February 2009 | News | Global Logistics

Global Logistics

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The threatening economic cloud hovering over the United States is spreading eastward and casting a pall over European trade as it continues its global path. The continent is bracing for a gloomy forecast as pressures build, consumerism wanes, and mandates to reduce transportation costs flood corporate boardrooms.

The current global downswing will stress transport rates throughout Europe, making it a tough go for truckers and shippers, predicts Walter Schulze-Freyberg, managing director of Hamburg, Germany-based Polzug Intermodal.

"I expect that, especially in the trucking sector, a considerable number of small players will not survive—even more so as road toll charges increase and truckers have difficulty passing these additional costs on to their customers," says Schulze-Freyberg.

The U.S. motor freight industry has already experienced such inertia, which has only catalyzed existing concerns about future capacity constraints and a need for transportation infrastructure investment. Europe now faces an equal challenge, shaded by some nuanced differences.

Europe's transportation network is more diversified in terms of intermodal utilization (railway, inland barge, and over-the-road transport) and its geographic footprint is far more contained than the United States—though Eastern Europe's growth is quickly changing that. Regional and country-specific politics, trade regulations, and infrastructure anomalies have contributed to past difficulties aligning transportation links and trade. To account for this, the European Union has made a concerted effort to liberalize and standardize rail freight transport between member countries, especially among EU entrants, eliminating bureaucracies and bottlenecks to facilitate freight flows and reduce costs.

But promoting rail/intermodal is even more essential to building and modernizing terminals near Central and Eastern Europe seaports, Schulze-Freyberg acknowledges. Polzug, which provides rail container services from Hamburg, Bremerhaven, and Rotterdam to destinations in Eastern Europe and Central Asia, is positioned in the middle of this emerging trade bubble. The rising prospects of new manufacturing markets amplify the need for more global connectivity in Eastern Europe beyond what already exists in the West.

Polzug plans to invest several million euro next year for new terminals in Poland after opening a facility in Wroclaw last June to handle in-country market demands. While the company expects container volumes for 2009 to remain on par with last year, the long-term growth trend for European container trade appears intact.

Noting that in 2006 and 2007 growth rates were well above forecasts, Schulze-Freyberg believes after 2009 the long-term growth trend will continue as globalization resumes.

"The European hub ports are continuing to increase their handling capacities, and I do not see any problems with port congestion in the coming years," he says. "Moreover, the terminals have made considerable efforts to improve their hinterland connections."

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