On average, Danes spend one hour in transport per day. Therefore, transport and logistics are essential focus areas that must function optimally to get the wheels turning in society. Karsten Lauritzen, branch director of DI Transport, says,
“Sometimes we forget that waste, building materials, citizens, and all goods have to be transported every single day. It sums up to many hours. Everything that can be done at a national and local level strengthens the transport sector and therefore, greatly strengthens the competitiveness of Danish companies. With the aftermath of corona, the war in Ukraine, etc., the Danes and the Danish companies have realized that we can no longer take the transport and delivery of goods for granted. It is no longer something that ‘just’ happens automatically and that you can count on and expect to work.”
“The new reality means that a large piece of logistical work needs to be done. We hear greatly from our members in DI – e.g., in our company panel, that many companies have been affected and are still affected by their security of supply. This means that many more people start to focus on ‘just in case’ and do what they can always to have sufficient goods on the shelves – and not as in the past when there was a trend of ‘just in time” to avoid a surplus of items. Thus, there has been a shift in the approach companies within the transport and logistics area, which ultimately also helps to influence the demand for warehouse and logistics properties.”
A survey by The Confederation of Danish Enterprises from September 2022 shows, for example, that the proportion of online stores with delivery problems is decreasing. However, the international supply chaos still affects 2 out of 5 online stores in Denmark and may have consequences on Black Friday and Christmas sales.
In large parts of Denmark, there are not a sufficient number of warehouse, logistics, and production properties, and the supply is also historically low, with only 1.3% vacancy nationwide. Mads Bjerrum Christensen, industrial manager at EDC Erhverv Poul Erik Bech Aarhus, says:
“After corona, several companies wanted to secure more storage space because they have experienced pressure on the supply chains and delivery problems, as goods have been stuck abroad. Demand is very high with record low vacancies, which puts pressure on the market. Therefore, there are real opportunities for those investors who want to invest in the existing properties or build new industrial and logistics properties.”
This picture is not limited to Denmark only – on the contrary, it is the case throughout the Nordic region. This is one of the main conclusions in the just-published report ‘JLL Nordic Outlook – Autumn 2022’, which focuses on the industrial segment and investments in the property industry. The report has been prepared by one of the world’s largest real estate companies, Jones Lang LaSalle (JLL), in collaboration with EDC Erhverv Poul Erik Bech. Joseph Alberti, Head of Research, EDC Erhverv Poul Erik Bech, says,
“As it can be seen from the Nordic report, logistics and warehouse properties have seen an increase in the total share of transaction volume. In 2019, logistics properties were traded for DKK. 3.6 billion, which increased to DKK. 12.9 billion in 2021 and DKK. 6.7 billion in the first half of 2022 alone. This means that the segment is growing, a clear trend that we expect to continue in 2022 and beyond. With a 4% return on prime properties in the logistics and warehouse segment, it remains an attractive investment in a Nordic and European context. With a record low vacancy rate, more and more investors will naturally consider building and investing in the segment.”
In a new report, Denmark’s largest commercial pension company PFA has calculated that their investment in logistics in Denmark and internationally has turned out to be an excellent business. PFA’s investments in logistics have yielded a return of 15.5%, corresponding to approx. DKK. 2.5 billion since 2013. Therefore, PFA has announced another 85,000 m2 expansion of Taulov Dry Port in Fredericia, which must be ready at the beginning of 2024. 100,000 m2 has been built, and a total expansion of 100,000 m2 has previously been announced and is ready in 2023.
In Denmark, the demand for properties is most significant in the larger cities, and virtually everyone wants to be located close to the motorways. Still, due to the low supply, many have to search further away from their desired locations, postpone or altogether drop their plans.
Mads Bjerrum Christensen, head of industry at EDC Erhverv Poul Erik Bech Aarhus, says, “All things being equal, it puts a damper on Denmark’s development, production, and new workplaces. Corona has also increased e-commerce, which has helped drive demand for logistics and warehouse properties in the past two years and is expected to continue to do so going forward. Increasingly, the fragility of supply chains is on the agenda, and companies are working to optimize production and delivery to secure goods on the shelves. All in all, it increases the demand for square meters.”
Karsten Lauritzen, branch director at DI Transport, says, “We hear from, for example, fashion companies that typically focus on a summer and winter collection, that there is a much greater focus on having goods on the shelves, as the customers otherwise disappear. Therefore, they risk burning out with more items and selling at sale prices, which can become a vicious circle for some companies. Many of our production and industrial companies also have a much greater focus on getting goods home on the shelves in time, and some are considering whether production should be moved home or closer to the respective markets.”
According to Statistics Denmark, total transport by Danish trucks increased by 3% in the first quarter of 2022 compared to the fourth quarter of 2021 and ended at DKK. 3.9 billion tonne-km adjusted for seasonal fluctuations. The increase can be seen particularly in international transport, with a growth of 13%, whereas national transport has increased by 1%.
Karsten Lauritzen, branch director at DI Transport, says: “Companies are investing more in the area and taking precautions as they do not want to lose orders due to delivery problems. Many companies have to build up stocks to deliver, but this puts extra pressure on the entire supply chain. In recent years, we have transported more and more, and we expect that the volumes of goods will continue to increase, so it is difficult to see that the transport volumes will not continue to increase going forward.”
In Danish Industry, they continuously fight to ensure that the focus is placed on the issue of more business premises at a national and regional level. Karsten Lauritzen says, “We are in ongoing dialogue with several mayors and municipalities, who, of course, can see the problem in the lack of commercial space – especially in Greater Copenhagen, but also in larger cities. But there is more money in housing, and the population is growing, so the municipalities naturally have the greatest focus here.”
“Therefore, we also believe that it is an area that our politicians at national level must address. National solutions must simply be created through grants or legislation, which means that there must be a greater focus on business areas – ports, trains, airports, business areas, logistics, and industrial areas. We all have to make a living from these companies, which pay wages to the Danes and make money back home to Denmark. We will simply have to make room for our business community to continue the progress in Denmark.”
DI Transport works with several areas in the transport field where it is necessary to look at the challenges on a national level. Overall, according to Karsten Lauritzen, branch director at DI Transport, the focus must be on: