Over the last couple of months, particularly October, there has been a noticeable increase in global logistics and couriers investing in Europe. In fact, this month we have published at least 2 news segments a week relating to the expanding logistics network in Europe. Hubs, ports and fulfilment centres are opening up all over the Netherlands, Belgium, Germany and France – but why is this? And how will it benefit small businesses trading with other EU countries?
European E-Commerce is Booming
Every year, the Growth Domestic Product (GDP) for E-Commerce in European countries increases. The GDP is the total annual value of E-commerce goods and services produced in a country. This is a key indicator of the number of online businesses that are growing in countries such as the Netherlands, Germany, France and Spain.
The graph below demonstrates the Growth Domestic Product for each country between 2016-2019.
Data source: Ecommerce Foundation
It is obvious from the graph that the number of E-commerce goods being produced in these countries is on a continuous and steady rise, and as trading cross-border is ever growing in popularity, it will bring with it new demands from E-commerce suppliers and their customers. Quicker, smoother, more reliable, and cost efficient. Sound familiar? I am sure that the logistics companies have a hard time tightening the screws, as the customers and the market itself are regulating the cost effectiveness.
Why are so many firms investing in Europe?
To meet these new demands of E-commerce businesses and their customers, global freight and logistics companies have been expanding their services to a number of locations in Europe. Just a few examples include ViaEurope, FedEx and UPS. ViaEurope, an E-logistics company, opened their second European e-Hub in Belgium last month. FedEx’s subsidiary FedEx Cross Border expanded its facilities to Venlo, The Netherlands, and UPS has expanded its Worldwide Economy Service so that it is now available to customers in Germany, France and the Netherlands.
In addition to these developments, global logistics firm Tigers is planning on building a 550,000 square foot fulfilment centre in Rotterdam, the Netherlands. DHL Express also recently opened a new €15 million air terminal, Tampere–Pirkkala Airport (IATA: TMP) in Finland to strengthen the country’s ties with the rest of Europe’s E-commerce market.
It is evident that these firms are investing in Europe in order to handle the ever-increasing flow of outgoing and incoming shipments to countries in a smoother and more effective way. E-Hubs are being built to better manage the sharp increase in the number of parcels handled per day. These hubs are using the cutting edge quite necessarily so, the newest of the best technologies to facilitate the operational process, and the steady flow of shipments, without any major inconvenience. The growing number of online businesses means that logistics firms have finally realised that this is a potential customer group which was formerly overlooked and now endeavours to include these merchants by making it more attractive for them.
What does this mean for EU-Based Sellers?
Basically, it is the core of a self-regulating market. And this market has seldom been as exciting as it is now. As logistics firms are bringing their services to new locations to meet Europe’s growing E-commerce demands, they benefit small online businesses as well as themselves. Companies based in the Netherlands who want to extend their cross-border reach will be able to do so easily via FedEx Cross Border’s expansion to Venlo: Venlo is conveniently located 2 miles from Germany’s west border, and is only a 40-minute drive from the border of Belgium. This means that users of the FedEx Cross Border service can easily and cost-effectively transport their goods across the Netherlands, Germany and Belgium.
Online businesses based in Germany, France and the Netherlands will also be able to make use of UPS’s new Worldwide Economy Service. The corner stones of this service combines affordable rates, with the management by one of the most reliable and flexible courier services in the world, it will be highly beneficial for small businesses looking to grow their online business. Abhijit Saha of UPS Europe has said “Our UPS Worldwide Economy service meets growing demand for low-weight, small size, cross-border shipments. We see this as an affordable solution for companies to take their e-commerce services to new markets around the world.”
Therefore, you could say that the market is changing. The rise of E-commerce brought about a rise in business of small parcels with a higher frequency and it almost replaces the cargo solutions of big shipments that are not so frequent. On the other hand, the location itself in Europe is also a thing to remember. The upcoming event or the delay of the upcoming Brexit had a lot of logistics firms grow grey hair (and lots of them) as there was talk about customs clearance, and an absolute chaos in the big ports and big hubs of Europe, such as Frankfurt am Main, Paris Charles de Gaulle, London Heathrow, Amsterdam Schiphol to name just a few of the really big ones. So the choice of Venlo and also parts of Belgium, being reasonably close to Frankfurt and Amsterdam, makes perfect sense.
Overall, the high number of logistics firms focusing on the E-commerce market and expanding their services to Europe opens up many opportunities for small and medium businesses. At the end of the day, you could say that the surge, massive growth of the European E-commerce market benefits the sole trader and small to medium ventures. Effectively this trend is also reflected in the rise of smaller and yet equally successful ventures which still is happening. Again, that is beneficial in itself for the possibilities for each and every individual intending to use e-commerce as a single sales channel but also as an add-on to existing physical stores. It is not only a growth market, but more so it is a market of opportunities.
If you are an online business ready to make use of the chance of E-commerce, and ready to motorise your growth across Europe, please contact us today – at J&P Accountants, we specialise in EU VAT compliance and offer expert advice to online businesses who trade across Europe.
Give us a call on 0191 378 0287, speak to one of our advisors, or drop us an e-mail to vatservices@jpaccountant.com.
