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Export Council meeting 21 June 2011Robin Martens
Managing Director European Gateways Platform
Empowering Romania as the Eastgate Re-Export Trade Hub
Agenda
• Value chain developments
• Holland International Distribution Council
• European Gateways project
• How to realize potential
Empowering Romania as the Eastgate Re-Export Trade Hub
Value Chain developments
Plan
Make DeliverSource Make DeliverMakeSourceDeliver SourceDeliverSource
Return Return Return Return Return Return Return Return
Market developments Value Chain
SUPPLY CHAIN
• Time of Supply Chain
• Shorten time-to-market; Compress Supply Chain; Lead-time restrictions
• Cost of Supply Chain
• Off-shoring production; Postpone final production / assembly
• Configuration of Supply Chain
• Outsourcing; Functional change of actors; Agility / responsiveness; Location of the market
Value Chain composition
Variable volume, innovative product
Stable volume, functional product
Gap Central America China
H&M Turkey China, Bangladesh
Mango Spain, Morocco China
Zara Spain China
Nokia Romania (a.o.) China
Xerox Netherlands China, Malaysia
LG Poland South Korea
Purchasing Power: Past
• 72 % of the European / and Central Distribution Centres are located in North-West Europe.All in a circle of 100 km around the ports of Rotterdam, Antwerp & Hamburg.
Source: NDL
• EU entry CEE states accelerates purchasing power development.
• Economic weight shifting to the East.
• Delivery requirements starting to upgrade to W-European levels.
• Logistics solutions leap-frog W-Europe.
Source: NDL
Purchasing Power: Present & Future
Trade Routes East - West
Kazakhstan, Near Asia, West China
Silk Route to Near Asia, West China
Trans Siberia Line to China
In competition with Bulgaria esp RoRo via Varna. Today Varna wins due to
lack of development Constanta
Virtually non-existent today, due to lack of assembly parks / inland ports in Romania. Threat is coming from Hungary & Slovakia
Existing route Europe –Kazakhstan – China
Non-existent today. Opportunity to link South Europe to Trans Siberia Line. Threat is
coming from Hungary & Slovakia
Trade leads logistics
Direct route to CEE + Near-Shoring =
Market Potential for Romania
1
2
3
4
5
6
7
Location Requirements- Comply with international demand -
1. Strategic logistic location;2. Space for growth;3. Development strategy;4. Low operational costs;5. High quality transport facilities;6. Multi-modal transport solutions;7. Freight villages;8. Stable & high quality personnel;9. Facility quality on international level;10. Simple and straightforward procedures;11. Availability of residential solutions;12. Wellness environment (e.g. schools, nature, golf)
Location Requirements- Outside view on Romania today -
1. Strategic logistic location: Yes2. Space for growth: Yes, but where3. Development strategy: No4. Low operational costs: ??5. High quality transport facilities: No6. Multi-modal transport solutions: No7. Freight villages: No8. Stable & high quality personnel: Yes??9. Facility quality on international level: No10. Simple and straightforward procedures: No11. Availability of residential solutions: No12. Wellness environment (e.g. schools, nature, golf): No
By rail€ 16.324,-34,5 days
By road€ 16.338 ,-35,5 days
Rotterdam
Constanta
By rail€ 12.089,-30 days
By road€ 11.766 ,-31,5 days
Distribution costs and throughput time
Harbour
Warehouse / rework
Destination
Prague
Venlo
Timisoara
Shanghai
By rail€ 16.794 ,-34,5 days
By road€ 16.816 ,-
36 days
Rotterdam
Constanta
By rail€ 11.860,-30 days
By road€ 11.609 ,-
31 days
Distribution costs and throughput time
Harbour
Warehouse / rework
Destination
Krakow
Shanghai
Cost2Serve: Shanghai to CEE
Is there a market tomorrow?Cost2Serve hinterland Constanta
Is there a market tomorrow?Captive Hinterlands in terms of TEU
Total Container Flows Europe 2005 57,3 million TEU
Status 2007: East European Ports ± 2,5 million TEU
Captive 2007 by East European Ports ± 8 million TEU
Captive 2015 by East European Ports ± 11,5 million TEU
Empowering Romania as the Eastgate Re-Export Trade Hub
Holland International Distribution Council
Fundament of Dutch success
RDC
RDC
RDC
RDC
Port Gateway Port Gateway & EDC
Inland Ports
Multi-modal connections andIntegrated business & logistics parks
The Holland Distribution Country model: Unsurpassed success
• Population: 16.5 Million• 400,000 people are employed in the Logistics and Distribution sector of the
Dutch economy• Over 25 Billion US$ of gross added value• 8% of the GDP• 51% market share in European Distribution Centres
• Enabling success: Holland International Distribution Council (HIDC / NDL)
• Founded in 1987 by the logistics industry with backing from Government• Mission: Strengthening logistics competitive position of Netherlands within
Europe• Private & not for profit, 500 company members• Activities: Marketing & Matchmaking, R&D, Lobby, Platform
The Dutch road to success
18
“The NDL team was an invaluable resource, very helpful and providing me with guidance in Holland…they really knew the logistics organizations personally and had rapport with them”
“They approximately reduced the transition time by 50% (from 6 to 3 months)”
“I highly recommend HIDC to other businesses who seek local support for establishing a distribution presence in the Netherlands”
– Director of Global Logistics; Masimo Corporation
“NDL has the specific knowledge about logistics in general and the Dutch market and players in particular that logistics investors are looking for ”
“Their knowledge about the Dutch players means that the leads they provide are valuable and a company does not have to waste time investigating irrelevant leads”
– Regional Logistics Manager Europe – Eurasia;Halliburton
"I don't think a lot of people realize how simple it is to set up a distribution center in the Netherlands"
"They (NDL) effectively held our hand during the whole process"
"There was real value in the efficiency...from start to finish we got everything going in less than 6 months“
– Logistics director;Tom’s shoes
“They are very helpful and knowledgeable“
“I really feel they are trying to make a match with a logistics provider that is best for me”
“I particularly liked that the first time we met they brought a tax attorney along, that was very useful”
– Logistics operations manager;Redwing shoes
The Feedback on HIDC (NDL)
• Location, Location, Location
• Infrastructure: Your connection to the World
• Quantitative & qualitative supply of expertise
• Collaboration, Communication & Cooperation
Lessons learned in Holland
Existing Situation Romania
2
5
3
45,799.5 EURO
6,204.9 EURO
18,875,5 EURO 4,609 EURO
Logistics Market Romania:
• 2010
- 350 mln tonnes
- Almost no transit !!!
• Characteristics
- Bucharest (70%)
- No logistic networks
- No inland ports / hubs
- Fragmented
- No trade policy
- No multi/inter-modality
- Absence of infrastructure
- No clustering
Is there a market tomorrow?Market requirements
2
5
3
4?? EURO
?? EURO
1?? EURO ?? EURO
Potential Market Romania:
• 2020
- Domestic: +50%
- Transit/trade: HUGE
• Requirement
- Path of Least Resistance
• Romania competes head on with other European Countries:
- Hard infrastructure
- Soft infrastructure
- Trade policy
- Marketing & SalesEGP project =
Empowering Romania as the Eastgate Re-Export Trade Hub
The EGP project
• Develop in cooperation with Romania the corridor Constanta - Rotterdam
• Cooperate & Support Romanian public authorities in formulating & preparing Policy, Plans & Projects
• EGP is a PPP between the Dutch Government and companies & entities
• Launching members of EGP:• Archicom• Baggerbedrijf de Boer• Boskalis• Centrum Transport / Essers• ECON group• HITT• Koninklijke Saan• KLG Europe• MHC
Foundation European Gateways Platform
• Multraship• Price Waterhouse Coopers • Rotterdam Maritime Group• Seacon Logistics• Syncera MWH• Van den Herik • Wim Bosman CEE• Nederland Distributieland• Transport en Logistiek Nederland
Objectives
• Constanta Logistics Hub: Eastgate of Europe
• Romania Trade & Assembly Hub of Europe
EU Strategy Ports & HinterlandEU2020
EU TEN-T
EU Danube Strategy
EU Transport Policy
EU Green Policy
Business case
Benefits:• GDP contribution: € 10.7bln
• Tax income State: € 1.6bln
• Jobs: 176.000
• External cost savings for Europe: € 120mln/year
Cost:
• Investment: € 500mln for period 2011 - 2020
N1) Constanta
N2) Giurgiu - Ploiesti
N3) Craiova - Pitesti
N4) Targu Mures - Cluj
N5) Timisoara - Oradea
Develop Romania Logistics Corridor
Freight villages
Infrastructure
Road
Rail
IWT
NEW
N4N5
Market Potential Romania 2030:
- Domestic: 600mln tonnes
- Transit/trade: 200mln tonnes
N1N3 N2
Loss per Day
Loss per DAY
TEU Romanian State
Romanian businesses
2011 50,000 € 92,000 € 286,000
2012 100,000 € 184,000 € 572,000
2013 250,000 € 460,000 € 1,430,000
Effect of VAT-deferment
Per 100,000 TEU
Total additional income to State € 67.500.000
Customs duties € 24.500.000
Salary taxes & unemployment savings € 33.000.000
Corporate taxes & VAT € 9.000.000
Spin-off to companies in Romania € 210.000.000
Empowering Romania as the Eastgate Re-Export Trade Hub
Potential Realization
• Constanta Logistics Hub: Eastgate of Europe
• Romania Trade & Assembly Hub of Europe
Way forward
1. Adopt EGP-project as a Project of National importance
2. Establish Integrated Project Unit:• Responsible for execution of the Project
• Implement defined measures (next slide)
• Market Romania & acquire investors
• Visualize strategy through presentation documents
• Develop and deploy support tools
• Define masterplan Romanian Logistics Corridor
Measures to be implemented
• VAT deferment
• Global Fiscal Representation
• Authorized Economic Operator
• Extended Customs Gate
• Inter-Modal Strategy
• Inland Ports
• Extend South Port Constanţa
• Supply chain & logistics education
• Change of Order 500/2007 & Customs Code
• Change of Methodological Norms 2004
• Change of Order 2243/2006 & 5465/2007
• Execute Pilot project
• Invest ± € 200mln up till 2020
• Implement Inter-Modal Strategy
• Develop container terminal & logistics park
• Direct ESF funding for “strategy project”
Contact details
European Gateways PlatformMr. R.J. Martens
B-dul Aviatorilor 51-53Sector 1BucharestRomania
T +40 – (0)21 – 210 90 24M +40 – (0)726 – 79 24 35E [email protected] www.europeangatewaysplatform.nl
