What a difference a border makes. While Ukraine’s infrastructure-related business struggles, neighboring Poland’s thrives. “Poland is a very young and dynamic country in respect to logistics,” says Maciej Madejak, who heads business development in Poland for Goodman, the global owner, developer and manager of logistics facilities. “It is expanding rapidly.” Mind you, the size of that logistics industry still pales in comparison to European leader Germany. Poland’s logistics inked revenues that totaled 45-billion Euros in 2012, according to a study by Fraunhofer SCS. That puts it in seventh place in the EU, just behind the Netherlands. Germany’s logistics industry totals a whopping 228-billion Euros. Another measure is warehouse inventory. According to a recent report from Jones Lang LaSalle, Poland’s warehouse stock stands at 44.3-million square meters, or about 14% of Germany’s stock, and growth is leveling. However, Poland has gained considerable ground. While its logistics industry didn’t transform overnight, the speed of change is extremely impressive and mirrors both Poland’s improved infrastructure and its extraordinary economic gains. (The Polish economy is Europe’s best performer over the last decade.) Poland now scores higher in the World Bank’s Logistics Performance Index than any other Central European nation, a ranking that rivals such Western European nations as Portugal and Ireland. Part of Poland’s advantage is location, and that is now proving increasingly useful when it comes to Russia, the Ukraine, Belarus and the Central Asian nations. “We are at the center of trade between the EU and the countries of Eastern Europe,” says Andrzej Kozlowski, a board member/COO with Rohlig Suus Logistics SA, one of Poland’s three biggest complex logistics concerns. “Poland has a quite privileged geographic location.” But that isn’t the whole story. European manufacturers, especially those from Germany, began to move into Poland in the early 1990s, shortly after the overthrow of Communism. They took advantage of a large pool of high-quality Polish labor, Polish government incentives, and significantly lower production costs for goods destined back to Germany and elsewhere in Europe. More recently, back office operations began migrating to Poland as well, again taking advantage of an educated and abundant labor force. This “near-shoring” of operations and manufacturing necessitated the establishment of increasingly sophisticated logistics operations. Rohlig Suus, for example, came to Poland in 1989 as a subsidiary of the Bremen, Germany-based Rohlig group. It first focused on air cargo facilities with the then-new international airport, expanded from airfreight to sea freight, then into central logistics, offering distribution both domestically and throughout Europe. Last year, revenues totaled about 130-million Euros, almost twice that of 2009. In 2006, Polish investors bought out the German parent. Poland’s logistics really took off after the country entered the EU in 2004. Borders with EU countries were thrown open, customs checkpoints cleared, operations streamlined. Logistics operators began to see Poland as a lower cost alternative to more developed countries for goods shipped throughout Western Europe. While some manufacturers have the heft to operate their own logistics centers – Volkswagen is one example—third party logistics providers are also thriving. Poland’s own consumers provide a huge incentive as well. With a population of 38 million and a fast-growing middle class, Poland is an increasingly attractive market in its own right. Goodman, for example, has been in Poland for almost ten years and has developed 12 facilities, totaling 350,000 square meters. Goodman now is developing a 95,000 square meters project, which would make it the single largest freestanding logistics facility in Poland. Amazon will use this as a fulfillment center, moving its operations from Germany. Poland can not only move goods westward, but stands as a logical staging ground for goods going to and coming from non-EU countries in the east, where the environment remains highly challenging and problematic. “We are quite a strategic platform,” says Kozlowski, who knows from experience the difficulties of operating in a country like Ukraine. He was based there for eight years. Trade with Eastern Europe is primarily still land-based. However, one of the more dramatic infrastructure projects can be found around Poland’s main Baltic Sea ports at Gdansk and Gdynia. DCT Gdansk launched in October 2007. The container terminal has a capacity of 4-million TEUs. A Macquarie infrastructure fund owns 64% of the terminal, which cost 200-million Euros to build. In 2011, the terminal began handling the enormous Maersk E-type container vessels with a capacity of 15,500 TEUs. A second terminal is scheduled for opening next year. Rail and highway links have been opened as well. DCT Gdansk is marketing itself as a closer alternative to Hamburg and Rotterdam for container ships from Asia with goods destined for Poland or transshipped to Central European countries such as Russia and Ukraine. That can be done via ships to Saint Petersburg or Kaliningrad or via rail or truck to the Ukraine border. As Poland attempts to move up the logistics chain and, in Kozlowski’s words “be more and more important to our customers,” that role in intermodal transport takes center stage. Kozlowski calls intermodal his company’s “youngest baby.” That means the country must open up choke points. Poland, for example, is tackling a bigger and more technologically advanced rail gauge switching facility on the Ukraine border, which will allow trains to more quickly switch from European gauge to Russian. Logistics, of course, is dependent on infrastructure. While Poland has made great strides, it continues to play catch up to Western Europe. “When you look at the current situation versus what it was, it’s great and we are quite happy,” says Kozlowski, but he adds: “We still have some limitations.” He cites, as an example, rail infrastructure modernization and some legal regulations. State-owned PKP Cargo SA, the country’s largest rail freight carrier, went public in October, an almost $500 million IPO that sold off about 17% of all shares. It’s questionable, however, whether this capital ingestion is enough to underwrite necessary development. A report by Jones Lang LaSalle calls Poland “the largest construction site in Europe” because of its expansion of public infrastructure networks. That includes seaports, rail and, most especially, roads. A Bloomberg survey on competitive business environments cited Poland’s improved road system as significantly lowering the cost of moving goods. Poland has proven adept at gaining EU funds for infrastructure projects. One of the biggest is the A1 motorway, a 1.4 billion-Euros dual carriageway that links Gdansk in the north with Torun in the south and forms part of a modern road artery extending into through the Czech Republic to Vienna. The EU picked up more than 80% of the cost. EU institutions added another 1 billion Euros to underwrite a section of the A2, the east-west artery that now connects Warsaw with Berlin, and which will eventually reach the border of Belarus.
Poland’s Foreign Trade Figures
1st Quarter 2014 US$
Exports 17753,4
Developed countries 15112,9
of which EU 13754,5
of which euro-zone 9526,7
Developing countries 1419,2
Countries of Central & Eastern Europe 1221,3
Imports 17503,4
Developed countries 10768,0
of which EU 9708,5
of which euro-zone 7634,3
Developing countries 3883,8
Countries of Central & Eastern Europe 2851,6
Balance 250,0
Developed countries 4344,9
of which EU 4046,0
of which euro-zone 1892,4
Developing countries -2464,6
Countries of Central & Eastern Europe -1630,3