The latest study of the NBG Research Department focuses on the sector of land logistics and the effect of dynamic forces - such as the presence of COSCO in the port of Piraeus and the development of 4PL networks – as well as factors hindering the growth of the sector (mainly concerning the institutional framework). The main conclusion is the significant potential for growth in the sector in the next 5 years.
The land logistics sector has proved resilient during the crisis in Greece, with its contribution to GDP reaching 2.9 per cent in 2016 from 2.5 per cent in 2008, thereby gradually closing the gap with the European average of 3.4 per cent. According to a field survey of a sample of 200 small and medium-sized land logistics companies, technology seems to be the main factor giving momentum to the sector in recent years, as reflected in practically all the key indices (demand, export-orientation, employment). However, the overall positive picture hides certain significant disparities:
- medium-sized enterprises stand out compared with smaller (and larger) ones in certain key business figures (sales and deleveraging) as well as financial ratios, leveraging their comparative advantages in terms of flexibility and competitiveness
- in terms of business activities, freight handling activities (warehousing, packaging, pricing etc.) offset the decline in freight transport. Specifically the Greek freight handling sector has been pursuing a course of gradual convergence with the EU average, while at the same time presenting a qualitative upgrade in services. On the other hand, Greek freight transport has been under pressure from falling demand as well as certain particularities in the sector. Specifically, the Greek road haulage fleet is comprised of vehicles that are old, relatively small and mainly own account - with Greece standing out as the European country with the lowest penetration of specialized logistics companies (21 per cent of freight compared with 70 per cent in the EU).
The outlook for demand in the sector appears positive, as over 10 per cent of manufacturing and trade SMEs state their intention to outsource logistics operations to specialized logistics companies in the following five years. Based on our survey we estimate a 30-40 per cent increase in demand, which could be even higher in case the lack of awareness in the business sector regarding the potential benefits of specialized logistics is addressed. Moreover, the land logistics sector should also benefit from a series of exogenous factors, with participation in wider 4PL networks and the enhanced presence of Cosco in the port of Piraeus expected to provide new stimulus over the coming five-year period. The institutional framework has been shown by our survey as a key factor to unlock this dynamic, since it seems to hinder about 40 per cent of logistics SMEs, while 11 per cent of the sector views further liberalization of road transport as offering greater opportunities to their business.