The Slovenia Times

Only Catching Up, So Far



Mr Uhl, a former senior manager of one of the most important transport and logistics service providers in the world, Deutsche Bahn, and an analyst for the World Bank, nevertheless sees enormous opportunities for Slovenia's logistics sector.

You come from a country that, according to various analyses, is viewed as one of Europe's top logistics hubs. Considering Slovenia's strategic position at the crossroads of major European transport corridors, why isn't Slovenia ranked higher?

The reason is mainly historical. As long as Slovenia belonged to Yugoslavia, transport infrastructure in the country was not considered of a top priority. As you know, the Croatian port of Rijeka was the major maritime hub. After independence, things changed. The port of Koper, for example, can be considered one of the most successful logistics stories in the Mediterranean region. Italy and its ports are not sleeping, however. Still, Slovenia has a very good basis to join the top logistics hubs, from a geostrategic point of view.

Which are the other factors that determine Slovenia's success in the logistics and distribution sectors?

A prerequisite to playing an important role in global trade is transport infrastructure with open access possibilities. Transport infrastructure not only consists of roads, rails and logistics terminals. Information infrastructure is also important; nowadays, it is almost as important as physical infrastructure. Slovenia has been investing in modernising road infrastructure on European corridors V and X. When it comes to rail traffic, not much has changed, neither on corridor V from Italy and its branch line from the port of Koper, nor on Corridor X. It is still the old railway system with low reliability and quality.

What other weaknesses besides railway infrastructure do you see and how can Slovenia overcome them?

Apart from the fact that the Slovenian logistics sector is small and fragmented, I know from many shippers that Slovenian logistics service providers are trying hard to catch up to the Central European and Western European logistics standards. One reason that they are still only catching up might not be underinvestment in physical infrastructure but a lack of investment in education.

Although Slovenia has enough highly qualified people, they are not properly trained for the challenges of the contemporary logistics services market. Those I know who are highly qualified usually receive their training outside Slovenia. Therefore, education in logistics starting in technical college and continuing at the university level is one of the most important conditions that should be met for Slovenia to reach the top.

Another problem is costs. Here we have to deal with another enormous surprise. For years and even now, transport from Austria to an Adriatic port is far more expensive than from Austria to North Sea ports, in particular with rail transport. I can only explain this with the market structure in the transport sector, in particular with the monopolistic structure in the rail sector. These disadvantages or weaknesses can only be abolished by an open market policy in the transport sector. If you take the liberalisation index in the railway sector (published annually) Slovenia is among the least liberalised EU member states.

Although you are slowly building up a competitive environment, there does not seem to be the legal certainty to guarantee real open access, at least in the rail market. I feel that a strong transport regulator for roads and railways is missing. Once Slovenia has introduced such institutions, foreign investors will be more inclined to consider the country a good investment opportunity.

The state has significant ownership stakes in most of Slovenia's biggest logistics companies. Is this a benefit or a burden?

We all know that government participation does not foster innovation, commercial risk taking or efficient management. Again, it is a question to what extent the Slovenian government wishes to give the private sector a chance to develop logistics competence. The state in a liberalised market should concentrate on having a strong market regulator that guarantees fair and non-discriminatory market behaviour.

Does Slovenia need to find a large foreign strategic partner for its logistics companies? Deutsche Bahn, the German logistics giant, has been brought into play

As I said before, cooperation and joint ventures with non-Slovenian partners outside and inside the European Union would definitely be an advantage. So, my answer is not that Slovenia should find a big foreign strategic partner but foreign strategic partners. Why do need they be big? Small and medium-sized partners with good networking are also interesting alternatives.

You mentioned Slovenske ┼żeleznice (Slovenian Railways) and Deutsche Bahn. Both of them are state monopolies in their own countries. Both of them are too big to fail. Both of them have strong government involvement. Deutsche Bahn thinks globally and this might be an advantage, but that does not solve the major problem of a more or less monopolistic rail sector. Such monopolistic sectors might become very costly for the taxpayer!

So, my question to your question is: why not open up the rail sector more and let competition get in, in order to produce the most competitive hinterland traffic from Luka Koper to your catchment areas of Serbia, Hungary, Austria, Slovakia, Czech Republic, southern Germany and northern Italy? I have my doubts that with the "biggies" you will render Slovenia more competitive as a logistics hub.

Do foreign and international logistics companies operating in Slovenia have enough room for their activities and development?

Foreign and international logistics companies certainly have enough room for their activities as long as they have the legal certainty of not being encumbered by monopolistic or oligopolistic structures It is precisely the policy of the European Commission to abolish such institutional obstacles. All in all, I see enormous opportunities for Slovenia but it is always a question of how fast the government and even the transport sector react to the challenges of global logistics.

"Be close to your customer and study him;" this credo is valid not only for sales persons, but also for Slovenia's logistics sector as a whole.


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