Logistics

When I start doing business in Europe, should I set up my own distribution centre or can I find a partner who can do this for me?

The choice between outsourcing and setting up your own logistics operation depends on various issues: Is logistics a core or strategic activity? What would be the type and scale of the operation? What is the required time-to-market and how much logistics knowledge is available in the company? However, especially for companies starting to do business in Europe for the first time, outsourcing the logistics operation to a local logistics service provider (LSP) can offer considerable advantages. Some of these advantages include:

• No capital investments needed—fewer risks
• Lower total logistics costs
• Flexibility in space and manpower
• Economies of scale
• Insight into logistics costs
• Concentration on core business
• Flexibility in supply chain setup

In Europe outsourcing logistics activities to logistics service providers (LSPs) is more common than in the US and Canada. Of all operations, about 65% is outsourced worldwide, but in the Netherlands this percentage is an even higher 75%. The reason is the high volume of goods flowing via the Netherlands. This makes it profitable for LSPs to offer warehousing, transportation services and value-added services. The advantages for your company are that the rates are competitive and there are frequent connections to pan-European destinations.