No Slowdown for German Logistics
The coronavirus pandemic has not dented Germany’s leading role in European and global logistics. In many respects, it has even handed the sector additional growth potential.
Last year, the First Mover Group, a Norwegian project management and relocation business with 450 employees across Scandinavia, acted in the true spirit of its name. Not deterred by the significant obstacles presented by the pandemic, management decided the time was right to expand its European presence. In December, the group opened its German new home in Krefeld in the heart of the Rhineland, one of the most densely populated regions in Europe.
Martin Grønberg Myrold, managing director for Germany, worked with Germany Trade & Invest (GTAI) to find a location for the logistics company during this unusually challenging time. “Coronavirus has forced companies to modernize and change their workspaces,” Myrold says. “There’s excellent infrastructure between the big cities, so we can serve about 18 million people within an hour of our office.”
First Mover Group is hardly an outlier. Germany continues to attract international companies with its central European location, strong domestic market and extensive export expertise. Even as the coronavirus pandemic disrupted Germany’s attempts to maintain “business as usual” in 2020, the logistics sector proved resilient.
“Revenue in the logistics sector in Germany has doubled in the past 20 years, proving itself to be an enormously important driver of growth,” says Christina Thurner, a board member of logistics company LOXXESS and the German Logistics Association (BVL).
Overall, Germany’s logistics sector has over 60,000 companies with three million plus employees, accounting for roughly EUR 285 billion revenue in 2019. “The pandemic made the systemic relevance of logistics clear for the first time to a large part of the population,” Thurner says. “Despite national borders closing, goods arrived at supermarkets, medicines at pharmacies, and medical products at hospitals and care facilities. And the public recognized the important work by logistics professionals, such as truck drivers.”
The pandemic also showed that “lean and mean” supply chains might not have enough of a buffer to get a company through a rough patch. “Covid-19 taught us that if you’re too reliant on any one supply chain, and there’s a disruption, you might risk scrambling to find a replacement,” says GTAI logistics expert David Chasdi. “What used to be ‘just in time,’ has become ‘just in case.’”
© Stockvisual Sources
The Bottom Line
Germany’s response to the second and third waves of coronavirus was to keep as much of the economy open as possible. Logistics has proved to be one of the few sectors to emerge stronger in 2021.
An international frontrunner
Germany has come out No. 1 in the World Bank’s three most recent biannual Logistics Performance Indices, rankings of 160 countries. “When it comes to logistics, Germany is the frontrunner by international standards, especially in the areas of infrastructure quality and logistics technology,” Thurner says.
The country’s strong exports and strong purchasing power combine to produce an internationally connected economy with high domestic consumption.
Road transport accounts for nearly 80 percent of freight movement volume in Germany. Moreover, heading north on the Rhine River, the city of Duisburg boasts the largest inland seaport in the world. Germany is also home to three of the top ten air cargo hubs in Europe. “Logistics in Germany is highly diversified with both global giants and many smaller niche players,” Chasdi says, adding that individual companies’ logistical needs help determine the best location within the country.
The Forecast is sunny
Logistics market in Germany, annual growth (in %)
German logistics market segments (in EUR billion)
Contract logistics services
SME in-house logistics
General truckload (FTL)
Courier express, parcels
Cargo with special equipment
Supply chains in flux
Thurner believes that German companies will want to reinforce their supply chains and increase “near-sourcing,” leading to higher demand for contract logistics services and warehousing. As a result, demand for suitable real estate in Germany is also expected to rise.
After data centers, logistics was named the second biggest investment opportunity by the Urban Land Institute and PwC’s Emerging Trends in Real Estate: Europe 2021 report. And that same study identified four German cities among the top ten locations for real estate investment in Europe.
»What used to be ‘just in time,’ has
become ‘just in case.’«
Germany Trade & Invest
The coronavirus pandemic turbo-charged German e-commerce in 2020, with total sales jumping 14.6 percent to EUR 83 billion, a new record. More than one-third of that volume comes from a single company: Amazon.
Since Amazon opened its first fulfillment center in Bad Hersfeld in 1999, the US online retail juggernaut has rapidly expanded its German operations and now has 15 logistics centers, with about 40 sorting centers and delivery stations around the country. Since 2010, Amazon has invested over EUR 8 billion in German facilities and infrastructure and now employs over 20,000 people countrywide.
In the last three years alone, it has opened two vast fulfillment centers in North Rhine-Westphalia (a 100,000-square-meter facility in Werne and a 55,000-square-meter facility in Mönchengladbach) and a new distribution center in Raunheim Mönchhof, Hessen.
Two more fulfillment centers are in the works: one in Achim, near Bremen in the North, scheduled to open in summer 2021, and another in Gera, in the eastern state of Thuringia, set to start operating by the Christmas season. An even larger facility is being established in Erfurt, which is projected to bring as many as 600 new jobs to Thuringia. In 2020, Amazon also launched its first regional air hub in Europe at the Leipzig/Halle Airport in Saxony. And construction is underway on a 34,000-square-meter sorting center in Schönefeld, close to Berlin’s new BER airport.
Like all companies, Amazon has had to adapt its business processes to protect employees during the pandemic. “But as a logistics company, this is what you do,” Cossmann says. “You adapt to new situations every single day.” With growing markets, Germany is adapting and keeping the pace for success strong.
E-Commerce is Booming
E-commerce turnover (B2C) in Germany
Amazon keeps expanding in Germany
Since it opened its first fulfillment center in Bad Hersfeld in 1999, Amazon has expanded its German operations to 15 centers, with two more set to open this year, one in Achim, near Bremen in the North, and another one in Gera, in the eastern state of Thuringia. Since 2010, Amazon has invested over EUR 8 billion in German facilities and infrastructure.
“It’s important to stay close to your customers,” says Armin Cossmann, regional director for Amazon’s German fulfillment center network. “Our buildings in Germany are part of the European network, and we are proud to be able to fulfill orders from customers in many European countries. A product ordered in Italy might be delivered from Bavaria.”
At Amazon’s Brandenburg sorting center in Germany, thousands of incoming parcels are sorted every day according to delivery districts, over an area of about 34,000 square meters. Photo: Amazon
More important numbers:
Amount invested by Amazon in Germany since 2010: €8BN+
Permanent jobs created in Germany: 20,000+
Total sales in Germany: 2018-> $19.9BN; 2019->$22.2BN; 2020->$29.6BN
Sources: Börsenblatt; Statista
How does Germanys toll system work?
Germany introduced tolls in 2005, and since 2018 they’ve applied to trucks weighing over 7.5 tons on 52,000 kilometers of highways and major roads. Electricity-driven vehicles are exempt. The company Toll Collect collects the fees, calculated per kilometer based on weight and emission class. Digital onboard units allow tolls to be recorded and deducted automatically throughout Germany and Austria.
Over one-third of Germans obtain tertiary degrees, and MINT (mathematics, informatics, natural sciences, and technology) subjects are more popular than in any other OECD country. Germany is also famous for its dual vocational education and training system, which combines theory with training embedded in a real-life work environment. All told, Germany spends EUR 310 billion on education, research and science – and EUR 1,182 per capita on schools, universities and other educational establishments.