Charting its own growth path

The Benelux countries are cognizant of the fact that the logistics chain needs speed. Understandably, the logistics services industry here is highly sophisticated. Their governments also understand the value of external trade. It’s a well-established and well-known market, it’s vibrant and will continue to grow. Surya Kannoth…

Given that the Benelux is a redistribution hub of sorts, those doing business in the region are on the whole pleased with the logistics infrastructure and services on offer. The Netherlands today, along with Belgium and their inland partner, Luxembourg, maintain strong ties with the rest of the world as major centres of finance, shipping and redistribution in Europe.

“One of the biggest pharma cluster in Europe where a lot of R&D and production is concentrated, we see a trend where big pharma companies are consolidating their pharma volumes in European Consolidation Centers close to the major multimodal hubs. The Benelux is an excellent example where big air and sea gateways are located close to each other. This offers excellent transport options for shippers for their global distribution,” believes Nathan De Valck, cargo & product development manager at Brussels Airport Company. Even though there is no potential of direct growth of consumption in the Benelux, the region has always been in the center of the European trade lanes, connecting east to west and north to south.

Netherlands – Critical market for transshipment
Though little of their cargo originates in the Benelux, the Netherlands is a very critical market from the transshipment perspective. While the Netherlands is Europe’s eighth largest economy, Amsterdam’s Schiphol Airport is Europe’s third largest cargo airport. This highlights how Schiphol has become an important gateway for air cargo for a much wider area of Europe; and it means that the market in Europe as a whole is the driver to its own success. A major aspect of Schiphol’s operations is its trucking traffic, with regular scheduled services to and from points as far away as Italy.

“Our future potential remains, as it always has been, in being the preferred cargo gateway for Europe. All our efforts aim to support this position. We are particularly targeting pharma traffic. IATA suggests some 3 percent of all air cargo is pharma; our estimates for Schiphol are that it could be as high as 5 percent of all our traffic,” anticipates Jonas van Stekelenburg, Director Cargo, Schiphol Cargo. With over 50 percent of American and Far Eastern manufacturers’ RDCs located in the Netherlands, the Dutch government is also promoting and upholding initiatives that could lead to Schiphol increasing of its market share among airports in Europe. For instance, one initiative is ‘TheSmartGate’ program which effectively manages safety and security risks at Schiphol and improves cooperation in the air cargo chain.

The recently-opened Yusen facility takes advantage of Schiphol’s ideal location as a pharma and lifescience logistics hub for Europe. The Yusen facility is one of several GDP-accredited operations at Schiphol - others being Kuehne + Nagel and Panalpina (both of which have airside access, which only Schiphol provides to forwarders), UPS, Gefco (formerly IJSGlobal) and Cyber Freight. Handlers including KLM Cargo also have the necessary multi-zone temperature-controlled facilities to handle pharma and life science traffic.

The logistics game in Luxembourg
Logistics is now a big part of the Luxembourg government’s economic growth programme. Innovative solutions for multimodal transportation and high value-added supply chains are developed by Luxembourg-based companies and public research organisations in the fields of ICT, security, design, green logistics and strategy.

With its modern and well-equipped air freight handling facilities, Luxembourg offers secure, efficient and speedy ground handling allowing for jumbo freighter planes to be customs cleared and unloaded at a record speed. “Trucks are a minute away from the open road, and less than 24 hours from any European city. Over the last decade, Luxembourg has continuously improved its positioning as an intercontinental and multimodal hub in Europe for added-value logistics activities. Furthermore, Luxembourg has initiated a multi-product specialization within its logistics sector by focusing on certain types of products requiring specific managing and/or storage solutions such as high valuables, pharmaceuticals, high-tech goods, live animals or perishables,” said Johan Vanneste, CEO at Luxembourg Airport.

According to Vanneste, government support has resulted in creation of one of the fastest growing sectors in Luxembourg and today the logistics sector is a key pillar of the Luxembourg economy.“We don’t see any regulatory issue which would block the growth of cargo activity in Luxembourg. Logistics is a key sector in the economy of the country and as a result benefits from a continued political support,” he said.

Leading air freight handling agent at Luxembourg airport, LuxAir Cargo has been making great strides. Year-to-date, it stands at 3.5 percent of handled freight tonnage ahead of 2014. With positive indicators for the second half of the year, it expects 5 percent increase in volume compared to the previous year.

Going forward, the LuxAir Cargo is already working to implement the next big challenge. “Increase the outsized handling area without compromising the ongoing operation. Direct access for trucks and cranes simplify and speed up the handling process. Dedicated and special trained teams of experts work 24/7 to prepare the outsized shipments for being flown or trucked,” it said in a press statement. In addition to the infrastructure, it is also constantly investing in processes improvements.

“Our aim here in Luxembourg is to have our Cargocenter designed for a high volume full freighter hub operation and not to only build warehouse facilities to supply handling services for changing/rotating customer carriers. The investment is higher but all carriers operating through LUX draw benefit from a unique set-up which in general they only would have at their own home base while providing in-house self-handling services,” the statement said.

Earlier in September, Luxembourg-based Cargolux Airlines, the largest all-cargo airline in Europe celebrated its 45th anniversary this year. As an undisputed leader in air cargo, Cargolux offers an extensive product range, covering everything from every-day cargo to shipments that require detailed attention, special treatment and expert handling.

Belgium bets big on pharma
The availability of big air and sea gateways in Brussels is expected to continue to attract big pharma volumes, leading to even more specialisation by service providers. Said Steven Polmans, head of cargo at Brussels Airport Company (BAC), “A lot of air cargo pharma volumes are consolidated by 3PL and 4PL service providers at BRUcargo, the dedicated cargo area at Brussels Airport. The pharma control tower operated by the 4PL will allocate the pharma volumes to selected lanes, with a clear preference for reliable, transparant and direct connections.”

BAC’s Nathan De Valck adds, “The air cargo transport will have to offer high quality and reliable transport solutions at an affordable cost in order to maintain its position in this multimodal world. Offering an integrating cool chain solution involving all the stakeholders from origin to destination is one of the big challenges.”

In a recent development, Magma Aviation announced the launch of a new 767-300BDSF service from Brussels. In association with euroAtlantic Airways, the airline are looking to offer a mid size wide body freighter to the market. This aircraft along with the B747-400BDSF is expected to provide a flexible mix of capacity options for its clients.
Liege Airport, another key player in Belgium, ranks eighth in the European cargo rankings. Air cargo has scripted the success story of Liege Airport. Liege’s excellent cold storage facilities make it an ideal hub for transport of flowers, vegetables and fish. Liege also has expertise in the transport of materials for the oil & gas industries.

Meanwhile, the cargo arm of Brussels Airlines, the national carrier of Belgium, is intensifying its efforts to offer the producers of pharma products a reliable logistical solution. It is strengthening and promoting its time sensitive “Cargo Premium” product in Europe and is looking to tap more into pharma commodities.

Logistics players throng Benelux
Major international leading logistics service providers have opened their distribution centers here to serve their customers in Europe, the Middle East, Africa and beyond.

Yusen Logistics has grown into a significant logistics player in the Benelux market. Yusen Logistics’ recently opened GDP pharma facility at Schiphol is at the very heart of Yusen’s global pharma distribution capability. The operation adds to Schiphol’s collective pharma capability and Yusen is benefitting from the strong advantages of Schiphol as the ideal location for this hub.

This new operation has been developed in close consultation with Yusen Logistics’ pharma customers, who are increasingly looking for new ways to optimize flows within the constraints of GDP.

Talking about sectors that could have good potential in the future in the Benelux, Yusen Logistics’ Victor Bakels, general manager-Europe, business products division/air freight forwarding department said, “With chemicals and machine parts showing a high value density and relatively low market share for the Netherlands, there are opportunities to develop market share for these products. In addition, it will be important to protect current market leadership for perishables and high-tech products.”

Leading logistics player CEVA Logistics already has a very significant presence in the Benelux, with no less than 16 contract logistics, five freight management, five customer and three in-house locations throughout the Benelux. “Due to our geography, the fragmented market, we believe that there is still a great opportunity to further increase our footprint in the Benelux. We will do so by differentiating in our services, and responding to customer demand,” said Bart Beeks, EVP Benelux, CEVA Logistics.

A couple of months ago, CEVA Logistics opened the doors at a new global distribution center for industrial spare parts in Born, the Netherlands. “From a distribution point of view, Benelux as a whole is geographically very well situated to distribute into Europe, via parcel or pallet distribution networks, with viable lead times and the ability to offer multiple service levels to suit the customer,” Beeks added.

More than 25 percent of CEVA’s contract logistics revenues come from industrial spare parts customers, so the logistics player has considerable expertise in this sector. “Our service portfolio answers the industrial customer’s demands: services like onward transport, packing (using cartons or wooden crates), customs processing and security screening are all offered to our industrial customers, giving them competitive advantage in the market. We are constantly working to improve our service proposition to our customers. This will expand our activities for our existing customers, and will also make us more capable of winning new contracts in this region,” said Beeks.

CEVA’s belief is that there is still room for further outsourcing of freight management and logistics activities across all customer segments, as companies increasingly focus on their core business. In the market there are still companies who have not outsourced their logistics yet, but they are more and more looking at first time outsourcing.
While the logistics infrastructure in the Benelux has obvious advantages, there are challenges. “We are subject to relatively high labour costs in the Benelux, compared to other regions in Europe. We also have an ageing workforce, resulting in a growing shortage of skilled employees caused by retirements. The Benelux logistics sector is large, highly fragmented, and highly competitive,” complains CEVA’s Beeks.

Though the area already has a proven strength in logistics and a relatively sophisticated ground and water network, there is room for improvement, with efforts continuing on the part of Benelux governments and trade associations to promote better logistics infrastructure.