Belgium Travelog: Dispatched from Flanders
Inbound Logistics recently joined Flanders Investment & Trade on a tour of Belgium's ports and distribution facilities, and learned a little something about running shoes and waffle irons.
For all Belgium's medieval charm, reputation as a gateway to continental Europe, and esteem as headquarters of both the European Union and NATO, its neighbors often draw all the attention. The country's federal monarchy is a mélange: the Flemish-speaking region of Flanders, French Wallonia, and bi-lingual Brussels. Dutch, German, and English are equally influential—all squeezed into an area roughly the size of Maryland.
Identities aside, in the transportation and logistics world, Belgium has few equals. Given a paucity of natural resources, the country's economy relies on manufacturing, value-added services, and re-exportation. In the northern region of Flanders—home to Brussels Airport and the seaports of Antwerp, Zeebrugge, and Ghent—transportation and logistics is fundamental.
And it shows. Belgium is home to a who's who of American multinationals, with the U.S. Top 50 alone contributing more than $2.3 billion to the country's economy, according to the American Chamber of Commerce in Belgium. Companies such as Nike and Stanley Black & Decker have located their European distribution hubs in Flanders, largely because of the region's multimodal strengths and the efficiency with which they can dispatch cargo into, through, and out of the European market.
Waffle Irons and Warehousing
When University of Oregon track and field coach Bill Bowerman developed a revolutionary new running shoe in the 1960s, his inspiration was a waffle iron. The self-cleaning, batter-dripping mold—which, when applied to footwear, provided better traction than traditional circular designs—kick-started the Nike brand.
It's fitting that the Beaverton, Ore.-based company's primary European distribution hub is located in the ancestral home of waffle-making, where a do-it-yourself ethos echoes through its Laakdal location. But like Bowerman and Nike co-founder Phil Knight, pragmatism and innovation go hand in hand. Flanders is all that and more, having been the cornerstone of the company's European operations for the past 20 years.
Nike's Laakdal DC is the essence of modality and sustainability. Located adjacent to the Albert Canal—an 80-mile waterway that connects the inland city of Liege with the Port of Antwerp—the facility also has direct rail and roadway access. Remarkably, 96 percent of the company's inbound product arrives via barge.
The only mode absent is air. And yet Nike has still succeeded in capitalizing on that element by sourcing 100 percent of its energy needs from six on-site wind turbines leased to a local utility, as well as rooftop solar panels. "It's the only global Nike DC with on-site power generation," says Filip Peeters, spokesperson for the Laakdal operation.
Sustainability is a big part of the corporate ethos—and a reflection of Belgium and EU standards in general. With turbines towering above, a rack of orange Nike-swooshed bikes frames the entrance to the DC. Employees are incentivized to cycle to work. In keeping with the company's mantra : "If you have a body, you're an athlete."
When Nike contracted its European distribution footprint from 32 facilities in the early 1990s, it chose Laakdal as its primary hub because of the location, proximity to major ports in Belgium and the Netherlands, and mode access. Barge and rail service didn't exist at the time, but those services developed with Nike's presence.
Before the Laakdal move, Nike's disparate network of DCs operated independently. Service levels and price points varied from country to country. If inventory imbalances occurred in one area, overstock was liquidated elsewhere at cost. DCs were competing against one another.
By centralizing distribution in Flanders, Nike was better able to capitalize on economies of scale. With so much volume moving through the region and its ports—60 percent of Europe's purchasing power is within a 300-mile radius of the country—companies can take advantage of better asset utilization, explains Peeters. When Nike located in Laakdal, inbound transportation costs dropped markedly.
Getting Closer to Customers
Stanley Black & Decker, based in New Britain, Conn., discovered similar efficiencies when it opened its 700,000-square-foot Tessenderlo DC in 2012. As part of the merger between the two industrial tools companies, the new conglomerate has been consolidating its European and MENA footprint from 14 DCs to eight over the past three years.
"The intent is to optimize the networks across both brands to get closer to the customer," says Dominic Vogels, logistics director EMEA, Stanley Black & Decker.
The new DC merged a space parts facility, outsourced operation, and privately managed warehouse (all in Belgium), and now serves 50 percent of the European market—specifically customers in the Benelux region, Scandinavia, France, Germany, Austria, and Switzerland.
By design, the new facility has less automation than the company's previous DCs, and provides more flexibility to accommodate different business units. At 34 feet high, the building allows Stanley Black & Decker to take advantage of high-density shuttle racking storage for high inventory count items.
Transportation connectivity was a cardinal reason for the Flanders site selection. Tessenderlo is the nerve center for the manufacturer's European distribution, feeding retail stores, as well as other DCs, across the continent. About 70 percent of product arrives from the Far East—much of which comes through Zeebrugge—then is delivered via barge. As with Nike, Stanley Black & Decker relies on overland transportation for most of its outbound movements.
Nike and Stanley Black & Decker are telling examples of why multinational companies favor Flanders and its environs. The area's road network is the densest in Europe, and among the best in the world, and Brussels is a top-50 airfreight hub. But what differentiates Flanders is its port infrastructure.
Zeebrugge, Ghent, and Antwerp—the three most prominent ports in Belgium and Flanders—complement one another. As a collective, they provide a mix of differentiated services and industry-specific capabilities that deliver value as well as connectivity to remote locations. Flanders' ports function as both short-sea and deep-sea transport hubs, providing shippers greater latitude to consolidate and de-consolidate freight, and execute value-added activities.
With strength in container and RoRo shipments, Zeebrugge operates as a peripheral port to Antwerp, says Lieve Duprez, B2B communications and public relations, Port of Zeebrugge. Situated on the coast of the North Sea, Zeebrugge has become a primary transshipment and distribution hub for both European imports and exports. That balance appeals to steamship lines.
The complex has an inner and outer port. The outer port has been developed through land reclamation, and serves to expediently move unit load shipments, such as containers and automobiles.
The inner port is designed to handle valued-added logistics activities—whether processing and packaging green coffee beans, or customizing cars. What makes Zeebrugge unique is that no industrial activity surrounds the complex. It's a "clean port," which is attractive to certain industries.
Antwerp—ranked second in Europe to Rotterdam in terms of total tonnage, and third in containers with 8.6 million TEUs in 2012—is noticeably more industrial. Situated 50 miles inland from the North Sea on the upper River Scheldt, and spanning 50 square miles, the expansive port operates seven locks—including the biggest in the world—with another in the works that will surpass even that.
More than 50 percent of Antwerp's total cargo business is containers, with liquid bulk (25 percent), dry bulk (10 percent), and break bulk (nine percent) filling the quota. The port's petrochemical cluster is the largest in Europe, and home to seven of the top 10 companies in the world. But the real economic driver for the port is in breakbulk cargo such as steel, non-ferrous metals, fruit, coffee, forest products, and project cargo. Currently, it has about a 25-percent market share in Europe.
"Breakbulk generates more employment than containerization—because there's more cargo handling," says Stefanie D'Herde, marketing coordinator for the Port of Antwerp. "So we want to maintain this type of business."
By contrast, the commodity of choice at the Port of Ghent is dry bulk, which accounts for about two-thirds of its total volume. The port is located at the southern end of the Ghent-Terneuzen Canal—about 20 miles from the Terneuzen, Netherlands, locks on the upper Scheldt estuary. At a depth of 44 feet, the port can accommodate Panamax vessels for re-distribution in and out of the hinterland.
In Ghent, new and old energy dominate the scene. Adjacent to a biomass wood pellet facility, coal is unloaded from a vessel as wind turbines twist in the distance. Sweden is the port's leading trading partner—a notable short-sea destination for automobiles—followed by Russia, then the United States.
Given its inland location at the junction of two major north-south and east-west European roadways—the E17 (Stockholm to Lisbon) and the E40 (London to Istanbul)—Ghent is the epitome of intermodal connectivity. Sixty-three percent of the port's traffic is short-sea cargo, making it an ideal complement to Zeebrugge and Antwerp. Work on an expanded sealock at Terneuzen is expected to improve access for seagoing vessels in the near future.
The Low Down
For a region its size, Flanders lays claim to a diverse network of symbiotic transportation assets that is the envy of much larger peers. Given its lack of natural resources and dependence on trade, public and private sectors have made transportation and logistics investment a priority—which has led to considerable foreign speculation.
In 2011, 43 percent of U.S. foreign direct investment in Europe—more than $800 billion—was appropriated to the Benelux region, largely because of its central location and position as an import redistribution hub for the continent. The Netherlands and Luxembourg, by virtue of its financial services strength, attract the most U.S. dollars on the continent.
But Belgium is its own unique magnet. Whether it's renewable energy demands driving U.S. exports to the Port of Ghent, or Antwerp's growing petrochemical cluster, American companies are setting their sites in Flanders for a reason.
As both a regional and global cargo crossroads, specific attention has been focused on building the region's value-added manufacturing and logistics capabilities—adding touches, growing volume, increasing economies of scale, and creating more incentive for companies to locate in the area.
Continued investment in port infrastructure and hinterland services is key to Flanders' and Belgium's shared growth as new trade opportunities and bigger vessels navigate the North Sea. "We don't want to miss the boat," says Duprez.