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Transportation and Logistics in Hungary

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Transportation and Logistics in Hungary Transportation and Logistics in Hungary Sectoral Analysis Autumn 2005 ICEG EC Sectoral Analyses – Transportation & Logistics 2 Table of Contents Executive summary_______________________________________ 3 1. Trends in the European Union and in the region _______________ 4 2. Evolution of the sector in Hungary _________________________ 6 3. Market structure ______________________________________ 10 4. Regulation and policy measures __________________________ 11 5. Short and long term prospects ___________________________ 13 6. Sectoral SWOT analysis_________________________________ 15 ICEG EC Sectoral Analyses – Transportation & Logistics 3 Executive summary In the first half of 2005 the positive trend, namely the intensification of foreign trade in the EU started in the second part of 2003, contin- ued. It was supported by the dynamic increase of foreign trade of the NMS, which increased more than the EU average. Thus, the share of this region in foreign trade also grew. The value of the goods exported from the Central and Eastern Euro- pean countries increased and in line with that tendency, the role of logistics services augmented. The transportation and logistics market has grown by double-digit figure for several years which reflects well the dynamism of this market. In line with the increasing oil prices the costs of transporters also grew. The increase of oil prices seems to be a permanent process with which the actors of the sector have to reckon. In the first half of 2005 the transportation sector in Hungary reached a significant growth mainly due to the outstanding performance of the international transportation (approximately +25%). The annual growth of the sector was more than 18% which is significantly higher than the average of the previous years (2.5-4.5%). The role of the road is growing continuously in modal split figure of transportation, in line with the decreasing role of railroads. However, the share of road transportation is still lower than that of the EU- average. In Hungary, the share of road in transportation is 15%- points lower than the EU-average. The increasing role of road transportation is partly due to the signifi- cant investments in the road infrastructure. The length of the motor- ways in Hungary increased significantly in the previous years and that trend is expected to continue in 2006 too. There are four places in Hungary where significant National Logistic Centers are operated (in Budapest, Debrecen, Sopron and Székesfe- hérvár), while in case of the other 7 NLCs more development is needed to enhance the functioning of these places. Mainly because the demand on logistics services close to these places – or far from the capital city - is expected to grow. In case of transportation sector the role of small-sized enterprises is significant, mainly in road transportation. On the other hand, the EU accession and its result, namely the larger competition is expected to decrease the role of these entrepreneurs. Besides that, the large ac- tors of the sector plan to become regional actors, mainly because Hungary has an adequate geographical position. However, we must mention that the competition among transporters of NMS is increasing. In case of the trade between Hungary and Po- land, and Hungary and Slovakia, the role of those haulers which are operated in the trading partner is dominant. ICEG EC Sectoral Analyses – Transportation & Logistics 4 1. Trends in the European Union and in the region Positive tendencies In the first half of 2005 the positive trend, namely the intensification in 2004-2005 in of foreign trade in the EU started in the second part of 2003, contin- the EU ued. During the first eight months of the year foreign trade of EU-25 increased by 8% compared to the same period of the previous year in euro terms. …and also in the It was supported by the dynamic increase of foreign trade of the NMS, New Member which increased more than the EU average. Thus, the share of this States region in foreign trade also grew. This positive tendency is expected to continue in the future, thus the trade – and as a result, the trans- portation - between Western and Central Europe is expected to in- crease further. While the share of the four so-called Visegrad coun- tries (namely the Czech Republic, Hungary, Poland and Slovakia) in the foreign trade of EU-15 was only 2.5% in 1995, this figure in- creased above 4% in 2003. Modal split figures in case of the transportation of goods in the Visegrad countries and the EU 100% 80% 60% 40% 20% 0% Czech Republic Hungary Poland (2004) Slovakia (2003) V4 EU15 (2002) EU25 (2002) (2005H1) (2005H1) Road Railroad Inland waterways Pipelines Source: Eurostat, national statistics offices Road: winner, rail- Regarding the modal split figure in case of the transportation of road: loser goods, one can observe that the share of road transport is increasing while the share of other transports is decreasing. Accordingly, road transport has a dominant share in the EU. On the other hand, road transport has a much more dominant share in the old Member States than in the NMS. While in case of the EU-15, 75% of all transport (sea transport is excluded) is road transport, in case of the four Visegrad countries this figure is about 60%. In case of the latter countries, railroad transport still has a bigger role mainly due to the former (communist) regim. On the one hand, it is true that the role of railroad and the length of railways decreased significantly after the transition, on the other hand, the figures of the railroad transport – such as the role of railroad transport or the density of ICEG EC Sectoral Analyses – Transportation & Logistics 5 railways - are generally higher in the NMS than in the EU-15. Anyway, the role of road transport is expected to increase in the future in case of the NMS too, which will result in the further decline of the railroad and other transports. Probably, the biggest adventage of the road transport is that goods can be transported from house to house. Thus, despite the fact that the figures of railroad transport improved in many NMS in the first half of 2005 (such as in the Czech Republic or Hungary), the role of road transport increased further. Goods with higher The value of goods transported from Central and Eastern Europe in- values creased continouosly in the last years. In 1999 the average value of a ton of goods was EUR 1000, while this figure increased to EUR 1400 in 2003. This means that these countries export goods with higher and higher values. Among the countries in the region, Hungary exported goods with the highest value (a ton of good was valued at €2700), mainly because of the fact that the share of electronic products is quite high in the export. It is interesting that the figures of the Czech Republic and Slovakia in 2003 were EUR 1600 and EUR 1800, respec- tively. Emphasis on trans- Among the important tendencies we have to mention that the EU tries pors that has less to put more emphasis on the dispersion of those modes of transports impact on the envi- that have less negative effect on the environment, such as the inter- ronment modal transportation methods (Ro-LA, Ro-Ro, etc.). Increasing oil In line with the increasing oil prices the costs of transporters also in- prices creased. The increase of oil prices seems to be a permanent tendency with which the actors of the sector have to reckon. Infocom technolo- In the global logistics sector one can observe that information and gies in the sector communication technologies has larger and larger role in logistics ser- vices, which make transportation easier and more efficient. ICEG EC Sectoral Analyses – Transportation & Logistics 6 2. Evolution of the sector in Hungary 2004: a good year In 2004 Hungary joined the EU and this factor influenced the figures in Hungary of transporation too. In 2004 the value of international transports in- creased significantly. Compared to 2003 that figure increased by al- most 17% in terms of tonne-kilometre. Thus, total transport figure – which includes national transport - increased by more than 10%, while that figure averaged around 2.5-4.5% in previous years. H1 2005: the good In the first half of 2005, the good tendency continued. The perform- tendency contin- ance of transportation increased by 18.1% compared to the same pe- ued riod of 2004. Basically the road transportation reached an outstanding growth (+28.3%), while inland water transport also increased signifi- cantly (+23.1%). On the other hand, the performance of railroad and pipeline transport played a less important role in overall growth of the sector. International transport is the In the first half of 2005 international transport remained the main en- main engine of gine of the growth. During the first two quarters of the year interna- growth tional transport increased by almost 25% in terms of tonne-kilometre mainly due to the outstanding performance of road transport. Interna- tional road transport incrased by approximately 50%. Increasing role of road transport Basically due to the aforementioned factor, the share of each mode of transport changed. In the first half of 2005 the share of road transport increased to 58%, which represents a 5%-points jump compared to the same period of the previous year. The share of inland water transport also increased by 0.2%-point (to 4.3%) in the examined pe- riod. The share of the other modes of transport decreased. The role of railroad transport decreased despite the fact that its performance in- creased. The share of pipeline transport also decreased. Significant de- The development of the road infrastructure, namely the increase of velpment of infra- the length of the motorway network had a positive impact on road structure in 2004 transport.
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