Eastern Europe posts logistics gains despite infrastructure challenges

Romania infrastructure lags much of Western Europe, yet it still posted a 9.4% growth in logistics in the past year. (Photo: Shutterstock)

Romania infrastructure lags much of Western Europe, yet it still posted a 9.4% growth in logistics in the past year. (Photo: Shutterstock)

This year has been one of recovery for Eastern Europe’s logistics sector, despite challenging conditions that continue in Western Europe, The Loadstar reported. According to think-tank Transport Intelligence, the not-so-favorable conditions also loom in the background as this side of Europe tries to ride the tide of positive growth seen in the region.

The research institute traced most of the growth to former Soviet block countries. While Western Europe has seen growth of 1.8% in contract logistics, Central and Eastern Europe grew more than twice as fast at 4.8%.

Numbers crunched by the IMF showed the European Union’s growth as a whole coming in at 1.9% in 2016. Other sectors were also noted in the report, which cited “weaker manufacturing production growth in the Euro area at 1.5%, down from 2.3% in 2015.”

Growth in Eastern Europe seemed like a welcome surprise for an area often overlooked due to its lack of infrastructure. The disparity reached glaring levels when data was compared to Western Europe, particularly Belgium, which alone has more transport infrastructure compared to most countries in the East.

But, while Belgium’s sea freight operations alone accounted for 5.7% growth, that number was dwarfed by the growth delivered by some countries in Eastern Europe. Serbia’s performance in sea freight increased by 10.6%; Romania’s performance increased 9.4%; and Hungary’s performance increased 9.7%.

Despite the performance, Eastern Europe still has a ways to go in improving its infrastructure. Transport Intelligence focused on Romania in an effort to explain the disparity. “Shortage of staff is a significant issue for the logistics sector, with increasing emigration exacerbating the situation in the labor market. Alongside further investment in roads, which remains of the highest importance for the logistics industry, the port of Constanta and the country’s railway network are also of strategic importance.”

While other countries in Eastern Europe performed relatively well, the report saw a lot of promise in Romania. This is one country seen to be shielded from the not-so-favorable conditions surrounding the logistics industry in Europe as a whole. The road freight sector alone is seen to grow by about 1 billion euros come 2020.

Instead of viewing Europe’s contract logistics market holistically though, Transport Intelligence implied that “over the next five years, general market conditions are expected to be less favorable for logistics providers, although one must note the story is different for each particular logistics market.”

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