They take logistics seriously in the Netherlands. One indication of the industry’s importance is the fact that the Holland International Distribution Council holds regular meetings at the highest level of government to guide economic development. The Netherlands was also the first country to pioneer the concept of national distribution councils back in 1987, though the idea has since been copied elsewhere, notably in Belgium, and some other northern European countries.
In many ways, while the Netherlands has spawned many imitators it is the country that can largely be credited with inventing most modern logistics concepts, and few other countries can offer such a well-balanced package.
Land and buildings are both relatively good value and abundant, the Netherlands fiscal regime for VAT and other taxes is probably the most flexible and trader-friendly in Europe and transport links are, on the whole, good, as are labour relations most of the time. It also boasts Europe’s premier port and one of its largest and most modern airports.
HIDC vice president, Edgar Kasteel, says: ‘Logistics here in the Netherlands is a fully-fledged industry. We have less of a manufacturing and more of a service economy, and logistics is a very important part of that.’
There is not the same resistance to the idea of investing intransport infrastructure in the Netherlands as there is in some other countries, Kasteel continues. That isn’t to say that the Netherlands hasn’t experienced some of the problems seen elsewhere. While there may be acceptance for the need for investment at the highest government level, individual actions and protests can sometimes hinder developments or make them more expensive. A classic example is the plan for the Betuwe freight rail link from the Port of Rotterdam across the country to the industrial heartland of Germany. While seen as vital for the future growth of Rotterdam, demands of local communities have both delayed the project and increased the cost. But the Netherlands is at least trying to build longdistance freight-only rail lines.
Kasteel says government planning does allow for expansion of the country’s main ports – chiefly, Rotterdam and Amsterdam and also its main international airport at Schiphol, near Amsterdam. Space for major logistics hubs is a bit tighter, especially the modern, versatile facilities that the industry demands. ‘Yes, there’s plenty of warehousing but it’s not all of the right quality, certainly not in the quantities that people would like to see.’ Besides the port and airport areas, some of the biggest concentrations of logistics activity are at Nijmegen and Venlo – both on the German border – and Tilburg in the south-west.
Kasteel does not believe that the distribution property market is getting tight in the sense that demand is outstripping supply, ‘but members are saying it’s taking longer to find something that fits their exact requirements’. But the smaller towns – especially in the south of the country – are keen to attract logistics business and fresh areas of the country are being opened up all the time.
On the spot
The situation is helped by the fact that transport is excellent throughout the country. A grid of motorways covers the nation and unlike many other European countries it is a genuine network – hardly any spot is more than a few kilometres from a motorway. Likewise, the rail network offers a good range of connections between all towns and industrial centres above a certain size and there is also a comprehensive network of inland waterways.
It’s a busy but resilient network, and while space capacity on the roads and railways is not unlimited there is enough capacity to handle growth in the immediate future. Capacity for freight is only a problem during commuter peaks around large cities such as Amsterdam and Rotterdam.
Being able to offer multimodal transport is important for multinational firms, says Kasteel. ‘If you’re only distributing locally road is fine, but for longer distances you need water and rail links.’
The shift toward manufacturing further afield in Eastern Europe or China can only be to the Netherlands logistics industry’s benefit. ‘Importing usually means some sort of consolidation into an import centre in a port or airport. So for us it’s more a blessing than a threat, though I can understand that for more manufacturing-based countries it could mean job losses.’
While it is frequently said that the Netherlands has little manufacturing industry, many of the activities that go on in logistics centres are coming to resemble if not full-scale manufacturing then certainly assembly, much of it quite labourintensive. The trend started in the early 1990s in the Netherlands in the high tech sector but now customisation, relabelling and assembly at point of consumption is the norm for consumer products from clothing to garden furniture.
And while there has been a trend toward some of this configuration work being done at the point of origin where labour costs may be lower, Kasteel believes there will always be demand for some configuration close to the point of consumption in countries like the Netherlands. China is a good month away from Europe which makes it difficult to predict whether, say, clothing will end up being sold in French or German stores.
Growing pressure on electrical and other manufacturers to take back end-of-life products could also expand the distribution centre’s role.
This multi-faceted role for the DC is one reason operators are finding it a little harder to satisfy their needs. The modern DC needs to be capable of handling high-density storage – probably in a high-bay area – cross-docking or merge-in-transit in a larger area with more doors and, likely, an assembly or configuration area either on a mezzanine floor or, in the case of more ambitious operations like Exel’s facility for Hewlett Packard, its own dedicated building. It can take time to rebuild a traditional warehouse to reflect these new demands, or it may be necessary to build new.
On creation of the Single European Market, the Netherlands sold itself to companies on the basis that they could have a single European distribution centre (EDC) serving the whole of the EU. That model has been refined a little now, says Kasteel, because of the need for reliability and speed to market. The modern approach is to have a DC in the Netherlands with another to serve Southern Europe and a third to serve the East – a reflection of the EU’s expansion since 1992. In fact, what is happening is that firms are operating highly sophisticated distribution models with different types of supply chain for different products. If time to market is allimportant stock may be held in regional centres, but for some items a single central stockholding will suffice. Modern IT systems make it easier to operate these highly complex distribution patterns.
At the Flanders Institute for Logistics, Professor Alex Van Breedam sees no let-up in the number of multinationals seeking distribution centre sites in his region. At the last count, he says, ‘there were 400 DCs in Belgium – the highest density in the world.’ As well as its major seaports, Belgium can also offer Europe’s densest rail network and its second highest highway and inland waterway network.
He points out that recent studies still cite Belgium as the top European distribution location. And as Prof. Van Breedam points out, 60 per cent of Europe’s buying power is within a 300 mile radius.
Belgian’s recent experience of manufacturing is another bonus, he argues, as many of the postponement activities that go on in logistics centres require manufacturing skills. Postponement can mean anything from configuring a computer printer for a specific European market to tuning a piano that has been shipped halfway around the world from Japan – skills that can be found within Belgium’s diverse knowledge base.
In Zeebrugge, one of the world’s leading car import and distribution points, configuration can mean quite intensive activities such as fitting sun roofs or entertainment systems.
Belgium is in competition with the Netherlands, among other countries, though many would argue that to serve the whole of Europe within 24 to 48 hours the choice boils down to the relatively small area straddling both countries’ borders and bounded by the Rhine and the Scheldt rivers.
Satellite areas
While space for DCs in the immediate Antwerp port area is getting tight, the Belgians have counteracted this problem by developing satellite areas like Liege – now the second biggest inland port in Europe – and the Limburg region centred on Hasselt. ‘The latter is an attractive DC location because they’ve still got plenty of land,’ says Prof. Van Breedam. Unemployment is also relatively high – which is a plus for the labour-hungry logistics industry.
Congestion is an issue, though Prof. van Breedam says that studies suggest it is less of a problem than in the Netherlands. As elsewhere, there has also been a trend toward setting up cross-docking and merge-in-transit depots elsewhere in Europe in addition to the main DC in Belgium.
Given its pivotal role in European transport, it’s hardly surprising that distribution property specialist ProLogis should have chosen Benelux for its venture in Europe, back in 1997. ProLogis’ first European developments were in the Netherlands but over the past two years Belgium has had the edge as the location of choice for distribution developments, says vp for Benelux, Ko Nuijten. ‘Average land prices are lower and availability is a bit better,’ he says. Further advantages include tax breaks and a proactive stance by the Belgian government.
But it is slightly misleading to think of the two regions as being in competition. North-west Europe’s ‘golden triangle is a cross-border region taking in Rotterdam and Venlo in the Netherlands and Liege and Antwerp in Belgium.
There are also big differences in land prices within each country. In Belgium, for instance, you can expect to pay e85 to 95 per sq m for a logistics facility in Antwerp or Brussels, falling away to only e20 to 25 in the rest of the country. A facility in a prime area of the Netherlands might cost around e90 to 125.
Not surprisingly, there has been a lot of interest in developments in the Liege area of Belgium, which is seen as offering much the same location advantages as the pricier areas (Liege airport is the main hub for express freight giant TNT) but at a fraction of the cost.
Nuijten agrees with HIDC’s Kasteel that there is not a shortage of property and land as such in the region, but that the problem is rather ‘the wrong buildings in the wrong locations’. He adds: ‘I think if you looked at the totals, you might find that only 10 per of what is available is made up of reasonable quality buildings in reasonable locations.’
There has also been a fundamental change in market demands, he says. ‘3PLs used to follow their customers and you ended up with a spread of smaller units. But now the focus is on campus-type developments offering flexibility and the opportunity to share resources and for expansion. And there’s definitely a shortage of that type of space.’
The few locations of this type that do exist in the Netherlands include Atlas Park in the Amsterdam port area, Rotterdam’s Maasvlakte, Roosendaal and Bergen op Zoom in the West Brabant region and the Tradeport North extension in Venlo. ‘But locations are full up and in Antwerp and Brussels, larger sites are not really available. The best bet now is probably eastern Belgium including Liege and Genk where land is available.’
Conversion of brownfield sites is one possibility and this has already started to happen on a large scale in the UK. Nuijten believes Benelux will follow suit in three or four years as market conditions start to dictate. In the current market ‘remediation is way too expensive – but it will come’.
Congestion is also starting to become a serious issue, adds Nuijten. The direct link between Rotterdam and Antwerp will probably come about in 2011 – but the plans were originally laid 30 years ago.
Gazeley, well known for its Magna Park development in the UK, also has a Magna Park in Belgium, explains MD for Belgium, Ian Worboys. The Belgian version is at La Louviere, near Mons, on a site bought by the developer from the local municipality.
‘It’s a truly trimodal site, with road, rail and water transport available, in contrast with the UK where you’d probably have the choice of only trucks,’ says Worboys. Canals capable of handling 1,500 tonne container barges link Antwerp, Dunkerque, Rotterdam and Paris – and even Germany.
Component costs
There’s a lot of interest in south Belgium says Worboys. Labour and land prices in Brussels are going up and Mons is only an hour away. Land prices fall away steeply over the short distance between the capital and Mons and there is a similar effect with labour, which after all tends to be by far the largest component of logistics costs.
So far the Benelux’s attractions have outweighed those of neighbouring countries, but it wouldn’t do to become complacent. The Nord Pas de Calais region of France offers cheap land and while restrictive labour laws and the French 35-hour working week have prevented it from developing as a serious competitor for logistics operations, things could change.
Within the main harbour areas, there is a certain amount of land hunger says a spokesman for the port of Antwerp.
Many of the existing areas have already been developed and multinational firms like Nike and Exxon have had DCs within Antwerp port for a decade or more. The tendency, as companies that used to manufacture in Europe switch to Far East, has been to use the existing European distribution network rather than build major new facilities in the ports.
On the relatively few occasions that the odd couple of hectares has become available in Antwerp, the port authority’s staff are liable to get trampled in the rush. Priority tends to go to companies that provide a large number of jobs, especially for less skilled people – for example fruit sorting and packing or importing and stockholding cameras and spares.
There are also some older port areas that could be redeveloped, for example the Albertdok area though much of this area has now been revamped.
Antwerp’s other main concern is to keep on top of the demands of its shipping line customers and two major slugs of capacity will be coming on stream in the next few months – the Deurganckdok terminal on the Scheldt and the southern side of the Delwaide dock, which will be developed as a dedicated terminal for shipping operator MSC. These developments will more than double Antwerp’s container capacity over the next few years and there should be no shortage of container capacity in the foreseeable future.
This is not the only container terminal development in the Benelux region. APM Terminals is due to open a major facility at Zeebrugge in mid-2006 for the use of its sister company Maersk Line.
Amsterdam is another port which has had only limited success as a container hub in the past but which has had some success in marketing its Ceres terminal to deepsea operators. It also has a major new logistics development planned in Greenport Business Park, which will be built at the edge of the Afrikahaven as a space for logistics and production companies.
Plots from 2500 sq m are available on 24 hectares of land and promises a ‘park management in charge of organising security, energy supply, cleaning and maintenance’.
Developer Diephuis Partners says it will probably take 12 years to fully develop the park and it will be developed on an island approach whereby projects will be allocated over the available area in clusters.
Meanwhile, Rotterdam, the region’s biggest port, keeps forging ahead although the huge Maasvlakte II has been put back to around 2013. But many other sizeable schemes are underway, such as the Euromax terminal which will add around three million TEU to Rotterdam’s annual container capacity by late 2007.
Long-term trends in shipping could well favour major hub ports like Rotterdam and Antwerp as ship owners will want to keep the giant new 8,000 TEU container ships in the ports with the largest volumes. That may well mean feeding containers to and from markets like the UK on smaller connecting ships.
NYK Logistics is the supply chain arm of Japanese owned shipping and transport giant NYK. MD of NYK Logistics Netherlands and Belgium, Piet Boogaard is in charge of several locations throughout Benelux including three in Rotterdam, one in Amsterdam and in Belgium, Antwerp, Genk and Charleroi, and a cross-dock facility in Mechelen (Belgium).
Generally speaking space is not a problem in Rotterdam, even in the port area, says Boogaard. ‘If land isn’t available, developers can make it available,’ he says. ‘If I wanted it, I could rent it this afternoon.’
Antwerp however is a little bit tighter, he says, although there is plenty of land in other areas like Genk or the Charleroi region. South Belgium is becoming increasingly interesting, he adds. It’s a useful place for serving northern France and some big manufacturers have set up in the area.
As a rule, land is cheaper in Belgium but labour is cheaper in the Netherlands, so the latter might be favoured for the more value-added activities.
Zebra Technologies has featured in these pages before as a supplier of bar code and RFID systems but the company has a supply chain of its own to run. Last year, the company moved its warehousing and distribution operation, along with some of its repair and configuration work, from Preston in the UK to the Netherlands and has never looked back, says marketing manager for supply chain, Clive Fearn.
Obvious choice
Seafreight and airfreight, along with good linguistic skills were important to Zebra so the Netherlands was the obvious choice, but the spot it chose was the town of Heerenveen in Friesland in the north of the country. Having decided what he wanted in property terms – reasonably modern, ready-built 10,000 sq m facility, Fearn dismissed several places in the middle and south of the country chiefly because he saw problems with the cost and availability of labour. ‘People there can move jobs every dozen weeks or so. Also rent, rates and people are more expensive – 10 to 20 per cent more.’
Road congestion is another serious headache in the busier parts of the country, although the Dutch government is improving the network in the south.
The Netherlands is a small country and moving to a socalled ‘region’ does not mean that you’re going to end up in the back of beyond, points out Fearn. The Netherlands’ motorway and rail networks cover the country and the less populated areas do not miss out.
He was also impressed with the skills and quality of the workforce. Of the 80 or so potential workers he interviewed, only one couldn’t speak English.
When Palletways was looking for a hub to service its new pan-European network in March 2005, the Netherlands was the obvious choice. To some extent the actual location was made for it, explains European development director, Adam Shuter, because it used an existing facility set up by partner Currie European, but the Nijmegen hub has proved an excellent choice, he says. ‘Benelux is an obvious location for a pan-European hub, forming the pivot-point between the neighbouring larger economies of France and Germany – and it can be used effectively as a hub for movements within the Benelux itself, or sometimes even between locations in Germany.’
