Margaux Balériaux: Is Belgium Europe’s new logistics hotspot?
Over the recent years, Belgium has managed to attract big name distributors such as Johnson & Johnson, H&M or Coca-Cola and most recently the global giant Alibaba, to name a few. So, why is it that this tiny country nestled at the heart of Western Europe is becoming Europe’s new logistics hotspot? Time to focus on what drives location decision-making for logistics users and Belgium’s ability to market its supply chain strengths to large logistics companies.
Companies want to place distribution centers strategically to help save time and money when reaching their customers. A logistics hotspot therefore needs access to large metropolitan regions to attract big suppliers and large distribution centers. Belgium's proximity to neighboring European economic powers such as France, Germany, the Netherlands and the UK has given the region an edge when it comes to attracting logistic companies, providing them access to the European market at more attractive costs.
To transport people and products around the world, logistics and transportation companies need a functioning infrastructure system with an excellent network of multimodal transport corridors. One integral factor in turning Belgium into a logistics hotspot is the transportation system in and out the country.
Belgium can boast several international airports and freight hubs serving the rest of the world, a great uncongested road infrastructure and several multimodal platforms allowing easy access to deep-water ports for companies looking to reach global shipping destinations. Thanks to this multimodal access via sea, air, road and rail, companies that organise their logistics from Belgium can thus connect with a consumer market of at least 170mn consumers within a range of 500 kilometers. This goes up to 244 consumers within a radius of 1,000 kilometers.
"We first chose Belgium because of its central position in Europe. We always strive to be close to the two big european markets that are Germany and France and be able to get to them at lower cost, with great access to main highways and airport hubs," said J-M Colnot, Former Senior Distribution Director EMEA, now Senior Director Of Distribution & Customer Service Operations ANZ at J&J
Skilled workforce availability at competitive costs
One common denominator to a successful logistics location is its solid workforce and Belgian workers are without doubt very competitive compared to neighboring countries. First, they are best-in-class in terms of productivity and work up to 39h/week with flexible legislation recently enforced for night shifts and last but not least. Specific training subsidies and tax reductions can also be claimed to regional authorities & the European Union to ensure the workforce matches the company needs and several incentives and reductions can reduce labor costs by 20-30%. Secondly, the country benefits from a dense university network with minimum radius and several specific e-commerce and logistics university programs and training centers. And last but not least, a lot of temporary work agencies can offer logistic workforce on short-term notice, a useful asset for logistic companies often having to deal with peaks in activity.
Inexpensive, available land and logistical properties
With several thousands hectares of fully-equipped lands available for logistics activities and located in big industrial zones around cities, Belgium shows off as a very hospitable and inexpensive country to invest in. Real estate costs of a fully equipped industrial greenfield and prime industrial rents are indeed significantly lower than in other European cities, with lands prices going as low as US$39/m² in Charleroi (Wallonia) compared to prices up to three times higher in neighboring countries. Besides, many project sites are also available to build a brand new warehouse or distribution centre within minimum time. For example, Charleroi offers 150 hectares of state-owned greenfield able to accomodate sustainable, state-of-the art facilities, as well as more than 50 hectares of existing warehousing space.
Attractive tax conditions
It goes without saying that one of the key selling points of a successful logistics location is the ability of a region to offer attractive tax conditions. Belgium, and more specifically Wallonia, is no exception to the rule! Reduced corporate tax rate, dedicated tax regime for European Distribution Centers (EDC), five-year tax-ruling and a very efficient customs clearance process are some of the key measures adopted by the region in order to attract logistics companies. And it pays off, as a performing logistic ecosystem has already taken shape and many big names are now strategically heading to Belgium to tackle the European market. From location to workforce and infrastructure, it seems that Belgium has been able to leverage its logistics strengths like no other and this certainly played a part in turning it into the hottest logistics option in Western Europe right now. So the question to ask now is who will be the next big logistic player heading to Belgium?
Margaux Balériaux currently works for CATCH delivery unit, a project of the Walloon Government to boost economic growth and job creation in the region of Charleroi. For more information on Belgium's advantages and available locations in the region of charleroi, reach out to 32 474 78 20 27.
Driver shortages: Why the industry needs to be worried
While driver shortages are a global problem, with a recent survey from the International Road Transport Union suggesting that driver shortages are expected to increase by 25% year-on-year across its 23 member countries, the issue has very much made itself felt for UK businesses in recent weeks.
A perfect storm of factors, which many within the industry have been wary of, and warning about, for months, have led to a situation wherein businesses are suddenly facing significant difficulties around transporting goods to shelves on time, as well as inflated operating costs for doing so.
What’s more, the public may also see price rises as a result due to demand outmatching supply for certain product lines, which in turn brings with it the risk of customer dissatisfaction and a hit to brand and stakeholder reputation. Given that this price inflation has been speculated to hit in October, when the extended grace period on Brexit customs checks comes to an end, the worst may be yet to come.
"Steps must be taken to make a career in the industry a more attractive proposition for younger drivers, which will require a joint effort from government, industry bodies, and the sector as a whole"
That said, we have already been hearing reports of service interruption due to lack of driver availability, meaning that volumes aren’t being transported, or delivered, to required schedules and lead times. A real-world example of this occurred on the weekend of 4-6 June with convenience retailer Nisa, with deliveries to Nisa outlets across the UK affected by driver shortages to its logistics provider DHL.
But where has this skills shortage stemmed from?
Supply is the primary issue. Specifically, the number of available EU drivers has decreased by up to 15,000 drivers due to Brexit alone, and this has been further exacerbated by drivers returning to their home country during the COVID-19 pandemic, as well as changes to foreign exchange rates making UK a less desirable place to live and work. This, alongside the recent need to manage IR35 tax changes, has also led to significant inflation in driver and transport costs.
COVID-19 complications have also meant that there have been no HGV driver tests over the past year, meaning the expected 6,000-7,000 new drivers over the past year have not appeared. With the return of the hospitality sector we understand that this is a significant challenge with, for instance, order delivery lead times being extended.
It is little surprise, therefore, that the Road Haulage Association (RHA) earlier this month became the latest in a long line of industry spokespeople to write to the government about the driver shortage for trucks. The letter echoed the view held by much of the industry, that the cause of this issue is both multi-faceted and, at least in some aspects, long-standing.
So, many in the industry are in agreement as to the driving factors behind this crisis. But what can be done?
Simply enough, outside of businesses completely reorganising their supply chain network, external support is needed. In the short-term, the government should consider providing the industry with financial aid, and this can also be supported more widely with legislative change.
Specifically, immigration policy could be updated to place drivers on the shortage occupations list, which would go some way towards easing the burden created by foreign drivers returning to their home countries. Looking elsewhere, government should also look for ways to increase the availability of HGV driver tests after the blockage created by the coronavirus lockdowns.
Looking more long-term, steps must be taken to make a career in the industry a more attractive proposition for younger drivers, which will require a joint effort from government, industry bodies, and the sector as a whole. As it stands, multiple sources suggest that the average age of truck drivers in the UK is 48, with only one in every hundred drivers under the age of 25. We must therefore do more to increase the talent pipeline coming into the industry if we are to offset more significant skills shortages further down the line.
On the back of a turbulent year for the supply chain industry, it has become increasingly clear that the long-foretold shortage of drivers is now having a tangible and, in places, crippling effect on supply chains.
Drivers, and the wider supply chain industry, have rightly been recognised for the seismic role they played in keeping the nation moving and fed over the past year under unprecedented strain. If this level of service is to continue, we must now see Government answer calls to provide the support the sector needs, and work hand-in-hand with the industry to find a solution. If we do not see concrete action to this effect soon, we are likely to be in for a turbulent few months.
Rob Wright is executive director at SCALA, a leading provider of management services for the supply chain and logistics sector