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The Warsaw Voice » National Voice » October 27, 2011
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Transport and Logistics
October 27, 2011   
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Poland’s transport and logistics sector is set to develop rapidly in the coming years despite the continued weakness of the country’s road and rail infrastructure. The relatively strong growth of the economy will be the main driving force behind this expansion.

Transport and logistics is one of the key sectors of the Polish economy, contributing almost 5 percent to the country’s GDP. Called the bloodstream of the economy, the importance of transport stems not only from its own potential but also the role it plays in the economy as a whole.

Thanks to its central location in Europe, Poland has convenient road, rail and air connections with all European Union countries and is well prepared for trade with the EU’s eastern neighbors. The country’s three main seaports—Szczecin-¦winouj¶cie, Gdynia and Gdańsk—located on the southern coast of the Baltic, have connections with the most important ports around the world. As a result, Poland is an attractive location for firms that want to operate on the European market and on eastern markets.

Wide-gauge connections to Russia and other CIS countries are a strong point of Poland’s rail system. They ensure fast and reliable transport of goods to eastern markets. Poland’s wide-gauge line is 400 kilometers long. It runs from the terminal in Sławków, Upper Silesia, which has the largest freight loading ramp in Poland, to Hrubieszów on the EU’s border with Ukraine. Poland is gradually developing its rail infrastructure for container transport. The EU promotes this form of goods transport as an alternative to long-distance road haulage.

Air transport plays an important role in the Polish transport system. The largest and most important domestic and international airport in Poland is Frederic Chopin Airport in Warsaw. Thanks to the airport, Warsaw has direct air connections with 55 cities across the world. Cracow, Gdańsk, Katowice, Poznań, Wrocław, Szczecin and ŁódĽ are the other Polish cities with international airports. As a result, it is possible to get from Poland to most places in Europe within two hours. Pipeline transport has a relatively big market share because of considerable demand for natural gas and oil. Inland water transport, especially on the Oder river, is also developing in Poland.

However, road transport dominates in Poland and is the most rapidly developing segment of the transport industry. At the end of 2009, Poland had 262,000 kilometers of public roads. The density of the road network was 83.9 km of roads per 100 square kilometers of land. The biggest drawback of the Polish road network is a small number of freeways and expressways. At the end of 2009, Poland had less than 1,500 km of such roads.

Roads under construction
At present more than 1,400 km of national roads are being built or modernized. These include 702 km of freeways, 609 km of expressways, and 93 km of beltways.

Much of the funding for these projects comes from EU sources. Since July 1 money for the construction and modernization of roads has also been collected through the viaTOLL system, in which the amount of money to be paid for using a toll road is calculated electronically. The system is mandatory for vehicles weighing over 3.5 tons and for all buses. In the first three months after its launch, almost zl.160 million was collected through viaTOLL. The money was transferred to the National Road Fund. The receipts have been growing rapidly every month—from around zl.25 million in July and over zl.60 million in August to almost zl.75 million in September.

Modern warehouses popping up
The development of the transport and logistics sector depends not only on improving the quality of roads and railway lines. Equally important is investment in logistics centers and warehouses.

Poland now has 6.5 million sq m of modern warehouse space. Most of it was built between 2004 and 2008. The years 2006-2008 were a boom period on the warehouse market, when demand for warehouse space was greater than the pace at which new facilities were being built. Buyers for the premises were found before the completion of the projects. In the following years, speculative projects almost disappeared from the market because of problems with access to funding for developers. Interest in built-to-suit facilities has been growing steadily since 2009. The advantage of such projects is that they meet the specific requirements of the tenant and are built in locations of their choice. The economic slowdown has resulted in a significant drop in the number of warehouse and logistics centers under construction in Poland in the past two years. After a weak 2009, developers almost stopped building new facilities. As a result, only 270,000 sq m of new warehouse space—over 1 million sq m less than in 2008—was put on the market in 2010, according to Jones Lang LaSalle. But this year market trends have been much better, which is reflected in many new projects started by developers.

Ties with Scandinavia
Polish transport firms have increased their presence on international markets, especially in “old” EU countries, since the country’s entry to the European Union. Scandinavia is one of the markets where the activity of Polish transport firms has grown the fastest. This is not surprising because the region is close to Poland, not only geographically. Scandinavia is an important trade partner for Poland, and Sweden is Poland’s third largest business partner in terms of trade turnover among the countries in the Baltic Sea region. In recent years, Danish, Finnish, Swedish and Norwegian investors have eagerly invested on the Polish market and they are now active in the key sectors of the Polish economy. Scandinavian firms account for around 10 percent of all foreign firms in Poland. At the same time, Scandinavian investors account for 19 percent of all companies that have invested more than $1 million in Poland.

Since Poland also plays a major role as a link between the countries of the Baltic Sea region and the countries of the Mediterranean and Adriatic region, it is small wonder that many transport and logistics companies with Scandinavian roots operate in Poland. They include AFG International Transport & Spedition Sp. z o.o., Blue Water Shipping Sp. z o.o., Cargotec Poland Sp. z o.o., DSV Group Poland, Enterprise Logistics, HRX Poland, Maersk Polska Sp. z o.o, Nordtrans Thermo Sp. z o.o., Scandinavian Express Poland Sp. z o.o., Stena Line Polska, TransCargo Poland, Transpoint International PL, and Wilshire Holding.

Further expansion of economic relations between Poland and Scandinavia requires efforts to increase the speed and volume of goods trade between Central and Eastern Europe and Scandinavia. It is also necessary to modernize and develop transport infrastructure, and shorten the time for the transport of goods and passengers. The idea of the Central European Transport Corridor has been proposed to meet this challenge. The corridor is expected to connect the Swedish region of Scania and the whole of southern Scandinavia with the northern and western regions of Poland, thus facilitating transit traffic between Northern Europe and Central and Eastern Europe.

Krzysztof Miegoń Sales Director, Transpoint International (PL) Sp. z o.o.:
The transportation, forwarding and logistics sector is vulnerable to any changes in the economy, as a result of which stagnation or a new crisis—a much-debated prospect lately—could easily affect the condition of our sector. Looking at the issue from our perspective, this year can be considered a successful one by now, despite much uncertainty and a number of potential stumbling blocks recently. These include the new toll collection system on roads, a sharp and alarming increase in fuel prices, and the unstable price of the zloty against the euro.

All these factors, combined with the anticipated economic slowdown and the limited availability of rolling stock and vehicle fleets, add up to a realistic threat that may hinder the development of Poland’s transportation market.

Our company specializes in handling cargo shipped between Poland and Scandinavian countries, which accounts for over 75 percent of our revenues. This is a market of key importance to us and it is our strategy to continue expanding in this area. Food, paper products, cosmetics, chemicals and power engineering products are the most commonly shipped types of cargo. As a result of this diversity, we deal with products that occupy whole trucks as well as with a growing amount of general cargo, which is a good thing given the need to enhance the national distribution network and optimize the utilization of different modes of transportation.

We have also been looking for new markets, such as Turkey, whose GDP grew over 8 percent in the second quarter of this year, according to the latest data. We see this is as an opportunity to use Poland as a transfer country between Turkey and Finland, for example.

Artur Czyżewski Chairman of the Organizing Committee of the Skandynawigacje 2012 Conference:
The prospects of the market for transportation, forwarding and logistics (TSL) in Poland need to be discussed separately from the crisis, because the crisis affects most sectors in highly unpredictable ways, and transportation, the driving force of the economy, usually gets hit immediately. Generally speaking, transportation, forwarding and logistics have been developing in spite of the crisis and escalating fuel prices, but these two factors have had a powerful effect on the sector. To begin with, the sector owes its development to the growing position of Polish companies on EU markets, which helps more than make up for the situation at home. Second, this development is fraught with growing risks, as shown by spectacular bankruptcies of companies, including those that used to be the leaders in this business. So the growth in this sector can hardly be described as healthy.

The economic feebleness of this sector, coupled with the risk of bankruptcy, make consolidation a more likely turn of events. This mainly applies to road transport because rail transportation has already undergone integration. More consolidation is to be expected.

Providers of comprehensive logistics services are growing stronger at the expense of companies which provide transportation services. Now that growing volumes of goods are sold through store chains while supermarkets and shopping centers keep expanding, warehouse-based logistics supporting such chain customers is gaining importance.

The quality of Poland’s road and railway network keeps improving. This is one of the greatest opportunities for Poland to pursue healthy development as a transfer country on routes leading from the East to the West and from the North to the South. The North-South direction seems somewhat forgotten, which we have been trying to change by revisiting the Adriatic Baltic Landbridge project. The subject will also be discussed at the Skandynawigacje conference which I am the coordinator of. However, in order for ideas to materialize, Poland’s improving road and railway networks have to be prevented from becoming Europe’s costliest. Railroad tracks in Poland rank among those with the most expensive access in Europe, more expensive than in Germany, for example. This is why logistics routes from northern Europe pass through Germany, which is a longer, but faster and cheaper option. If this state of affairs persists in rail transportation and spreads to expressways, there is no way Poland could become a transfer country.

As for obstacles that hinder the development of the sector, I will only mention two, both of which are somewhat less commonly discussed than the state of infrastructure and fuel prices. The first hindrance are the rising costs of training for drivers. Last year, the price for a C+E driver’s license, complete with the right to transport goods, increased 100 percent to over zl.5,000. Legislative ideas go even further than that and once training programs for drivers are expanded to include mandatory training on a simulator, the price will skyrocket to over zl.10,000. As a result, the profession of a truck driver will gradually become a highly exclusive job.

The other problem is unstable legal regulations. Just take a look at the way the viaTOLL toll collection system was introduced. It was a last-minute effort. The thing is that Polish companies are small and most of them lack people to closely watch changes in law. The viaTOLL system changed the operating costs for companies so that halfway through the year, hundreds of small businesses were confronted with a major increase in costs in a situation when they had signed contracts for transportation throughout the year much in advance.
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