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LONDON-The European distribution market is being driven by large logistics companies and cross-border retailers who are looking to either consolidate or strengthen their supply chain. A new report by FPDSavills also predicts that demand for sheds in Central and Eastern Europe was set to rise as manufacturers seek to relocate to cheaper regions.

As planning regimes around major European cities become tighter, operators have turned their attention to secondary locations, the report reveals. The attraction is larger sites, easier labour access, lower costs and access to most modes of transport, particularly those that are centrally located within the new European Union or are supported by EU grants.

Companies such as TNT and Schenker have opened new hubs in the region to take advantage of such opportunities. But FPDSavills warns that this trend may be challenged by the environmental threat and cost of long-distance road transportation.

The report notes that shifting international freight from road to other modes is a priority emphasized in the EC’s White Paper on Transport, with a budget of euro 115 million (US$141.2 million) earmarked to help achieve this between 2003 and 2007. The EC is also financing the development of trans-European networks for transport at an estimated cost of almost euro 600 billion (US$736.4 billion). Without such measures, the EC observes that road-freight transport in the EU is set to grow by about 50% by 2010 and cross-border traffic to double by 2020.

The major developers are committed to providing multi-modal distribution parks in Europe, with Gazeley developing Magna Park-branded hubs in Germany, France, Belgium, Spain and Poland; and ProLogis developing pan-European facilities, its latest plans including Sweden and Denmark.

“Nevertheless, the modal shift in Europe is happening only slowly,” says FPDSavills, “and it will require a shift in thinking amongst the decision makers to complement the EU initiatives.”

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