Summary

The economic growth of the Czech Republic is majorly driven by increasing private consumption and improving transport infrastructure. The Logistics activities related to the relocation of goods, i.e, mainly transport, account for approximately 38% of logistics costs in the country. Furthermore, the country's geographical location favors trade with countries in Europe and helps attract foreign investors due to lower labor costs, and the current growth dynamics of the domestic market, which present several opportunities. As per a survey, more than 50% of companies expressed that the industry shows lower costs in the supply chain. A key long-term factor that will contribute to the enrichment of the Czech Republic’s economy is the constructive partnerships between trade unions, the government, and companies.

The country is one of the top 15 car producers by volume, producing 107.5 vehicles per 1,000 people. Prague is the key logistics center in the country but other cities such as Plzen, Brno, and Ostrava are also growing in importance. The position of the Czech Republic is reasonable in comparison with other European countries.

The Czech Republic is seen as a country that has a competitive advantage when it comes to skilled human resources in the logistics industry. As many as 20% of the companies in the country expect to register growth in the number of employees in the sector.In the first half of 2019, the share of vacant industrial halls and warehouses in the Czech Republic rose by 0.7%-point Y-o-Y, to 4.4%. A total of 356,300 square meters of modern industrial space on the market, which was ready for immediate occupancy, was 30% more Y-o-Y. Logistics in the country is becoming open to a wide range of experts, consultants, and investors.

Key Market Trends

Ecommerce Growth in the Region

The logistics sector is witnessing increased demand for logistics services driven by the growing e-commerce industry in the region. Domestic e-commerce has been growing in the Czech Republic at a record pace for several years. In 2019, purchases of Czechs in e-shops again broke the previous record and reached a total value of EUR 5.796 billion. It was a 15% Y-o-Y increase from EUR 5.04 billion in 2018, helped by both the growing popularity of online shopping and the increasing number of online stores.

According to current data from the Czech Statistical Office (CSO), retail sales of internet-shops and mail order services increased by 16.9% Y-o-Y in January 2020. Traditionally, the highest growth rate was recorded by online stores, and sales of stores with household products also grew at a double-digit rate. Higher sales, in addition to food, are also reported by other retailers, for example, from the household needs segment. An increase in sales can also be expected in logistics and other services for e-commerce.

Increase in Road Freight Transport

The domestic road transportation in the country is increasing in terms of volume. The situation is partly saved or alleviated by domestic transport. The country is also witnessing a growth in a road network with a series of construction activities such as the construction of a road for EUR 39.6 million in Pilsen, which is a feeder to the D5 motorway in the Tachov region is expected to complete in 2020. The construction site for its largest road construction this year, a new 6.3-kilometer-long road on the I / 27 line from Pilsen to Klatovy for 1.1 billion, was handed over to ŘSD on April 29. The contract with the supplier was already signed.

Competitive Landscape

The Czech Republic Freight and Logistics market is competitive and fragmented with the presence of many local as well as international players. The foreign companies in the region are mainly responsible for providing high-end, value-adding logistics services in the country, whilst local companies typically specialize in the commoditized transport of goods. International transport in the Czech Republic is significantly taken over by carriers from other European Union countries and domestic transport companies, thus, lose orders.

Additional Benefits:

The market estimate (ME) sheet in Excel format
3 months of analyst support

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