker companies in all sectors; not only in the logistics sector, but also in retail, trade, wholesale, distribution and so on. The only way to survive in an open, competitive market is to improve continuously the processes, optimize the supply chain, and reduce costs in stock and distribution. Companies can only win this competition, battle as it were, by focusing on core businesses and outsourcing as much as possible non-core activities to logistics service providers. The logistics market in Western Europe has already proven the soundness of such a strategy. In Romania, only up to 10 per cent of non-core businesses have been outsourced, while in Western Europe the level has reached roughly 85 per cent of the non-core activities. So the trend in the coming years is to outsource logistics activities.
What are the aspects that could turn Romania into an attractive investment destination for logistics, compared to other emerging markets such as the Czech Republic or Poland?
First of all, to be honest, the comparison with Poland, the Czech Republic and other emerging markets is a false one. Although these countries are emerging markets, the investment parameters differ completely. In the case of Poland and the Czech Republic the logistics business has a domestic dimension, while in Romania the market is both domestic and international. That positively singles out Romania from other countries.
The second difference is that Romania can learn from the mistakes made, for instance, in Poland, where large logistics parks have been developed in areas that are not logistics hotspots, lacking connection to multiple transport modalities.
Uncontrolled and overdue developments of single-type logistics facilities all over Romania are a severe threat to investors. My advice to developers and investors is to incorporate geo-economic and socio-economic forecasts into their investment decisions.
During the years of rapid growth in real estate there were still comparatively few logistics projects. Why do you think there have been fewer investments in that segment? What aspects should be improved so the local logistics market can attract more investment?
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