ECONOMY

Logistics support in new bill

Fresh opportunities will be arising in the logistics sector, such as goods stations and logistics parks, and generally in the supply chain with the new investment incentives draft law, which strengthens the hand of companies or other bodies moving in this particular direction. The logistics market, which some confuse with warehouses, has flourished abroad. Stamatis Andrianopoulos, consultant at Planning, a company specializing in this field, testifies that it was the multinationals which started off logistics in Greece. «The significance of logistics is evident by the high ranking which logistics directors have in large companies nowadays,» he points out. In Greece, however, it is still at an embryonic stage despite the «bubble» of the last four years. In fact, the lack of proper stock or goods management is thought to be partly responsible for the high costs of some state corporations. Even in the private sector, the more profit margins shrink, the more interest enterprises have in better management of the supply chain, putting them closer to consumers. Particularly in agricultural products, many people suggest that the creation of «agrologistics» companies may help remedy the current situation. The absence of organized portage units, such as those for fruit and vegetables, is hurting both producers and consumers. Only recently did the Ministry for Agriculture and Development announce that the prices consumers pay for products are four or five times higher than those producers pay, when in the rest of Europe it is only twice as much. Farming cooperatives are known for not being able to organize the traffic of their goods in Greece, let alone in neighboring countries. As multinationals brought logistics to Greece, many independent firms were set up offering Third Party Logistics (3PL). The latter undertake the entire service of transporting products from production sites or a central warehouse to stores they own or cooperate with. However, the 3PL boom did not last long: Dozens of companies were created (for example, by former customs officers or truck owners), with the fierce competition even driving some of them to bankruptcy. The 3PL market today is estimated to be worth 150 million euros, spread in about 150 companies; just a few of them have their own storage rooms (above 20,000 sq.m.) The size of the small Greek market and large domestic companies’ hesitation over using services provided by 3PLs have slowed penetration by foreign players. The sole large 3PL firm, the multinational ACR Logistics (formerly Hays) has invested in Greece due to the big contract it had signed with the French multistore chain Carrefour. In Greece, though, several international portage companies from abroad are operating with a large presence in logistics. Apostolos Theodoropoulos, CEO at Optimum, a software company with a dominant position in installing IT systems on logistics in Greece, says Greek companies generally avoid contacts with 3PL companies: «As competition increases, they want to secure quality of service for the consumer,» he says. By contrast, Andrianopoulos believes that «multinational groups cooperate with 3PL firms because they do not wish to invest in permanent installations (warehouses) in Greece.» He added that until today there had been no intervention by the state to create large, organized logistics parks. However, the new investment incentives bill supports the creation of such parks and generally investments related to the supply chain. Andrianopoulos believes there are sectors which can create opportunities for logistics firms. He cites the examples of the current, but antiquated, fruit and vegetable portage model and state corporations. Only a handful of people are active in the so-called agrologistics (e.g. the multinational Bellafruta and ongoing efforts in the biological products sector). Supporting companies involved in agrologistics through the investment incentives bill will lead, according to Adrianopoulos, to «the reduction in intermediaries between producers and consumers, and of costs.» «Furthermore, the portage circuit will be under tax control due to the Competition Commission, averting problems of overcharging during purchases from the producer as well as the smuggling of multiple quantities under the same invoice. The modern principles of marketing will also apply to agricultural products, there will be further standardization (e.g. in packaging) and modern warehouses will be created,» Andrianopoulos says. There could also be electronic marketplaces, which would depress transaction costs further. Similar initiatives could be taken by several public corporations that are trying to lower their costs, ignoring the need for better management of their immense stocks, which are devalued, according to Theodoropoulos, because of the current stock management model.