7 June 2018
How Belgium as a logistics gateway can face the challenge of changing technology?
Just how important is the logistics sector for the Belgian economy? How big is the role played by US companies on the Belgian market? And how are new technologies impacting both?
The view of the experts
We asked 3 logistics experts the following questions :
1. "What are Belgium’s key strengths for logistics operations?"
By Matthijs Luts, Supply Chain Director EMEA & India, Abbott
2. "What are the challenges of the future?"
By Alex Van Breedam, CEO, TRI-Vizor
3. "Is 3D-printing a threat to the sector?"
By Raoul Leering, Head of International Trady Analysis, ING
Watch their answers here:
Belgium is the gateway to the European market
For many US companies, Belgium is not only the gateway to the European market, but also an important hub in their global supply chain. A study by the American Chamber of Commerce in Belgium (AmCham Belgium) underscores the relevance of American companies for the Belgian logistics sector, but also highlights a number of concerns.
For its report, AmCham Belgium carried out a survey among US companies that have developed logistical operations in Belgium. “Logistics is a field that sometimes doesn’t get the attention it deserves”, says Marcel Claes, Chief Executive at AmCham Belgium. “This is strange, since the sector generates 7.6% of the GNP and 8% of all employment in our country.” In other words: the logistics sector is an important source of economic activity and job creation. And the sector’s growth shows no signs of stopping.
10 % of the jobs in the Belgian logistics sector are with US companies. Since the modern supply chain is remarkably complex, there are jobs available for people with different levels of education. The supply chain is characterised throughout by an intensive collaboration between stakeholders. The AmCham Belgium survey shows that US companies rate highly the importance of Belgium as a logistical gateway to Europe. The majority of US companies in our country have plans to invest further in their logistical activities in Belgium.
“The success of Belgium as a logistics hub can be largely attributed to our geographical location”, explains Claes. “The proximity of clients is important in this. A great many US companies have developed a long history in Belgium.” When US companies establish themselves it is not with a focus on the local market - they view Belgium as a gateway to Europe. 60% of Europe’s purchasing power is located within a radius of 500 km around our country.
In addition to its location, our country’s well-developed transport infrastructure plays a key role. Belgium is efficiently accessible via harbours, airports, roads, railways and waterways. This makes it possible for the logistics sector to make full use of intermodal transport.
Belgium’s third advantage is its abundance of well-trained logistics personnel. “This is something to keep an eye on, however”, says Claes. “It is important that we continue to invest in education and training.” US companies also view the multilingual tendency of Belgian workers as a big plus.
Our country’s logistical advantages are internationally known and valued. Belgium is sixth place in the World Bank’s Logistics Performance Index and tenth in the World Economic Forum’s Enabling Trade Index. Marcel Claes: “This positive standing is not only down to the strong development of the logistics network in Belgium, but also the great diversity encountered in the sector. In our country there are industrial players producing locally and distributing via Belgium as well as logistical service providers focused on transport, storage and added-value services.”
The growing volume of logistical activity in Belgium and the advent of new technologies and business models stand to offer our country’s logistics sector a plethora of opportunities going forward. But there are also some points of concern. “US companies are concerned about the evolution of mobility and the employment market”, says Claes. “These are two factors that have a negative impact on logistics.” In particular regarding the increasing congestion on our roads, the high labour costs, combined with employment legislation that leaves little room for flexibility. “The enormous potential of the Belgian logistics sector is beyond dispute”, concludes Claes, “but in order to grow further and become a world leader, Belgium must above all continue to invest and innovate.”
Interested by the full study?
Technology holds the key to sustainable logistics
Belgium has the greatest density of logistics flows in the world but there is an urgent need for greater efficiency. Disruption poses a challenge even in the logistics sector. However, the Physical Internet (PI) might hold an answer to fluctuating consumer demand. On the Physical Internet, all logistics service providers are connected and share infrastructure and data.
Belgium is known as the logistical gateway to Europe. Logistics companies serve the European market via our harbours, airports, roads, rail network and waterways. “I am convinced that the logistics sector in our country can continue to grow”, says Alex Van Breedam, CEO of Tri-Vizor, a company that specialises in harmonising supply chains. “But in order to do so the sector must undertake urgent action.”
The logistics sector faces a number of challenges. The World Economic Forum calculated that one in four trailer trucks is driving around Belgium empty. The other three are filled to only 57% of their capacity, on average. “These figures are only getting worse”, says Alex van Breedam. “This comes as a consequence of consumer behaviour.”
Although the volume of consumption is increasing, the way in which we consume is fundamentally changing. Consumers now buy more online and in smaller quantities. This leads to more transport activity but smaller volumes.
At the same time, the average speed of transport trucks has strongly declined in recent decades and the average age of drivers is increasing. “And so a paradox has emerged; the demand has never been higher, but the logistics sector is struggling to formulate the right response.” Breedam sees a potential solution in the development of the Physical Internet. “In the past, companies established data lines between each other. This ultimately resulted in the internet, where everyone is interconnected. Applying this idea to transport could offer a solution to the present issue, by pooling freight, organising return trips at full capacity, and so on.”
A solution for the present issues in logistics might also be found in new technologies. “3D printing, among other technologies, offers great opportunities in this regard”, says Raoul Leering, Head of International Trade Analysis at ING. “The application of 3D printing could change certain logistics flows completely.” When companies succeed in producing on a large scale with 3D printing, the drive to outsource production to low-employment-cost countries will diminish, also changing transport needs. After all, 3D printing offers the possibility to produce closer to the customer, reducing the logistical burden. So far, 3D printing is not capable of mass manufacturing. However, it does provide solutions to specific niche areas.
“This is already a reality for us”, says Mathijs Luts, EMEA & India Supply Chain Director at Abbott. The company produces medical solutions, such as heart valve prostheses. “In the past, production took place in the US, but now we make 3D prints locally, which we then transport to the hospital by courier. By printing in the hospital itself, we could even remove the need for transportation entirely.”
To tackle the challenge of the last mile, companies are investigating what advantages drones could offer. “There is certainly interest”, says Patrick Leysen, CEO of parcel service Parcify, a subsidiary of bpost, “but in practice there is still a lack of clarity regarding the legislation. Plus the transport capacity of a drone is currently very limited.’’ Testing is nonetheless taking place in various locations. In Switzerland hospitals are transporting blood bags using drones.
“We produce defibrillators, among other things”, says Luts. “We are investigating whether it is possible to transport such a device by drone. This could be advantageous in places not easily accessible by car, such as festival grounds. These examples go to show that innovation is more essential than ever for the logistics sector. “Customer experience in particular will be decisive in this”, Leysen states. “Today, logistics is still largely invisible, but is gradually becoming a visible part of a product.” This is the case, for example, when a company not only delivers the fridge the consumer has ordered online, but also installs it in their kitchen.
Apart from possible technological disruption – from 3D printing, drones, robots and cobots, for example – technology can also help to reorganise existing logistics flows and provide an additional boost to the sector. “Technology is essential for the future of logistics”, says Leysen. “Digitisation first and foremost offers opportunity. Half of bpost’s turnover is derived from new technology, not from the traditional postal services.’’ Furthermore, it’s not crucial that the company develops that technology by itself. “It’s a matter of who makes the best use of it”, says Leering. “The transporter who is the first to launch a platform to optimise the fill rate of its trucks stands to dominate the market.”
In this way, technology can drive the market forward, but a strong link with the traditional logistics world remains an absolute necessity. “Harbours and airports remain essential in facilitating growth over the next 25 years”, says Luts. They are indispensable elements in the development of the Physical Internet. “We already have the infrastructure and the knowledge”, concludes Breedam. “Now we must dare to be decisive – the government and the various sectors and companies must put their heads together.”