Logistics sector regains traction in Germany | Business| Economy and finance news from a German perspective | DW | 01.09.2010
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Logistics sector regains traction in Germany

As industrial production and exports recover, so too is Germany's logistics sector. But modern freight companies need global networks to thrive, as well as technology and young talent to improve service efficiency.

Port of Hamburg

Germany's logistics branch is moving again

Germany's logistics sector is surging back to capacity as the country's export-heavy economy regains momentum. The global recession had caused a 9-percent slump in turnover during 2009.

Some experts say the industry needs to be more efficient and globally oriented, and that it needs to attract a new generation of workers. But with estimated freight volumes increasing by 6 percent on roads, 7 percent at sea, 11 percent on railroads and 19 percent by airplane, 2010 seems to be shaping up well.

During the worst of the economic crisis, entire fleets of trucks were left idle, dozens of freight ships were 'parked' in river inlets and cargo planes were grounded. Global trade atrophied by 12 percent in 2009, and even powerful freight companies were unable to avoid the effects.

Lufthansa Cargo's Andreas Jahnke

Lufthansa Cargo's Andreas Jahnke says air freight volumes are recovering

"The most unpleasant thing about the crisis was that there was a surplus of freight capacity… which caused prices to sink," Andreas Jahnke of Lufthansa Cargo told Deutsche Welle.

Global approach needed

The freight companies hit hardest by the crisis were those that operate according to the classic model of moving freight from one fixed point to another. Unable to compensate by offering peripheral services, these firms had no choice but to idle their vehicles and accept losses.

Companies that have their own warehouses or provide additional services - such as putting food directly onto grocery store shelves or office paper directly into photocopiers - fared somewhat better because they could recoup losses from diverse income sources.

Evi Hartmann, Director of the Fraunhofer Institute's Center for Applied Research on Supply Chain Services, believes a diverse business model will continue to be necessary for freight companies' survival.

"These additional services will begin to occupy a central role, and companies will be able to use them to differentiate themselves, expanding even further the spectrum of what freight companies offer," she told Deutsche Welle.

Evi Hartmann

Evi Hartmann is a supply chain services expert at the Fraunhofer Institute

But diversifying services isn't the only thing freight companies should do to become more competitive. They need to offer their services around the globe to meet many customers' needs.

Karl-Friedrich Rausch from Deutsche Bahn Logistics is convinced the density of a freight network is the key to its success.

"In many cases customers want to be able to say, 'I have a service provider taking care of logistics problems for me,'" he told Deutsche Welle. "We need to be in a position to say: 'Yes, we do that.' What we can't do is say: 'Well, we only do that via freight rail in Germany, or we only do that via road transportation in Finland.' We need to offer customers global solutions."

Technology to improve efficiency

Freight companies should also use technological advances to improve their overview of where certain goods are at any given point in time, according to Rausch. A third of all trips made by trucks in Germany are simply transporting empty containers, which costs fuel and CO2 emissions.

Experts agree technology is the path to a streamlined logistics network. Eventually bar codes will be replaced with new RFID chips, which will make it possible to store data about a shipment at every step of its journey. That data is sure to be useful to freight companies and their customers.

"The question is: 'How can the customer track goods sent on a global voyage?' That is a vital point of competition, which we need to keep in mind," Rausch said.

A DB Schenker truck on the road

Freight companies need to think outside the box to thrive

Next generation of workers needed

But in order to build the logistics networks of the future, freight companies will have to attract a new generation of talented employees. Logistics is Germany's third-largest economic sector, employing some 2.7 million people and generating turnover of more than 200 billion euros annually. Still, some 10,000 qualified workers need to be found.

Andreas Froschmayer, head of development at German logistics company Dachser, said the logistics sector suffers in part from an image problem.

"The branch doesn't even cross the minds of many students and trainees, although it's very interesting, because it has global cultural aspects which many other branches don't have," he told Deutsche Welle.

Author: Richard A. Fuchs (gps)
Editor: Sam Edmonds

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