18


Issue 1 2015 - Freight Business Journal


///EASTERN EUROPE


All change for the heart of Europe


What a difference two decades make – along with an overthrow of the established government and a complete change in political and economic ideology. It’s hard to believe now that the countries of the east European and Baltic region were once bastions of communism.


Windows – and doors - of opportunity for DSV


Windows of opportunity are literally opening up for DSV in the Baltics and East Europe. Many companies that produce complete made-up building components such as windows and doors have migrated from high cost countries like Scandinavia to the Baltics and central and Eastern Europe,


says the forwarder’s


divisional general manager for Eastern Europe, Austria and Switzerland, Michael Madsen. Firms have gone to countries like Poland, the Czech Republic and Slovakia in search of lower- cost but skilled labour, and it is much cheaper to produce components here than in Scandinavia, even though the head office may still be located there. And in London and the south-


east, there is a ready market from the burgeoning building industry, he points out. It is quite a specialised segment of the market – the components are quite heavy, need specialist handling and more often than not are delivered direct to the customer’s premises. DSV is putting a lot of focus on


the Baltic and East Europe these days, Madsen continues. “There is plenty of potential for growth and we have made changes in our company to reflect that.”


Clothing has also become


quite big business in the region – many manufacturers have migrated there in search of better quality and quicker response than is possible in Asia and the Far East, says Madsen. Despite these promising


developments, many freight and logistics companies persist in seeing eastern Europe as still something of a niche market, Madsen says: “For some reason,


join. Distance may play a part


in colouring perceptions, of course, as will the difficulty of obtaining a balanced flow of traffic, particularly to and from the UK. “We do buy a lot more from the region than we sell to them, which pushes down prices for UK exports,” Madsen admits. “That said, we ourselves do have strong exports from the UK, whereas other operators


East Europe and Baltic region is twice-weekly, but departures on other days of the week can often be fulfilled by DSV’s unique pan- European daily Pallet service, based on a central hub near Stuttgart. Full load services can of course operate on any day of the week as required. DSV also stresses the fact


that, in the larger countries such as Poland, it serves all the major cities. Operating into a


Specifically, it has strengthened partnerships with DSV offices in the region; DSV is present in every major country. It is also targeting specific market sectors, like the building trade or clothing and textiles.


it’s still seen as a bit risky, more problematic than, say Benelux or Germany.” This is despite the fact that most countries in the region have been EU members for many years and others, such as Croatia, are continuing to


may go to the Benelux countries for example to get reloaded.” Poland


in particular has


made a strong recovery from the Great Recession and export business is particularly brisk. General


frequency to the


central point like Warsaw and redistributing to the outlying regions would add cost and complexity. The Baltic region is another


historically good market for DSV, particularly little Estonia where it bought the market- leading operator back in 1999; DSV today is by far the biggest carrier, says Madsen. Again, building materials,


including made up windows and doors


are a big trade


and there is a lot of forestry and timber-based business. Textiles are also a major trade from Estonia,


Latvia and


Lithuania. As with central and Eastern Europe, twice-weekly departures are standard and there is also the option of the Daily Pallet service to fill in on the other days of the week. “The Baltics are a surprisingly


major market, considering their size and population,” Madsen comments. This might partly be explained by their traditional role as a gateway to Russia. South-eastern Europe is


another important area for DSV, particularly Romania, and again business is helped by having a strong partner. Textiles and furniture, taking advantage of


to Romania as an alternative to the Far East; in fact, the country has soaked up some of the industry that has become less competitive as wage rates in the Baltic have gone up. There is every prospect of


UK business to and from central and eastern Europe and the Baltics increasing in future, says Madsen. The regions are a major focus for the UK government efforts to encourage exports, and there is particularly good potential in countries that have recently joined the EU, such as Croatia. Slovakia and Hungary also have great potential to increase their exports, especially as they have worked through their economic issues. DSV also plans to increase its


penetration of specific industry vertical markets, especially as more Scandinavian firms move out of their home region. “Over the next three years we’d like to become the ‘go to’ operator for Eastern Europe,” explains Madsen. “Not many other companies have got as good a set-up as we have.” Most of the expansion will


the country’s competitive


labour, are big exporters – again, a lot of companies have turned


be organic, particularly existing customers increasing their business but DSV wouldn’t be averse to acquisitions, particularly specialist for- warders.


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