Download Logistics sector in Hungary

Logistics sector in Hungary
Through Hungary to North and South, East and West
Hungary offers several benefits to foreign companies re-locating here. Among
these one of the most important advantages is Hungary’s location in the middle
of Europe both figuratively and actually, and in terms of history, culture and
economy too. North and south, east and west can all be easily reached from
here. Therefore Hungary may serve as a base for further expansion for all
investors who cast an eye on more remote areas and cherish greater (business)
objectives. Thanks to Hungary’s EU membership investors settling here find
themselves on the Eastern and Southern borders of a market of 455 million. The
central location of the country is strengthened by the fact that it is adjacent to
four non-EU countries, providing an excellent position for further expansion.
Many companies have recognized this advantage, among them Deutsche
Telecom (which used its Hungarian subsidiary to expand in South-East Europe
and gained a strong foothold in Macedonia) or METRO (which targeted Croatia
from Hungary).
Increased importance of central role
Hungary has long endeavored to become a regional business, financial and
logistics service center. Today more and more large foreign corporations realize
that it is worthwhile operating their regional centers from Budapest or another
Hungarian city in various fields, including logistics. Data also confirm this
statement. According to a KPMG survey conducted in 2003 80% of companies
using logistics services acknowledge the importance of logistics outsourcing and
the strategic and business opportunities it offers. Logistics outsourcing is a
clearly successful business structure in Hungary with four-fifth of the companies
who have chosen outsourcing declaring themselves satisfied with the results.
Logistics outsourcing seems to be a permanent tendency: those who have
outsourced their logistics activity do not want to become re-involved in the
already outsourced activity – found the KPMG survey.
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Advanced logistics sector
The first large logistics service providers entered the Hungarian market in the
middle of the nineties. Initially only a few multinationals took advantage of the
possibility but in the last 3-4 years outsourcing has become extensively used.
Recognizing the growth of the market the already present service providers
carried out huge investments to modernize their assets (warehouses, fleet,
information technology). At the millennium other large corporations entered the
market through substantial green-field investments. This all shows that the
advanced state of the Hungarian logistics sector meets all demands.
Link to the European Union
Currently there are several hundred high-quality Hungarian and multinational
logistics service providers available in Hungary. In terms of the development of
this service there is a favorable competition on the market. Companies only
dealing with transportation, customs and warehousing face the fiercest
competition. The market of companies providing logistics for special products
and complex logistics services is growing fast. One of the key driving forces
behind the market changes is Hungary’s EU accession: globalization will
continue, customs regulations and authorization procedures will be simplified
and Hungary will become the Eastern border country of the EU in terms of
logistics. Benefits arising from Hungary’s geographical position will also
increase: Hungary’s role as a transit country will further grow and will be very
special as it borders four non-EU countries.
1. Budapest Region
 Soroksár - BILK – under construction
 Nagytétény - Harbor Park - functioning
 Csepel - MAHART Szabadkikötő - functioning
2. Western Transdanubium Region /Sopron - GYSEV Rt. Raaberlag
Directorate - functioning/,
3. South-Eastern Region /Debrecen - DELOG Kft. - functioning/,
4. Central Transdanubium Region /Székesfehérvár - LOGISZTÁR Kft. functioning/,
5. Northern Tisza Region /Záhony – under organisation/,
6. South-Western Region /Nagykanizsa - Nagykanizsai Gazdaságfejlesztő
Kht. – under construction/,
7. Central Plains Region /Szolnok - LOGISZOL Kft. - under organisation /,
8. Southern Plains Region /Szeged - PRAELOG Kft. - under organisation /,
9. Southern Hungary Region /Baja - under organisation /,
10.Northern Transdanubium Region /Győr - under organisation /,
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11.North-Eastern Region /Miskolc - under organisation /.
Network of industrial parks
Since in the last few years the creation of an industrial park network has been
considered very important in Hungary there is no town in the country that does
not have an industrial center in its neighborhood of 30 kilometers at the
minimum. When the national network of logistics service centers was set up one
of the key criteria was also the accessibility of one base from everywhere in a
region. Companies relocating to these parks can enjoy all the benefits ranging
from production to delivery to the target location and a wide selection of
services.
Industrial parks in Hungary
1997 1998 1999 2000 2001 2002
Number of industrial parks
28
Area of industrial parks (ha)
2350 4950 6800 7640 8100 8800
Companies in industrial parks in %
21,5
30,0
34,5
32,9
Number of companies in industrial parks
320
685
980
1495 1760 2152
Employees of companies in industrial parks
27
(thousand people)
59
82
110
115
Value of investments by companies in industrial
166
parks (billion HUF)
316
427
662
1003 1264
Sales revenue of companies in industrial parks
619
(billion HUF) *
930
1651 2665 3294 3483
Export sales of companies in industrial parks
514
(billion Ft) *
698
1281 2211 2560 2596
Share of export revenues (%)
75
78
83
75
112
133
83
146
38,4
78
160
40,1
128
75
* 1 USD cca. 230 HUF
Source: Ministry of Economy and Transport
Wide range of subsidies
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Companies setting up logistics centers can choose among several subsidies.
Hungary’s regional role will further increase through the development of
logistics bases in the country and the use of its services. Logistics centers now
provide services to the players of the economy that are attractive to small and
medium enterprises as well as larger companies. By leasing long-term or
purchasing a part of the property companies can access high-quality complex
services required for warehousing, finishing, distribution, packaging, customs
and dispatching – and this way companies will be able to cut costs in the longer
term.
Also offering PPP
In the opinion of the Hungarian government if the role of logistics defining
competitiveness and the role of industrial parks in the development of the
economy jointly prevail the results will be much improved. An attractive
investment opportunity is Public Private Partnership: in the logistics centers it is
possible to receive external business partners who may join the business as a
part owner. It means that nationally significant logistics centers are also the
locations for Public Private Partnerships i.e. the land is purchased and the
external infrastructure is constructed with the help of the state and local
authorities while the majority of the logistics facilities are built using private
capital.
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