E-commerce-related retailers like Amazon are more and more competing on the speed of their deliveries and thus, they are moving their distribution hubs closer to population centers. But for all kind of companies it is important to decide where to establish distribution centers in the evolving European Union. But where to establish a such a distribution hub?
A research from 2013 states that depending on the companies’ main goals certain regions fit best. They divide in companies focusing on manufacturing, companies focusing on distribution and companies balancing the two activities and their decisions should be mainly based on “Infrastructure & Accessibility”, “Market access” and “Operational Base Costs”.
- Companies with balanced distribution and manufacturing goals – Look to the traditional northern European hubs:
These companies weight all three factors equally for their decisions. Thus, cities like Düsseldorf and a lot of Belgian and Dutch cities offer an excellent level of infrastructure, a favorable business climate and skilled workforce pool, a developed logistics market and the proximity to major European seaports and airports as well as to the largest consumer markets.
–> Best locations for hubs: Dusseldorf, Antwerp, Rotterdam, Brussels, Hamburg
- Distribution focused companies – Look at the Blue Banana:
For these companies, the proximity to final consumers and a developed infrastructure network is very important. The “Blue Banana” includes cities from Antwerp until Milan which are not only located in the heart of Europe but also in the most densely populated and richest area in Europe and therefore ideal for companies seeking to reach the largest number of customers as quickly as possible. From Antwerp, for example, approximately 143 million people can be reached by lorry within 9-hours. But also high-end manufacturing is getting more important in Western Europe.
–> Best locations for hubs: Antwerp, Rotterdam, Dusseldorf, Brussels, Hamburg
- Manufacturing focused companies – Look at the East:
As costs is the main determinant in the manufacturing sector, Central Eastern Europe with cities like Kiev or Istanbul is most interesting for manufacturing focused companies like BMW, Daimler or Siemens due to lower labor costs. Although there are relatively low margins, this hub is also suited for pan-European distribution activities.
–> Best locations for hubs: Kiev, Istanbul, Bratislava, Upper Silesia, Sofia
Of course, real world decisions like where to locate a distribution center is more complex and influenced by a number of additional factors like trade barriers constraints. But it provides a nice overview of the relative strengths and weaknesses of thelocations.