Romania’s Logistics and Transportation Market

A survey conducted by the daily Ziarul Financiar shows that Romania’s transportation market, estimated at 6.5 billion euros in terms of goods freighted and at 2 billion euros in passenger transportation, is in its seventh year of growth. This market has also been sustained by logistics companies, which consolidated their business and made investment in new logistic centres and storehouses.

With transportation costs on the rise, more and more companies are expected to decide in favour of regional production, while the low costs in Romania are expected to attract fresh investors. A bigger output also means an increased demand for services in the logistics and transport area. As new investment popped up, such as Daimler’s in Sebes, central Romania, or Bosch’s and Delonghi’s in Cluj, western Romania, both logistics and transport companies are expected to invest in trucks and storage facilities to cope with the demand. Furthermore, local carriers are expected to go global, expanding their activity towards Western Europe and Asia, where they can churn out bigger profits. Here is the vice-president of the Romanian Association for Logistics, Ion Lixandru, with more on the issue:

Ion Lixandru: “It is clear that logistics is on an upward trend, and transports will develop, too. With or without infrastructure, things are going in the right direction and I see a two-digit development rate for freight transport, because of the market demand. At this moment, the market is ripe; on-line sales picked up, and so did water distribution logistics. And a growing delivery market has offset the underdeveloped national infrastructure covered only by the Romanian Post Office, and as a result a private market has emerged. A very good thing is the capital inflow from abroad, which comes together with logistics know-how, delivery & banking solutions, all of which connects us better to the European network.”

Ion Lixandru also further talked about the latest developments in the market:

Ion Lixandru: “The logistics market in terms of the values of goods freighted is somewhere around 28-30 billion euros, without taking into consideration the transport of electricity, gas and fuel. We’re talking about the consumer market, so to say, not including the national networks.”

The vice-president the Romanian Association for Logistics has also mentioned the opportunities Romania offers in the field.

Ion Lixandru: “Consumption has been on the rise in the past two-three years, but Romania is also a producing country. In the central region, there are several car parts producers, which are connected to Sibiu by means of a motorway, even if there is an 80-kilometer section unfinished. The southern part of Romania has an advantage, namely the infrastructure there, and another important thing is that the Black Sea port of Constanta is developing with great benefits for freight transport. Romania’s south is also growing through the investment in the car-making industry in Craiova, where a Ford plant is located. However, the road infrastructure is still inadequate and we need a timetable so that goods can be transported at night as well. And what’s also important is to ease traffic on the Danube, in the ports of Orsova, Corabia, Turnu Magurele, Giurgiu, down to Calarasi.”

But could the cheap labour in Moldavia, eastern Romania, be an asset, in spite of the region’s notoriously under-developed infrastructure?

Ion Lixandru: “Unfortunately the answer is no; because these are some of Europe’s poorest regions and they get no investment. Except for a few areas, the region has been constantly avoided by investors. And we are presently living this paradox, that German investment has been concentrated chiefly in central Romania, in cities like Brasov, Sibiu, Sebes, Deva, preferred by some of Europe’s most successful companies like Mercedes, Audi and others.”

Ion Lixandru has also made some predictions over the regions that will see development in the following two-three years.

Ion Lixandru: “I see opportunities and a need for development and growth in the region of Oltenia in southern Romania, and in Moldavia, where we also expect a boom in tourism. Besides agriculture, tourism is expected to gain momentum and that will bring much more benefit than expected.”

Road transportation accounts for nearly 84% of the logistics companies’ turnover. Rail transportation stands at 3%; 8% is covered by naval transportation while the rest comes from air transportation.