In 2016, who was second in the Logistics Performance Index of the World Bank behind Germany? Not Belgium. Not the Netherlands either. It was the Grand Duchy of Luxembourg. How did this small country - without direct sea access, and enclosed by her large neighbours - make that happen? We asked Malik Zeniti, senior manager at Cluster for Logistics.
Malik, what is Cluster for Logistics exactly?
Cluster for Logistics is an organisation that was founded by the Luxembourgian Chamber of Commerce after the economic crisis of 2008. Both the economy and the government realised that changing tack was crucial if we wanted to attract new international players and bring more investment into Luxembourg. Cluster for Logistics is a federation by and for economic partners, with the goal of strengthening the position of Luxembourg as an intercontinental logistics hub in Europe. At this point, we have over 200 members: logistical service providers, 3PL and 4PL, and government. Naturally, WDP is also part of that. (laughs)
What are the advantages of Luxembourg as a logistical hotspot?
Of course, we are a small country enclosed by land, which is different to Belgium and the Netherlands. Furthermore, we do not have a centuries-old tradition of ports and maritime harbours. However, we are right in the middle of the large Western European consumer market. This is why we view the entirety of Europe as our domestic market, and why we are open to all types of transport. We are multi-modally connected: the Moselle, the motorway connections to Germany, France and Belgium, and we have the sixth largest cargo airport in Europe. The new transshipment terminal in Bettembourg is state of the art.
We can reach 60% of the European consumer market via road within 8 hours. Apart from that, we have also put a lot of work into our railway connections. At the moment, a company can use direct railway transport from Luxembourg to Antwerp, France, Spain, Turkey (via Trieste), Basel and Great Britain (via Zeebrugge). A train leaves for France and the Iberian Peninsula four times a day. Currently the government is even working on a similar connection to China, through Poland. In doing so, we hope to cut the maritime shipping time in half in the future: twenty days by train instead of forty days by boat.
Do you notice anything of the evolution towards e-commerce?
Absolutely. Many companies have underestimated this and are experiencing more evolution than expected. We also see this in the field of investments. As you know, Luxembourg is also a country for investors. We notice that 15% of all investments are linked to e-commerce nowadays. A number that surprised us, too. The design and size of the logistics is changing due to e-commerce, which is why you need more people and a higher level of automation. The evolution may also be an explanatory factor for the strong growth of our airport. Because of the delivery times required for e-commerce, air cargo is often the best option.
Is the room for additional logistical developments limited in a country like Luxembourg?
Not really. Over the last few years, 15 ha of logistical zones have been added. Currently, there is about 10 ha provided for additional development, with the option for a further expansion of 25 ha. The Master Plan can lead to more room being freed up for logistics and warehouses. The airport will also experience economic growth, which will lead to the search for more logistical areas.
Are there any weaknesses or threats for the further development as a logistical hotspot?
When people think of Luxembourg, they do not immediately think of a logistical hotspot. More of a financial hub. But that financial growth is likely to slow down in the future. What we do is make the Luxembourgers aware that logistics and LogiTech, in conjunction with FinTech, are the future for Luxembourg. Data centres with fast processing speeds are also playing an increasingly important economic role. Transport needs this. A European project surrounding data centres will play an important role in Luxembourg over the coming years.
Combining the growth of the Luxembourgian population, the increasing importance of sustainability, and the need for expansion in the field of logistics will be a great challenge too. Perhaps we should start considering building upwards. When will we see the first “double-decker” warehouse? (laughs)