March 2006 | News | Global Logistics

Global Logistics—March 2006

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3PLs Manufacturers Eyeing Eastern Europe

Go east—to Eastern Europe, that is—has become the new mantra for multinational manufacturers looking to establish low-cost production sites. The accession of Poland, Hungary, the Czech Republic, the Slovak Republic, Slovenia, Romania, Latvia, Lithuania, and Estonia to the European Union (EU) has opened up new growth opportunities in the region. Because of Eastern Europe's prime geographic location, cheap labor, market size, and friendly conditions for foreign investors, both U.S. and Western European companies have targeted the area as a growth spot for logistics and manufacturing operations. In addition, as these accession countries continue to globalize and make financial gains, Eastern Europe could itself become a valuable consumer market. As a result of the investment boom in the region, the outsourced logistics market in these EU newcomer countries is expected to thrive, according to a recent report from global consulting firm Frost & Sullivan. It predicts industry sectors such as automotive, high-tech/electronics, fast-moving consumer goods, and retail are most likely to boost the demand in Eastern Europe for basic logistics activities such as transportation, contract logistics, and other added-value services. To meet shipper demand in the area, local Eastern European logistics firms and multinational 3PLs are starting to collaborate on effective transport operations, says Sarwant Singh, automotive and transportation practice director at Frost & Sullivan. The removal of some customs barriers in Eastern European countries, as well as trucking companies' fleet upgrades to adhere to EU road safety and environmental regulations are also helping shippers in the region. Which Eastern European countries are generating the most buzz? Automotive manufacturers, retailers, and consumer goods manufacturers have their eye on Poland because of its relatively advanced existing logistics market, according to the report. Growth is also expected in the Czech Republic due to its strategic location and disciplined workforce, and in Hungary, thanks to the country's more than 40 airports. Less developed but still promising countries include Slovenia and the Slovakian Republic, which both offer logistics companies skilled human capital and a positive business environment. The Baltic States are also anticipated to experience a logistics boost from 3PLs looking to embrace its multilingual workforce.

C-TPAT Garners Global Attention

While the Customs Trade Partnership Against Terrorism (C-TPAT) has steadily gained traction with U.S. companies, new data shows the number of foreign firms ponying up for C-TPAT compliance is also increasing. Today, more than 9,000 firms around the globe are C-TPAT members, according to the International Cargo Security Council (ICSC). ICSC also reports an increase in the number of companies signing up for other C-TPAT services, the most popular of which is the C-TPAT foreign-supplier assessment service. Under this program, foreign suppliers pay for an assessment and receive an ICSC C-TPAT compliance certificate if they pass, which they use to demonstrate compliance to customers. Foreign manufacturers are increasingly obtaining C-TPAT certificates because it provides them a competitive advantage and eliminates the resources they would spend on multiple client C-TPAT assessment requests. The increase in global C-TPAT participation is good news for U.S. companies anxious about supply chain security.

U.S. Trade Balance: Seeing Red

The United States' foreign trade deficit has been on an upward tilt over the past few years, topping out at a whopping $725.8-billion total in 2005, thanks to record imports of oil, food, cars, and other consumer goods. But where in the world does the deficit come from? The usual suspects, including China, Japan, and the oil-producing Middle East countries account for the bulk of U.S. imports. But we also hold trade deficits with some surprising countries. What, for example, do we need to import from Poland? Answer: coal, alcoholic beverages, and iron and steel products, among other commodities. To get a feel for U.S. activity with trading partners around the world, here is a look at our trade balance with a sample of countries from different regions. Though we are in the black with some countries, red is clearly the predominant color on our import/export balance sheet. And because of the ever-increasing trend of offshore manufacturing and our dependence on foreign oil, that is not likely to change anytime soon.

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