Sorin Preda, Global Vision: Romania, a key gateway for companies seeking to establish a presence in EMEA

What are the main opportunities and challenges in the infrastructure and logistics sector in 2024?

In the European landscape, Romania continues to be a key gateway for companies seeking to establish a presence in the EMEA markets. Foreign companies are capitalizing on this and expanding their operations to provide effective solutions and availability at a much lower cost. Constanța Business Park is the perfect example of Romania’s allure for investors, especially in the realms of re-shoring, near-shoring, and friend-shoring.

The already announced infrastructure modernization plan further enhances the demand and plays a vital role in attracting new capital investments, particularly within the industrial and logistics sector. However, the current outdated infrastructure acts as a hurdle, impacting the smooth flow of goods and services. Ports and terminals lack the necessary technological advancements for efficient cargo handling, leading to delays and inefficiencies across the entire supply chain. Opportunities for the logistics sector will still include e-commerce growth. The increasing demand for fast, reliable delivery services has created opportunities for companies to innovate and expand their operations. Last-mile delivery remains a focus for innovation, with opportunities to improve efficiency, reduce costs, and enhance customer satisfaction through technology and alternative delivery methods. Global trade expansion continues to evolve, logistics companies can benefit from expanding into new markets and providing cross-border logistics solutions.

Even this early in 2024, we can already see challenges related to supply chain. The geopolitical instability is already adding new factors of stress. The situation in the Red Sea, where terrorists recently attacked commercial ships is one example, therefore the routes of maritime transport suffered, both costs and transit times have increased because now the ships have been rerouted through the Cape of Good Hope and thus bypass all of Africa and come to Constanta through Northern Europe. Because of this aspect, the current transit time for maritime transport from China to Romania is estimated at 50 calendar days port to port.

With increased focus on sustainability and environmental responsibility, logistics companies are under pressure to reduce their carbon footprint and adopt greener practices. This may involve investing in alternative fuels, electric vehicles, and optimizing transportation routes. Changes in trade policies, customs regulations, and international agreements can also have a high impact in the logistics sector. Companies need to stay abreast of evolving regulations and compliance requirements, which can be complex and vary by region.

Even though Romania remains a highly appealing market within the EU, providing advantageous returns on invested capital, investors are now approaching new developments with heightened scrutiny, placing greater emphasis on understanding the implications of these advancements. Regarding the rising costs associated with capital, construction, and operations—encompassing human resources, transportation, and IT—investors remain cautious, uncertain whether the rise in expenses can be offset by corresponding increases in revenue.

Moreover, it is essential for us to maintain a vigilant oversight and remain agile in adapting to the changes anticipated with the forthcoming elections in over 60 countries. Elections are poised to exert a notable impact on market dynamics, and our ability to adapt swiftly will be crucial in navigating potential shifts in the business landscape.

Read the full interview HERE.