Central and Eastern Europe’s New Logistics Era

Business | August 16, 2018, Thursday // 16:15
Bulgaria: Central and Eastern Europe’s New Logistics Era

Emerging Europe, Claudia Patricolo -- When it comes to the logistics sector, the CEE region is rapidly turning into the main hub of industrial demand.

The share of real estate investors targeting European logistics has more than doubled from 27 per cent in 2012 to 59 per cent in 2016, and while Eurostat foresees an increase of 36 per cent across the EU by 2050, the CEE markets will see some of the largest growth with Poland (54 per cent) and Czech Republic (46 per cent) well above the average.

“Clearly, the region is in an extremely good position of Europe both for the two most growing sectors, e-commerce and production”, says Robert Dobrzycki, CEO of Panattoni Europe, tells Emerging Europe.

According to Martin Polák, managing director and regional head for the CEE region at Prologis, 2017 saw investment volumes into central and eastern Europe logistics/real estate reach a record level of around 13 billion euros.

“Underpinning the growth in CEE is solid region-wide economic growth and the accompanying rise in consumption, wages and employment levels,” he tells Emerging Europe.

“Driving developments in CEE is the rapid growth of e-commerce, creating greater demand for warehouse space.”

For Agnieszka Haik, business development director at Raben Group, despite the unstable environment logistics operators have been clamping down cooperation year by year, offering a growing range of services with a modern technology and significant capacity.

“The logistics sector in eastern Europe is a relatively young market. What was common in the western market in the early 2000s, has in CEE only just begun to appear, such as the full outsourcing of logistics services,” she tells Emerging Europe. “For example, in Poland, there are currently 13.4 million sq m of modern warehouses on the market modern, 22 per cent more than in 2016.”

Also driving this growth are the relatively cheap costs in CEE, which have attracted companies such as Amazon (Slovakia) and Alibaba (Poland).

“It is obvious that the costs of human labour and the cost of warehouse space are still driving the development of logistics in CEE. Estimated hourly labour costs in 2017 for the EU-28 is 26 euros (in Denmark it’s 42 euros, France 36 euros, Germany 35 euros) because it is significantly undervalued by central European markets. Labour costs per hour in the Czech Republic and Slovakia are around 11 euros and for Poland, Hungary, Latvia, nearly 10 euros, while in Romania the cost is just 7 euros,” she continues.

Read the rest of the article: emerging-europe.com/intelligence/cees-new-logistics-era/

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