When IKEA decided it needed to set up a pan-European distribution center to serve 23 stores in southern Europe, the company chose the Isle d'Abeau area near Lyon, France. Corporate executives found the location favorable, given Lyon's strategic location.
"We were looking for a strategic site in southern Europe that would enable us to receive goods from suppliers in England, the Netherlands, France, Spain, Portugal, and Italy, and to dispatch them within France as well as to Switzerland, Spain, and Italy," said Denise Brire, manager of the Lyon site. "Our analysis of transport costs led us to choose Lyon as the ideal central location."
IKEA is now building a distribution center in Italy to handle the very rapid expansion there.
"We are also starting a construction project for a second distribution center in France," said Brire. "In my opinion, a logistics hub of the size of Lyon, 100,000 square meters (1.1 million square feet), is ideal. If it were any bigger it would become difficult to manage."
IKEA operates other distribution sites throughout Europe. Contracting this work to Groupe Norbert Dentressangle, the company runs another site in Metz-Lorraine, in France, that is today among the largest in Europe.
European distribution centers continue to evolve
In some ways, IKEA represents the evolution of European Distribution Centers (EDCs). In the mid-1990s, companies moved away centralization of distribution centers, but today the industry is experiencing a movement of strategic locations.
"The open borders created a free flow of goods that were only constrained by speed of transportation," said Marcel Stuve, vice president of corporate strategies and logistics for Buck Consultants. "This promoted a single site for distribution, with the Benelux countries of Belgium, Luxembourg and the Netherlands being the strongest contenders due to their gateway locations for ocean, air, and an infrastructure conducive to importing and exporting."
Now companies are seeking to have two or three centers throughout Europe, or one major center with several satellite centers, according to Stuve.
Transportation venues emerge
Lille, along with France's Nord Pas de Calias province, is emerging as an important alternative for distribution and logistics functions that traditionally have been found in the Benelux countries. Case in point: Columbia Sportswear Co. began construction on a new 270,000 square foot distribution facility in Cambrai, southeast of Lille, near the Belgium border.
The new facility, which is expected to be operational this summer, will distribute Columbia's products to all markets in the European Union. Columbia has been distributing its products in Europe through an independent logistics company based in The Netherlands.
According to Stuve, companies are looking at other locations outside the Benelux. Businesses in Lille can take advantage of excellent rail, highway, seaport and airport services.
"Companies find that if they locate within a day's drive from one of the city's serviced by the integrated carriers, for example, they can send and receive freight close to cutoff times," said Stuve. "For intra-European freight, though, companies are more likely to use truck than air. The road network is more efficient."
Reebok to branch out to more ports
Seaports and waterways also play a significant role in European logistics. Reebok, a manufacturer of sports and leisure equipment, is currently in the process of adding facilities at ports outside of Rotterdam.
Traditionally attached to Rotterdam, the international company did not exclude at least looking elsewhere, notably in the direction of Le Havre. In November, a test ship sailed into the Port of Normandy carrying Reebok goods.
"We will see if, as we think, all will go well with customs and procedures," said an official with Reebok France.
If it does work out, 1,000 to 1,500 containers per year, containing shoes and textiles made in Asia for Reebok, would ship directly to Le Havre, instead of through Rotterdam, Reebok's traditional supply hub to northern and eastern Europe.
Distripark Maasvlakte, a site for distribution centers located in the Port of Rotterdam, offers direct access to all modes of transport. It is the first port of call for many shipping lines crossing the Atlantic Ocean, and is within 48 hours by road or rail of all major European trade and industrial centers, creating the potential for significant efficiencies within the supply chain.
Danzas recently announced plans to lease two facilities from ProLogis, totaling 446,500 square feet at Distripark Maasvlakte.
"Our client's European storage and shipment operation is concentrated in the Port of Rotterdam," said Willem Mes, director of operations at Danzas Solutions Benelux/UK.
Regional approach gains steam
While ports help companies to serve a large area, many companies handle distribution on a regional level. Some companies are locating to Copenhagen and southern Sweden to take advantage of distribution channels to Scandinavia, the Baltic region, and northern countries of the EU.
Massey Ferguson, a U.S. manufacturer of farm equipment, closed three warehouses in Scandinavia and relocated a new central distribution facility just miles from Copenhagen's Kastrup Airport.
"We wanted to lower our costs in operating the three warehouses, and, at the same time, be able to provide overnight distribution via air and one to two-day deliveries by truck," said Preben Orsted, supply manager for Massey Ferguson. "We wanted to have access to the airport and the motorway, particularly since we send stock orders by truck."
Key to Massey Ferguson's decision were improvements to Copenhagen's Kastrup Airport and the new Oresund Fixed Link, a highway and rail bridge that connects Denmark to Sweden. The Link opened the entire region for distribution, particularly for Sweden's population centers in Malmo, Gothenburg and Stockholm.
Inter-modal links using rail and road transport have also been strengthened along the Danish-German border at Padborg. Such road and rail links impact Scandinavia and companies that choose to locate there.
Karen Thuermer is a freelance writer from Devon, Pa.
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