From a consumer perspective, Bosch believes that the future is bright for modern distribution centres, especially if you look at the growth rates in fresh and frozen food sales over the past five years. "They are going really well, and have been a real drive for development in rural areas.”
This, of course, affects different areas in the world in different ways. Looking at modern retail chains, “The Middle East and Africa are growing from a smaller base, and Asia, of course, is also a big growing region; meanwhile, growth in Western Europe lies below 1%. China represents 1/3 of Asia-Pacific, and the rise in fresh and frozen consumption here is really impressive.”
While operating in China entails difficulties for European and U.S. logistics operators, Mr Bosch believes that the market still offers many chances, simply because of the demand. "China is really trying to open up to food imports from Europe, and in fact, they are making great investments to improve the rail connections. Cities along the road are interested in becoming hubs, and I’m convinced that, in five years, transit times will be reduced to just 8 or 9 days.”
Meanwhile, however, the trade barriers imposed by Russia have naturally been a big hurdle, with a particular impact on prices, which in the case of the Netherlands have almost halved. “We’ve had to be pragmatic, to realise that this is only temporary and to look for alternative routes, and I would say that we are already in the recovery stage,” states Bosch.
In the face of these issues, he assures that many European firms have switched their strategies to focus more on value rather than volume; to rely less on cost-effectiveness and more on innovating and offering unique products, and for this they need long-term partnerships, which involves also the logistics side.
The adoption of such strategies is also strongly motivated by consumer demands, especially taking into account the growth of on-line trade. “I think we are now at the turning point where on-line is really going to take market share away from retail and supermarkets, which of course will have an impact on logistics. There needs to be a whole new range of services and there’s still a huge gap to fill, considering many prefer to outsource.”
The advantage of on-line is that it offers no limitations when it comes to shelf space. This means that there is much greater flexibility required in logistics, as well as diversity of distribution channels. It also means that the focus moves away from appearance and more on price and volume, and this is also something that can potentially affect the logistics, according to Bosch.
For operators, the bottom line is that on-line trade generates lots of data, which can be used to analyse and predict consumption patterns. "That’s really where the value is, and I believe logistics firms have a huge opportunity to understand where demand is really going, to find out if you are focusing on the right food categories or regions. Knowing what the consumer wants, you are able to deliver higher levels of traceability, safety and health,” concludes Bosch.