Trends in European Logistics: Opportunities for Slovenia

1. Trends in European logisticsPortorož, Slovenia, September 26th 2008 Jan Paul Olijslager Project manager EMEA

2. Contents • Introduction HIDC • Netherlands logistics industry (facts and figures) • Benchmark report • European Supply Chain Structures • Chances for Slovenia

3. HIDC: The organization • Holland International Distribution Council • Private non profit organization representing 450 members • Founded by the Dutch logistics industry in 1987 • With full backing from the government • Mission: • Improve the competitive position of the logistics industry in The Netherlands

4. Our services to foreign shippers Feedback and advice on European supply chain design (Logistics) partner selection / match-making services ‘Fact Finding Trip’ in the Netherlands to meet potential partners Assistance in every step – now and in the future Free of charge and completely confidential

5. Contents Introduction HIDC Netherlands logistics industry (facts and figures) Benchmark report European Supply Chain Structures Chances for Slovenia

6. Importance of Logistics to Dutch economy Economic value of Dutch logistics industry: Total cost 9.4% of GDP Added value 4.4 % of GDP Total cost of logistics € 43.6 billion Added value € 17.3 billion

7. Totalemployment Trade relatedactivities 6 mln people 1,75 mln ( 29%) Logistics 530.000 (9%) Direct employment in logistics

8. Netherlands market leader throughput European seaports (2007) Volume Port of Koper: 15.363 million tons Source: Port of Koper Annual report 2007 Total throughput Hamburg – Le Havre range: 1.090.277 million tons Source: Port of Rotterdam

9. Rotterdam market leader European container ports (2007) Market share Port of Rotterdam: 19% Volume Port of Koper: 305.648 TEU Source: Port of Koper Annual report 2007 Source: Port of Rotterdam x 1000 TEUS (twenty feet – Equivalant units)

10. Hinterland Connections Inland shipping Road Rail Pipeline Shortsea - feeder

11. Position Port of Rotterdam 52 weekly deepsea sailings 170 weekly shortsea/feeder services 236 weekly rail shuttles 370 weekly barge sailings

12. Customs authorities Efficiency and effectiveness of Customs and other border procedures 5 = Very Good 0 = Very Bad Source: World Bank, Connecting to Compete, 2007

13. Netherlands: Excellent and well developed logistics industry > 200 international logistics services providers >12.000 transport companies Full range of related services THE NETHERLANDS, YOUR GATEWAY TO EUROPE

14. Examples of EDC’s in the Netherlands

15. The Netherlands, since long the Gateway for Europe Central location within the European market Excellent sea- and airport facilities Support of the government Taxation advantages Extensive infrastructure with fast connections Excellent and well developed logistics industry Internationally oriented business community Flexible, productive and highly educated labor force

16. Contents • Introduction HIDC • Netherlands logistics industry (facts and figures) • Benchmark report • European Supply Chain Structures • Chances for Slovenia

17. Benchmark approach – locations

18. Benchmark approach – cost and quality

19. 2 Case profile Hi-Tech Products : instruments and components Product characteristics PG1 PG2 PG3 - weight (in kg) : 20 8 10 - volume (in m3) : 0.15 0.02 0.04 - value (in €) : 400 750 150 - # of SKUs : 250 100 30 - demand (in units) : 1,500,000 500,000 500,000 - Turn over (in €) : 600,000,000 375,00,000 75,000,000 Supply chain overview (units): • Markets • Dealers • Distributors 16% 98% LTL/FTL • Austria : 2% • Benelux : 6% • C-Europe : 1% • Denmark : 8% • France : 16% • Germany : 22% • Italy : 12% • Scandinavia: 5% • Spain&Port : 9% • Switzerland : 1% • UK&Ireland : 18% 49% 2% 35% • Sourcing regions • C-Asia : 0% • Far East : 55% • USA : 10% • UK : 0% • W-Europe : 10% • C-Europe : 25% Optional RDC’s • UK • Spain • Czech rep. • Annual volumes: • # of outbound order lines : 80,000 (EDC) • # of outbound shipments : 10,000 (EDC) • Inventory turns : 12 (EDC)

20. Benchmark results Example High Tech Case

21. Contents • Introduction HIDC • Netherlands logistics industry (facts and figures) • Benchmark report • European Supply Chain Structures • Chances for Slovenia

22. Centralized European Distribution 1990’s: from NDC’s to EDC Cost savings in transport and warehousing More efficient supply chain THE NETHERLANDS, YOUR GATEWAY TO EUROPE

23. Market developments in Europe • Further expansion of European Union • Road pricing and delivery restrictions • Environmental awareness growing • Inbound flows are expected to grow so strong that there will be sufficient growth for most ports • Product variety grows • Product life cycles decreases • Customer order lead time decreases • Working Capital decreases

24. European supply chain structures Direct distribution Source EDC EDC structure: Line hauls Cross-docks BDC/ RDC Source BDC/RDC structure: RDC Source RDC

25. = DC = DC = X = X - - Dock Dock Future Supply Chain Structures Centrally managed regionalized networks Integration East and West Combination of global Sourcing and sourcing from Eastern and Western Europe

26. Content • Introduction HIDC • Netherlands logistics industry (facts and figures) • Benchmark report • Future European Supply Chain Structures • Chances for Slovenia

27. Chances for Slovenia There are enough reasons to expect that there will be a serious growth of logistics activities in the Central and South Eastern European region. Slovenia scores well on a number of important criteria where global manufacturers and traders base their decision on where to start up a logistics operation. However, there are still some important hurdles to take. Challenges • Which port area will be best equipped to take the lead in attracting the inbound flows into Central and South Eastern Europe, Koper or Constanca? • Will Slovenia be able to attract a part of the DC operations within Central and South Easterns Europe or will the competition (Czech, Slovakia, Hungary, Serbia and Romania) take the lead?

28. Chances for Slovenia PROS • Slovenia is first country in the CEE-region to introduce EURO • Deap sea accesibility for containervessels (up to 8000 TEU) • Multimodal connections • Road • Rail • Shortsea • Proximity to (part) of the European consumer and production markets. CONS • Will Koper be part of the deapsea sailing schedules of the main containerlines? • Multimodal connections • No barging • Absence of strong cargo airport in direct proximity

29. Where to make the difference • International orientation • Multilingual capabilities • Support of the government • Investment incentives • Taxation advantages (corporate tax, duties, VAT, income tax for ex-pats) • Cooperative attitude of the customs • Distribution infrastructure and availability of world class logistics service providers • Internet infrastructure

30. Contact us: NDL/HIDC - Holland Office Jan Paul Olijslager Project Manager EMEA and Asia Pacific E: j.p.olijslager@hidc.nl I: www.hidc.nl P.O.Box 660 2700 AR Zoetermeer The Netherlands T: +31 79 343 81 10 F: +31 79 347 92 17