03 May 2018
European economic integration has been steadfast since after the Second World War, which left the continent ravaged and in disrepair. Fast forward 73 years, and the continent is economically booming, with post-Soviet nations to the east joining the union and enjoying the benefits of the single market.
Intra-European trade – trade that takes place between EU states – was estimated at a whopping €3,110 billion in 2016, 78% higher than the value of exports leaving the EU, according to eurostat. That’s a huge amount of value, and over 15% of global trade, created without having to leave Europe’s shores.
The countries enjoying the highest average growth in trade are those to the east, with Bulgaria, Estonia, Latvia and Lithuania seeing their average annual growth rate increase by double digits. These nations are relatively new to the single market, and their market conditions – relatively low wages, high levels of skills and training and good infrastructure – have made them investment hotbeds for European cash and capital. Whether it’s mobile phone parts, floral crop-tops or razorblades, the east is quickly becoming Europe’s manufacturing hub.
The strength and resilience of intra-European trade is found in the continent’s economic versatility. This, combined with an increasing trend where manufacturers and businesses want their productive and operational capacity closer to home, has led the economic giants of Europe to look east. At DP World Constanta, the Black Sea’s premier port, we transport around 30% of cargo by rail to the east European hinterlands, feeding its growing productive base and its burgeoning consumer markets.
The geographical proximity of the continent’s states makes the market extremely accommodating to the consumer trend of fast, cheap and reliable delivery of consumer goods and, in certain cases, their subsequent return. An increasing amount of Europeans are doing their shopping online, and after they make a purchase, they want it there and then. E-commerce platforms have been feeding this hunger for instant gratification with the Urban Logistics Convention finding that more than half of online orders made include free delivery as standard.
And it’s not that consumers want their purchases now, they want them anywhere they feel like. All-channel fulfilment, or omni-channel commerce, is where retailers provide goods in physical shops, where customers can buy or pick them up after purchasing online, as well as online purchases being delivered directly to customers’ doors.
Adding further fuel to the fire of instant gratification, the rise of online purchases made via mobile devices means that shoppers can walk into a store, see an item that takes their fancy, and order the same item online from a different outlet, for next day delivery. Not only does this require all retailers to be incredibly plugged into their stock rotation and capacity to sure up their supply chains, it also requires a sophisticated transport system to deal with the dual-flow of purchases and returns from east to west. With these consumer trends likely to remain, the logistics operators with integrated, dual-fulfilment capabilities will be best equipped to deal with the endless back and forth of goods.
Within Europe, where cross border e-commerce is growing a twice the rate than domestic e-commerce, getting goods from their manufacturing facilities in the east to shops and customers in Hamburg, Amsterdam and everywhere in between requires multiple sorting centres in different countries, as well as long-distance transport and last mile delivery. This process works both ways – for deliveries and returns – and can be thrown off if, for example, there’s a staff shortage at one of the sorting centres, or perhaps a road accident on difficult terrain in eastern Europe. When one domino goes, the whole chain buckles and customers end up disgruntled, causing retailers to lose face, which, in an increasingly adversarial market, is something they want to avoid.
One way in which merchants can avoid this is by collecting and crunching data on their suppliers, the goods’ contact-points, the supply chain and consumer spending, shrinking product cycles and the volatility of demand - all of which affect sales prospects. Combine this with better, more well-equipped and customised consolidation centres and you’ve got the right amount of capacity to store and rotate goods near key consumer markets.
Another way in which the flow from east to west can be unleashed is through greater competition in the sector, with new providers entering the market offering a fresh approach. In 2013, the average number of cross-border commerce providers in Europe sat around 4.4, while in 2016 it reached 6.7, according to PostEurop. DP World Inland and Intermodal is at the heart of this fresh approach by offering intermodal solutions customised to their partner’s needs and plans, be it barge or rail.
Finally, online merchants are looking for their logistics providers in Europe to provide expertise and guidance, according to surveys conducted by E-commerce Europe. A lack of transparency in pricing, a lack of standardised interface specification to exchange data and confusing VAT and customs regimes are all highlighted. For all of these, DP World Inland and Intermodal ameliorates with expertise and jargon-free advice, helping improve merchants’ service and reliability.
The interconnectivity of Europe is one of its main strengths but, when it comes to logistics and commerce, it can be a burden. The reliance within the supply chain to deliver - and deliver fast - means that retailers have to expose themselves to hefty amounts of risk. With consumer trends only going one way, Europe-wide logistics providers need to be savvy about getting their goods from east to west, and vice versa.
Gain a competitive advantage with DP World’s Supply Chain solutions
To see how DP World Europe and Russia can help improve your supply chain, please contact our Regional Commercial Director, Dirk van den Bosch by e-mail
firstname.lastname@example.org or on +44 7721 238159