EVO Logistics Yearbook

2012 Edition

Colofon

EVO Logistics Yearbook 2012ISBN: 978-90-79470-07-5

Editor Peter J. van der Sterre

Editorial production Feico Houweling, Rotterdam

Photography Marco Hamoen Photography, Bodegraven

Illustrations and design Helen Verbeek Graphical productions, Zoetermeer

Translation Marcus de Geus, Delft

Print Bal Media, Schiedam

© 2012, EVOEVO considers it a pleasure to give full permission to reproduce, disseminate, or otherwise disclose to a wider audience the contents of the Logistics Yearbook 2012, provided full source credit is given.

Although EVO has prepared, compiled, and disseminated the information in this Logistics Yearbook 2012 with the utmost care, EVO cannot be held liable for any factual inaccuracies mentioned in the book, nor for damage of any kind whatsoever that might ensue from the use of the information the book contains.

Contents | 3

Contents

5 Foreword Mr. Siim Kallas, EU

7 Foreword Mr. Chris Bruggink, EVO

Introduction 11 The Netherlands in 2020: world leader in logistics!

Society 17 An exploration of transport in 2040

Dynamics 29 Scenarios for the Netherlands as a logistics hub: opportunities and threats

Attraction 45 The Netherlands as a logistics business location in 2040

Complexity 61 Transport of the future will be driven by volatility

Hubs 77 Schiphol: still connecting the Netherlands with the world in 2030

Ornamental plant cultivation 89 The Dutch ornamental plant industry adapts to the future

Chemical industry 103 Globalisation and local markets

Agrilogistics 111 Regional products and agrilogistics in future perspective

Recycling 129 Why produce waste if you’re going to throw it away?

Sustainability 141 C,mm,n cargo: the road to sustainable goods transport

World port 149 Road transport must become cleaner, smarter, more efficient

FAQ 155 Logistics Manager 3.0: Frequently Asked Questions

162 Authors

167 About EVO

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Logistics provides for the vital link that keeps the European economy going.

Foreword | 5

Foreword

The logistics sector is one of the most important sectors for the European economy, both in view of its impact upon the EU economic growth and employment, and because logistics provides for the vital link that keeps the European economy going. Production and distribution networks depend on high-quality, efficient logistics chains to organize the transport of raw materials and finished goods across the EU and European logistics companies continue to be global leaders in the area, even in the current difficult economic climate.

In the White Paper on the Future of Transport, published in March last year, the importance of logistics has been clearly recognized. But so were the challenges ahead. I am committed to working closely with all sectors of the industry to discuss what the needs and opportunities for the sector are and what possible policy responses the Commission should come forward with.

The ESC Yearbook is a very valuable contribution to our ongoing work, providing concrete examples of the role of logistics and the solutions which are being developed across Europe to ensure sustainable future growth.

Siim KallasVice-President of the European Commission in charge of Transport

Mr. Siim Kallas

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Anticipating the future requires a clear future vision.

Foreword | 7

Foreword

It is my great pleasure to present the EVO Yearbook 2012, the fifth instalment in the successful series informing EVO members and other interested parties about the latest developments in the world of logistics.

The theme of this Yearbook and of the 2012 EVO Annual Conference is Exploring Future (2040) Logistics. This time around, our future is what it’s all about. What are the major trends, and what are the uncertainties involved? Which will be the most relevant scenarios for the future, and what will be their effect on logistics?

Anticipating the future requires a clear future vision. The basis for this is a study by STT Netherlands Study Centre for Technology Trends (Stichting Toekomstbeeld der Techniek), which sketches four scenarios for the social context of logistics in the year 2040.

A number of logistics experts were asked to outline the future for their own industry, based on the STT study. The pivotal question is which direction our society will be taking, and what will be the effect on logistics? Will we become more global or will we become more local, will consumers of the future be individualistic or more collective-minded?

From each of their different backgrounds the authors will outline relevant future logistics scenarios for their industry. Sustainability plays a major role in practically every chapter. Consumer behaviour is another issue of interest, with increasing demand for specific, made-to-measure products. The question is also whether globalisation will prove to be an enduring trend or if consumers will prefer products from closer by.

All in all the EVO Yearbook 2012 has become a thought-provokingdocument that will provide you with easily accessible in-depth information about the current state of affairs and possible future trends in the logistics operations of industries that include our two main ports of Rotterdam and Schiphol, agrifood, market gardening, return logistics, chemical products, and real estate.

The logistics manager of the year 2012 more than ever needs to display the right mix of spirit and vision to face the future with any hope of success. Lose those qualities and you lose the decisiveness that is so sorely needed in an age when major decisions need to be made. EVO will be happy to provide you with the necessary support to tackle the important issues that determine our collective future.

On behalf of the management of EVO I would like to thank the authors for their contributions to this essential document, and I sincerely hope that this Yearbook may prove to be a source of inspiration to us all!

Chris Bruggink,EVO Chairman

Looking into the future

Looking into the future

Introduction

Introduction | 9

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Summary of the introduction

The world is moving fast, driven by technology. People are seizing the opportunity to do things differently, better, more sustainably. Businesses too are radically changing the way they operate. How will this affect the Dutch logistics sector?

By 2020 any shipper, carrier or logistics chain coordinator should be able to decide at any given time which transport modality to use for shipping their goods – road, rail, water or air. The Netherlands will have a single, coherent logistics system based on a single, neutral logistics information platform providing a comprehensive map of all goods flows. As a result, by 2020 the Netherlands will lead the worldin innovative logistics concepts and be the single major springboard to Europe and the rest of the world, a prime location for entrepreneurial growth and renewal, where knowledge abounds and sustainable solutions are developed.

What is the secret of our success? History will point to 2011 and 2012, when businesses, research institutes and the government established an ambitious agenda to reach the very top.

Introduction | 11

Maxime Verhagen,

outgoing vice-premier

and minister of Economic

Affairs, Agriculture and

Innovation

The Netherlands in 2020: world leader in logistics!

The world is moving fast, driven by technology. People are seizing the opportunity to do things differently, better, more sustainably. Businesses too are radically changing the way they operate. How will this affect the Dutch logistics industry?

Let’s look into the future. The year is 2020. You are a producer and you want to get your stuff from A to B. What should you do? Just like a decade earlier you will have to submit your data to the authorities, to a shipper, and to customers. The difference is that today, in 2020, you only have to provide the information once to get it to the authorities as well as commercial parties. In addition, the entire logistics path will be a turnkey operation, so you can simply order your chain manager to get things moving. The result is that you will be able to concentrate on your core business.

Rather than being committed to a single mode of transport, the chain manager can choose between transport by road, rail, water, or air at any moment. The cargo may well end up being moved together with the products of a competitor. The chain manager purchases transport from the shippers, handles the after-sales service with a maintenance company, makes the necessary arrangements with banks and insurers, and monitors the cash flow.

In 2020, collaboration and coordination in the logistics chain has become a well-oiled process with the single coherent logistics system that the Netherlands now has. The system is based on a single neutral logistics information platform that maps all the goods flows, whether by land, sea or air. This enables forwarders, shippers and chain managers to switch to transport by road, rail, sea or air at any given moment, allowing goods to be carried from A to B using a mix of transport modes.

Our customs services run faster and more efficiently than any other, communications with inspection agencies run smoothly, we have a top quality infrastructure, and the local logistics companies are all highly competent. This means that your products arrive in the right place at the right time at the lowest possible cost. And with its optimised use of the available transport capacity, Dutch logistics operations have gained significantly in sustainability. The days are long gone when half-empty lorries would roam the roads.

On the international stage too, the Netherlands scores high in 2020. Dutch logistics companies are now in charge of the entire national and international chain of transport. This involves the management not only of physical goods flows, but also of information and cash flows, e.g. forecasting, financial engineering and data management.

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Foreign companies are happy to be able to use the Dutch know-how and expertise by running goods and/or logistics information through the Netherlands, either physically or digitally. After all, there is no need to actually route the physical goods through the Netherlands, with all the nuisance to the living environment it involves, just in order to arrange for them to be transported – and of course, to make money out them in the Netherlands.

This is how the Netherlands in 2020 has become the single world leader for innovative logistics concepts; the single stepping stone into Europe and the rest of the world; the single location where businesses grow and innovate, where knowledge flows and where sustainable solutions are created.

How did we get here?The revamping operation started in 2011 and 2012. That was when businessmen and researchers in the logistics spearhead industry, supported by the newly-established ministry of Economic Affairs, Agriculture and Innovation, drew up an ambitious action plan, ‘Scoring for the Top’ (Partituur naar de Top). The industry’s ambition was to gain a leading international position in the handling of goods flows and as a chain manager of national and international transport chains before the year 2020. Also, the climate for enterprise and innovation needed to be improved in order to attract forwarding and logistics businesses. The industry had prepared innovation roadmaps covering synchromodality, cross chain control centres, service logistics, supply chain finance, ICT, and customs services, radically changing the ways of thinking and organising within the industry.

With my spearhead industry policy I supported the industry’s ambitions. I put businessmen and researchers at the helm and stimulated collaboration in order that knowledge might be developed and converted into new products and services, gratefully making use of the knowledge infrastructure that had already been created with the Dinalog Top Institute and the Knowledge Distribution Centres.

The cabinet also ensured that companies and research institutes gained improved access to capital for knowledge and innovation. We cut through the red tape and introduced a relaxed inspection regime, reducing regulation overheads for Dutch businesses by a quarter between 2010 and 2014. We created a compact and efficient government that would help rather than hinder trade.

In 2012 the industry’s plans already included a focus on human capital. The educational curriculum looked more closely at existing disciplines, incorporating new, multidisciplinary approaches to logistics, training a whole new generation of logistics experts with specialist operational or strategic qualifications.

Thanks to all these changes, the number of logistics professionals has reached its target level in 2020. The number of young people graduating from logistics courses at vocational and academic levels has increased by 50 percent since 2012. Businesses have also turned their focus on providing additional training and incentive schemes for their employees. People have changed the way they work,

Introduction | 13

and increasing use of new technology has become the norm. Modern logistics organisations are offering more room for creativity and innovation. People are proud of the fact that their industry now contributes to the reduction of CO2 emissions, road congestion, and noise pollution while making more efficient use of the available public space.

Back to the reality of today. It is now 2012. The logistics industry accounts for 750,000 jobs and an added value of 40,000 million euros, i.e. 8.5 percent of the Dutch GNP. The indirect contribution by the logistics industry to growth and jobs in the Netherlands is a multiple of this. The logistics is a spearhead industry of our economy which still has a lot more to offer.

Will the industry of 2020 really be as described above? That is the ambition of the industry itself! An ambition enthusiastically taken up by businesses, knowledge centres, educational institutes and local as well as national authorities.

It is an ambition which I wholeheartedly support. The world is moving fast, let’s move along!

Logistics in tomorrow’s world

Society

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Summary of chapter 1

We cannot look into the future, but exploring future possibilities and analysing trends, possible trend breaks and uncertainties provide ways to identify threats and opportunities and ways of coping with them. Future visions regarding the mobility of people and goods in the year 2040 require a vision of society as a whole, as this is what provides the context for mobility. How will people live, work, relax and consume 30 years from now? Where and how will goods be produced? The answers to these questions also depend on future technological developments.

The foresight study on Super Intelligent Transport by STT Netherlands Study Centre for Technology Trends (Stichting Toekomstbeeld der Techniek) sketches four scenarios of society in 30 years time to outline the context of mobility in 2040. The two socio-economic trends of individualisation and globalisation (and their counterparts) are offset against each other to define the framework for the scenarios.

The sketches are:• ‘Individual Prosperity’ (individual + international)• ‘Global Environmental Awareness’ (collective + international)• ‘Strong Region’ (collective + local)• ‘Self-sufficient Unit’ (individual + local)

Other relevant trends, such as urbanisation, demographic developments, informatisation and sustainability, and possible trend breaks, have been used to complete the description of the four scenarios. The descriptions can be found at www.stt.nl/transport. They are intended to stimulate thoughts about the future within organisations as well as governments, and to challenge their views on the state of transport and logistics by the year 2040. Additional input was gathered from desk research, expert interviews, workshops and brainstorm meetings.

Society | 17

Marie-Pauline van

Voorst tot Voorst, STT

Netherlands Study Centre

for Technology Trends

An exploration of transport in 2040

The interaction between social developments and technological innovation is changing the world on a daily basis. Any attempt to look into the near future is fraught with difficulties and uncertainties, and this goes even more for the longer term, in particular when a domain as complex as mobility is involved. What will be the demand for transport in 2040, and what will be its impact on society as it then exists: industries, organisations, people and authorities?

What will freight and passenger transport in the Netherlands look like in thirty years’ time? That is the central question of the future study, ‘Super Intelligent Transport’ by STT Netherlands Study Centre for Technology Trends (Stichting Toekomstbeeld der Techniek; STT). The study looks not only at possible and new modes of transport, but even more so at the future requirements for transport. What will be the demand for transport in thirty years’ time? How will we be moving our goods? The idea is to create a vision of the transport system as a whole, using scenario sketches to explore a number of different possible futures, based on what our society might look like thirty years from now.

STT organises participative future studies that look thirty to forty years ahead. STT investigates new trends and develops inspirational visions of future technology and society as a whole. It does so by creating a free space in which interested parties can meet and use creative methods to build images of the future. The results are embedded in new initiatives, e.g. research programmes or public-private collaborations.

Before we discuss the four sketches of our society in 2040, we will take a short look at the importance of exploring the future.

Why look at the distant future?Looking at transport systems thirty years from now is like gazing into the distant future. How do we do it, and why would we be interested in what’s still such a long way ahead?

Our technical abilities in fields such as gene and nano technology are developing at an ever increasing pace, and converging technologies continually offer new opportunities for development. These developments increasingly impact our society as a whole. The rate of progress requires foresight if we are to anticipate what the future holds in store for us.

Future studies is not about predicting the future, but about sketching different views of the future. It is a way of coping with our fundamental uncertainty about the future, the better to prepare us for the challenges ahead. Major elements in this respect include:

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• Awareness and anticipation of multiple futures rather than a single conceivable future.

• A time horizon of several decades in order to set the parties involved free from the limitations of today.

• Managing uncertainty and diversity.• Identifying opportunities and threats.

It is in the interests of industries, ministries and society as a whole to take a closer look at trends from time to time, but a future study looks beyond trends. The uncertainties, unexpected events and things like technological breakthroughs are the major ingredients that determine what a society will look like in the future. This wider view of the distant future lifts people from the here and now and contributes to an increasing awareness and improved anticipatory faculties. This creates the proper environment for a better understanding of the opportunities and challenges facing strategy and policy. In addition, with specific regard to transport, opportunities for action and depreciation intervals usually involve long time horizons where infrastructure is concerned, making a thirty-year lookahead not just relevant, but even imperative.

Social trendsTransport is a complex domain, due in part to the many links with other facets of society. Therefore this STT exploration will look at transport as a function within our society, and the image of our society in 2040 as anticipated by the study participants will form the launchpad for future views of transport. We will start with a description of five socio-economic trends, to be followed by a discussion of four scenarios. These scenarios are based on two of the trends combined with opposite developments. The input was obtained from literature research, expert discussions, and active expert input during creative sessions.

The five social trends considered most relevant to future transport demand by the STT exploration are:

Increasing urbanisationThe way in which urbanisation progresses can have a profound effect on the movements of people and goods, in particular in combination with future work, production, and consumption locations. Further urbanisation can take the form of densification of existing towns, expanding urbanisation of the countryside, and multiple use of space within the urban environment, multiple use in this case being the mixing of functions within a single space. In the Netherlands the further urbanisation of large areas such as the western part of the country is combined with the reduction in size of a number of country towns and villages.

Population changesAccording to the Dutch Central Bureau of Statistics (CBS), the Netherlands will not follow the anticipated rapid growth of the world population up to 2050. The CBS anticipates a decreasing growth up to 2038, after which the population of the

Society | 19

Netherlands will even start to decline. The rising average age and relative drop in numbers of the 0 to 19 year age group will seriously impact the demand for transport, since different age categories and social groups have different ways of spending their time as well as different travel patterns. A reduced labour force will also result in changing transport demands.

Increasing individualisationWith individual needs and self-interest becoming increasingly important, the demand for made-to-measure products and services, in transport as elsewhere, will start to rise. Consumers also appear to be asking for easier ways to consume products and services. The question is what will remain collective or become so. A third aspect of individualisation is the anticipated further growth of the number of single-person households.

Increasing informatisationAccording to research conducted in 2010, the Netherlands tops the EU league of countries with the highest number of Internet connections per household. In addition, over 95 percent of Dutch households have at least one mobile phone connection. This means that there is a firm technological basis for interconnectivity. Four out of ten Dutch people say that social media have positively affected their personal social life.

Progressive informatisation changes the type and nature of social contacts, commodities and services. Physical commodities become virtual services, for example, as illustrated by the alarm clock that has become one of the many functions incorporated into a mobile phone. This sea change affects the distances involved in the movement of people and goods. In other domains, technology takes over many of the burdens of man, as in the information and communication industries. In other domains, devices take over human tasks, with self-guiding vehicles rendering human drivers obsolete, for example. In other words, ongoing informatisation changes the demand for transport and opens new avenues of transport.

Increasing globalisationOn a global scale, companies and economies are becoming increasingly intertwined, stimulated by the increasing use of ICT as discussed above. Global goods flows are growing. Knowing which scale levels (local, regional, national or international) are gaining or losing importance can help answer the questions which transport modes can be used and which goods flows will be important in the future. What will be the role of the Port of Rotterdam thirty years from now? Where will the Dutch get their food from? In addition to these trends and possible reactions, sustainability and a shortage of raw materials have been given key roles in the composition of the scenarios.

Following up on the trends referred to above, and taking into account other existing frameworks such as those from the CPB Netherlands Bureau for Economic Policy Analysis, the study participants developed their own framework, focusing on human needs for housing, work, recreation and consumption. The two trends of

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individualisation and globalisation and their counterparts are compared to define four scenarios of the social context of the future (see Figure 1). Other relevant trends and possible countertrends have been used to augment the description of the four scenarios.

Figure 1. Framework for the transport future view social context.

The extent of individualisation is used as a measure of self-interest versus focus on society. The qualification ‘individual’ puts self-interest first, whereas ‘collective’ means that persons put their own interests second to those of society as a whole. The result can be a reason to prefer collective over individual transport.

For goods transport, individualisation results in an increasing demand for custom-made products, whereas the opposite might lead to an increasing demand for cheap, mass-produced goods. Both extremes place different demands on production, transport and delivery of goods and services.

The extent of globalisation, of geographical orientation, is a measure of the geographical scale at which a person enters into social contacts, and of a person’s scope, whether conscious or not, regarding the origin of consumed goods and services.The further away, the greater the distance over which people, goods and services must be moved.

Apart from a person’s attitude, the two dimensions of the framework, the degree of individualisation and of globalisation, will prompt interested parties to consider two major aspects of transport: the number of units to be moved and the distance to be covered. The degree of individualisation raises the question whether, and if so,

Society | 21

under which circumstances, the collective transport of goods and/or passengers is an attractive option for satisfying transport demand. Changes in the extent to which products are produced locally rather than being imported from elsewhere can play havoc with the nature, volume and distance of transported goods.

Scenario descriptionsThe following sketches the social context, a ‘world’, for each of the four scenarios for 2040, and adds a translation of the social context into the resulting transport demand and a number of properties of the relevant transport system. The essence of each of the sketches is visualised in an word cloud.

Individual wealthThis scenario fits into the Individual – International quadrant, with individuals seeking wealth, luxury and profit while working for various clients in loose associations. They make their contribution to global, virtual, occasional teams from their own living environment in an urban area. It doesn’t matter where the products and services a person consumes come from, as long as they are there in time and meet with full satisfaction. This kind of luxury is not available to everyone. There is a broad social lower class, both within the Netherlands and abroad, that has to make ends meet. This is a society of keeping up or going down.

Transport demand and transport system properties: in this world view the government sets few restrictions. Individual freedom of choice goes first. This leads to an increase of worldwide goods movements, with the Port of Rotterdam remaining Europe’s leading freight hub. The shortage of raw materials will cause the recycling industry to grow fast.Persons also tend to travel a lot, be it for work or education, relaxation and

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personal health. Many activities are intertwined. The number of individual movements throughout the Netherlands, Europe and elsewhere has increased, both physically and virtually. The movements of those who cannot keep up in this society are restricted to significantly shorter distances.

Worldwide environmental awarenessThis scenario fits the Collective – International quadrant. People live in towns. Since tasks have been extensively broken down into subtasks, they work as specialists. Services are the dominant profession. New technologies come to fruition. Products and services are created to minimise the overall cost. Governments worldwide advocate environmental awareness, making sure the living environment remains healthy and enforcing the prudent use of raw materials. The industries ensure that the worldwide economy keeps running well.

Transport demand and transport system properties: governments worldwide greatly influence movement patterns, mostly because they shape both the production of goods and activities to result in the lowest possible overall cost. Some activities and production types are simply not tolerated locally. This results in increased goods production within Europe, but computerised processes keep job opportunities low.

Personal movement is also subject to strict rules. People would love to travel, but environmental targets mean that government rules won’t let them.

Society | 23

Strong regionThis scenario fits the Collective – Local quadrant. Trust in other countries and persons further away has declined radically. People focus on those they know personally and they have their own regional network of acquaintances and social contacts. People take care of one another and of their environment. Strict environmental restrictions set limits to economic development. Intensive recycling of raw materials and goods limits the flow of trade between regions. Society has shifted focus from personal ownership to usership. The region offers most of the essential facilities, so there is little need for the inhabitants to leave the area.Transport demand and transport system properties: goods transport, including recycling flows, is regional in nature, with regions varying in size from urbanised areas with a number of town centres to a number of provinces. Transport between regions is limited to raw materials, semi-finished products and luxury products that aren’t available, or cannot be recycled, within a region.

Personal travel mostly takes place within the region. Contacts and exchange of knowledge mostly take place face to face, or virtually where contacts outside the region are concerned. People incidentally go on holiday outside the region.

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Self-sufficient unitThis scenario fits into the Individual – Local quadrant. A worldwide crisis has sparked a changeover from society as it used to be in 2012. People seek to be as independent as possible. Small-scale communities predominate. Thanks to technological developments the direct living environment offers sufficient means of subsistence. The exchange of knowledge, using both real and virtual means, plays an essential role. People live as self-sufficiently as possible and work according to the cradle-to-cradle principle (C2C). Large-scale, worldwide production flows are a thing of the past. Since self-sufficient communities require relatively large areas to exist, the population has move out of the cities and towns, and existing urban areas have been redeveloped.

Transport demand and transport system properties: this world vision is characterised by its highly local nature, with goods transport occurring mainly locally, and international transport limited mainly to raw materials. One of the reasons for this is that recycling on a local scale is possible and entire chains of production occur mainly locally.

On a personal level, people live and work within the same area. Most of what people need in the way of work, recreation, shopping and entertainment can be found in the direct vicinity. There is little opportunity for long holidays outside the direct vicinity. Most contacts with people outside the local community or district are virtual in nature.

What do these scenario sketches offer?There is no such thing as ‘the’ future. Preparing for the opportunities and threats of the future requires a wide-ranging and open view. Within the STT future study ‘Super intelligent Transport’, the scenario sketches form a stepping stone to

Society | 25

possible future views of passenger and goods transport thirty years from now. Complemented by anticipated technological developments they invite parties to consider the state of transport demand in thirty years’ time and think up transport concepts to help meet that demand. Just think of the alternatives ICT offers to transport. These days these include telephony, Skype, videoconferencing, and soon perhaps holographic projections. Think also of the impact local 3-D printing could have on goods flows.

The sketches also have their validity outside the study. They could become the basis for internal and external business strategy discussions. What will an organisation’s vision be? Will any of the four sketches predominate? If so, which one, and which products or services will it affect? Will the effects vary between regions? What are the underlying developments worth monitoring? Or will entirely different developments radically affect the future of the organisation?

The sketches could also be used as checkpoints. The question might for example be what the effect of the sketched developments could be on the organisation. Will the organisation’s strategy be able to cope with the developments outlined by the various sketches? How can the organisation adapt to cope with new opportunities and threats, both anticipated and unforeseen, in a timely and adequate manner? Here lies ample food for thought and discussion.

References• Blauw Research (2010). “Wat wil jij dat er echt verandert” (‘What do you really

want to change?’), change research for BNP Paribas B12115.• Statistics Netherlands (CBS) (2009). Bevolkingstrends – Strategisch kwartaalblad

voor de demografie van Nederland (‘Population trends – Strategic quarterly journal for the demography of the Netherlands’). Volume 57 – 1st quarter, 2009. CBS, The Hague.

• Statistics Netherlands (2010). Tempo vergrijzing loopt op (‘Average age rising more rapidly’) CBS press release.

• CPB Netherlands Bureau for Economic Policy Analysis, Environmental and Nature Planning Bureau and Spatial Planning Bureau (CPB, MNP, RPB) (2006). Welvaart en Leefomgeving (‘Wealth and Living Environment’)

• CPB Netherlands Bureau for Economic Policy Analysis (2010). The Netherlands of 2040.

• European Commission (2010). eCommunications household survey: The results of a special Eurobarometer survey, results for the Netherlands.

• Huysmans, F.J. de Haan and A. van den Broek (2004). Achter de Schermen – Een kwart eeuw lezen, luisteren, kijken en Internetten (‘Behind the Scenes – A quarter century of reading, listening, watching and surfing the Internet’). The Netherlands Institute for Social Research, The Hague.

• Smith, Jack E. (2006). Science and Technology Foresight: Provocateur for Innovation Policy?

• UNFPA (2007). State of world population 2007 – Unleashing the Potential of Urban Growth. UNFPA, 2007

Changing flows offer new opportunities

Dynamics

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Summary of chapter 2

In the past few decades it has become apparent that global goods flows do not follow a path of linear growth. The global freight system has become increasingly dynamic and volatile, as can be observed from continuous changes in geographical patterns and in the type of goods being moved.

Global mega-trends, such as the emergence of new economies, climate change and the ongoing battle for natural resources, will all have repercussions on the position of the Netherlands within global logistics networks. At the same time, technological development provides opportunities for the Netherlands to consolidate and improve its current position as a global hub. Logistics services need to be developed in order to cope with changes in global freight patterns and to support innovative and highly complex global networks.

In addition to investing in physical infrastructures, the Netherlands needs to invest in virtual infrastructures that can serve flows that do not pass through its main ports or that may change course in the future. We will look at the main global mega-trends that affect logistics, discuss some quantitative scenarios for future freight flows, and identify future opportunities for Dutch logistics.

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Scenarios for the Netherlands as a logistics hub: opportunities and threats1

The past few decades have made it clear that worldwide goods flows are changeable. Although the long-term growth forecasts for world trade remain high, at the same time the dynamics and volatility of goods flows are increasing. The geographical patterns and the types of products being shipped internationally are subject to constant changes. Whatever we knew about forecasts is confirmed once more: nothing is more difficult to predict than the future. The only thing left to us is to run up scenarios and plot a course with strategic choices that will make our industry more robust in the face of possible setbacks. What are the developments that lie in store for us, and how can we prepare for them?

What is certain is that it is no longer self-evident that the Netherlands of the future will still be processing the same goods flows. At the same time, opportunities will be created for a new generation of logistics service providers with complex networks and a high level of automation. With itself strong virtual infrastructure and services industry, the Netherlands has the means to exploit these opportunities and maintain or even improve its position among the logistics competition.

This article will look at this line of thought in more detail, describing relevant global changes and presenting a number of recent scenario calculations for the future of the Netherlands as a logistics hub. The chapter concludes with a discussion of the resulting opportunities for the logistics services industry.

The dynamic environment of logisticsGeopolitical and economic developments lead to new challenges for the Dutch logistics industry. The developments involve structural changes and uncertainties which the logistics industry needs to be able to cope with. It is no longer a dead certainty that the Netherlands of the future will still be processing the goods flows of today. A major meta trend is the rate and the unpredictability – or even inconceivability – with which changes present themselves. Even if many developments in themselves are reasonably easy to predict on the basis of trends, and the nature (if not the timing) of certain sudden events can be imagined, time and time again the complex interaction of these developments will throw up unpredictable ‘black swans’.2 This chapter provides a short discussion of the global trends that most impact the logistics industry.

Lóri Tavasszy, TNO/TU

Delft, Arjen van Diepen,

TU Delft/TNO

Dynamics | 29

1 This article is based on two publications on which the authors worked: TNO, HCSS (2011), Een nieuwe generatie van logistiek: kansen voor Nederland (A new generation of logistics: opportunities for the Netherlands), Delft: TNO Diepen, A. van (2011), Effects of global long-term scenarios on container throughput in the port of Rotterdam, MSc. thesis, Delft University of Technology.

2 Nassim Nicholas Taleb, The Black Swan, Penguin, 2010.

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Demographic developmentsThe world population will continue to grow for some years to come, and is estimated to reach about 8,300 million people by 2030. Most of this growth will take place in Asia, Latin America and Africa. As the world population grows, so will the demand for food, water and energy. In addition to increasing numbers, the world’s societies will witness other demographic changes such as urbanisation and a rise in average age.

In 2030, 60 percent of the world’s population will probably live in urban areas. By that time, Asian towns and cities will hold 1,200 million more people than they did in 2000. This is a growth of over 90 percent. Urbanisation has far-reaching implications for economic growth, since the process often involves a shift from an agricultural economy to a more industrialised or services-based economy. The shift often results in increasing economic growth and rising consumption figures, turning these areas into potential markets for western products and services.

In 2050 the percentage of people in Europe of employable age (15-64 years) will have dropped to 57 percent, down from 68 percent in 2010. Especially once the baby boom generation starts to retire in the next few years, Europe will increasingly face shortages in the labour market. Businesses will find it increasingly difficult to find both blue-collar and white-collar employees, and as a result, labour costs will probably rise.

Figure 1: Change in working-age world population 2010-2030 (UN Database projection)

Socio-economic developmentsIn addition to the more rapidly increasing world population, the E7 countries (China, India, Brazil, Russia, Indonesia, Mexico and Turkey) also show much higher figures for economic growth than the western economies do. According to Volume 2 of the Transportation & Logistics 2030 report by PriceWaterhouseCoopers, the E7 countries will overtake the G7 economies sometime around 2020.3

3 Klaus-Dieter Ruske et al., Transportation & Logistics 2030. Volume 2: Transport infrastructure – Engine or hand brake for global supply chains? (PriceWaterhouseCoopers).

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One effect of the fast population growth in combination with the high economic growth figures is a rapidly growing middle class in the E7 countries. Goldman Sachs expects the percentage of the Chinese middle class population, i.e. those with an annual income in excess of USD 6,000, to increase from 35 percent in 2008 to 70 percent in 2020.4 This rising middle class will ensure an increasing demand for (luxury) consumer goods. Already the Chinese import figures for luxury goods are rapidly rising. China is the largest market for Louis Vuitton, and it accounts for a major share of the sales of such brands as Swatch (28 percent), Richemont (22 percent) and Gucci (18 percent).5 European goods are popular in China, mostly because of their quality and the image they project.

Another important socio-economic trend that affects consumer demand is mass individualisation. Customers increasingly want products and additional services to fit their own specifications. They want to be able to choose the colour combination of the stripes on their shoes, which extra services, if any, they want with them, and where and when the shoes will be delivered.

More and more companies cater for this market by enabling customers to design and compose their own products. Dell was a trendsetter with its built-to-order computer systems, where customers could themselves pick the components for their computer. The fashion and lifestyle industries also offer many examples, including Nike (Nike CustomID), Adidas (MiAdidas) and Vans (VansCustoms). One factor that aided the development of this type of mass individualisation is the rapid rise of home, or Internet, shopping. Since 2002, annual Internet sales figures in the Netherlands have consistently shown double-digit growth. Even so, the growth has declined in the last few years, due in part to the international economic crisis. In 2010, on-line shopping turnover amounted to EUR 8,200 million, i.e. 10 percent of the entire retail trade.

Political and economic power shiftsPolitical and economic interests are increasingly converging. The E7 countries want to play a more prominent role in international economy and finance institutes. The Beijing Consensus, an economic model of state capitalism inspired by China, is on the rise. In contrast to the Washington Consensus, which takes human rights into account in the development of trade relations, the Beijing Consensus assumes a non-intervention policy where political issues are concerned. The other E7 countries are among those that are also adopting certain aspects of state capitalism, such as the establishment of large state-owned companies, a mercantilist export policy, and a technonationalist research culture.

4 Dominic Wilson and Raluca Dragusanu, The Expanding Middle; The Exploding World Middle Class and Falling Global Inequality, Global Economics Paper (Goldman Sachs, July 7, 2008), 10, http://www. ryanallis.com/wp-content/uploads/2008/07/expandingmiddle.pdf.

5 CLSA, Asia-Pacific Markets – Dipped in Gold: Luxury lifestyles in China and Hong Kong.

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One of the sectors resorting to state capitalism is the procurement of strategic raw materials. The rise of the E7 countries and the corresponding growth of raw material-intensive processes (e.g. urbanisation) and changing consumption patterns has pushed up the demand for raw materials. Various state-owned companies are being used to safeguard access to these raw materials. China for one is investing heavily in companies, infrastructure and physical installations in countries that are rich in raw materials, in particular in Africa. In 2007 for example, China signed a natural resources for infrastructure contract with the Democratic Republic of the Congo. In the deal, between two Chinese state-owned companies and the Congolese state copper company, the Chinese partners promise to invest USD 6,000 million in Congolese infrastructure projects and mine development. In exchange, the Congolese government will provide ten million tonnes of copper and 600,000 tonnes of cobalt from the mines in the Katanga region.

With its active acquisition policy in the field of foreign infrastructure, China is building up its influence in international logistics chains. In 2010, the Chinese state company COSCO paid EUR 2,800 million for a 35-year lease on the largest container terminal in Piraeus, Greece. During the lease period, the company intends to invest EUR 680 million in port facilities and a new jetty, trebling the capacity of the port area. The container terminal already processes 1.8 million TEU6 each year, which makes it a major player in the region. China is also involved in the development of a logistics hub near the port of Attica, and there has been talk of acquiring Greek railway systems. Other European suffering from economic problems have also caught the attention of the Chinese, with Chinese manufacturers building schools, apartments, railways and factories in Athlone (Ireland) to promote the export of Chinese products.

Technological innovationThe ever increasing possibilities offered by technological development have a marked influence on logistics. The increasing computerisation of processes for example, lowers the market threshold for smaller players and so forms a firm basis for innovation. The rise of smartphones allows information access and knowledge exchange on a continual basis. In the future, the physical and virtual world are expected to converge even more.

Developments in ICT not only offer excellent opportunities for optimising processes, they can also help to introduce entirely new production methods. Rapid prototype technology, or 3-D printing, enables producers to use digital data files to locally (re)create objects by printing a 3-D object layer by layer. The current use of the technique is mostly limited to rapid prototype production, but although commercial 3-D printers are still expensive and technically limited, prices are expected to drop and capabilities to increase in the near future. New technologies such as 3-D printing can affect the location of production centres and trade routes. Rapid prototyping for example, on the one hand can help reduce transport costs by

6 Standard container size (Twenty Foot Equivalent Unit).

Dynamics | 33

regionalising supply, while on the other hand transport volumes will shift from high-value products to raw materials.

Figure 2: Example of tableware created by 3-D printing. (Photo: Cunicode design agency for 3Dprint)

Within the domain of technology, sustainability is rapidly gaining importance. Climate change discussions have resulted in pressure to substantially reduce energy consumption and CO2 emissions. Innovation in clean fuels such as wind and solar energy is a major focus of the EU and its member countries.7

World trade changesWorld trade has rapidly increased in the past decades, while logistics costs have dropped. Figure 3 shows the exponential increase of world trade between 1970 and 2010. Whereas logistics costs dropped sharply over the past years, they are currently on the rise again in developed countries.8 Factors contributing to this effect are the increasing congestion problems, higher cost of stock-keeping and rising energy prices.

7 European Commission, Europe 2020. A European strategy for smart, sustainable and inclusive growth.8 ATKearney/ELA, 2009.

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Figure 3: Development of logistics costs and world trade (WTO, Eurostat, ATKearney).

Among other influences, the economic rise of the E7 countries and the expansion of their middle classes are affecting the directions of the various trade flows. During the 1980s and 1990s the emergence of the Asian Tigers already caused a major change in trade flows, causing transhipping operations on the east coast of the U.S. (New York, Philadelphia) to stagnate, and stimulating major growth of transit operations on the west coast (Long Beach in particular). This also resulted in changes in the American hinterland flows, due to which new long-distance rail connections were stimulated.

The worldwide financial crisis has weighed down heavily on world trade. Nevertheless, expectations are that in the long term the growth rate will pick up to reach former levels, with GNP levels being reached later than forecast.9

As the Asian countries develop, we can discern effects that are more subtle than simple growth. The new middle class in China for example will cause the intra-Asian flow of high-value products to increase.10 In addition to an increase in the Chinese degree of self-sufficiency, there are other trends, some of them conflicting. The production within China is expected to shift to regions within China where wages are lower, i.e. from east to west. Eventually the production will move to other, even cheaper regions such as Africa. Export products that have a high value or are time-critical in nature will be produced or stored closer to the consumer markets.11

600 18,00

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World trade (USD 1,000 M)

9 Rothengatter (2010), Economic crisis and consequences for the transport sector, uit: W. Rothengatter et al. (eds.), Transport Moving to Climate Intelligence, Springer Science + Business media

10 Klaus-Dieter Ruske et al., Transportation & Logistics 2030. Volume 3: Emerging Markets - New hubs, new spokes, new industry leaders? (PriceWaterhouseCoopers), 16.

11 Boston Consulting Group (2007), Surviving the China Rip Tide: How to Profit from the Supply Chain Bottleneck; www.bcg.co.th/documents/file14992.pdf.

Dynamics | 35

The effects of these structural shifts in world trade need not necessarily be beneficial to the transit volume of the main port of Rotterdam. One of the consequences of the development of trade between Asia and Central Europe was the movement of container terminals in Europe. Even though Rotterdam still remains Europe’s largest container port and shows high growth figures, the ports on the Baltic and the Black Sea grew faster in recent decades.22 Germany overtook the Netherlands as the foremost transit country as long ago as 1999, processing well over one third more goods than the Netherlands in its peak year, 2008. In rough figures this amounted to 15 million TEU versus 11 million TEU.13

This pattern is expected to continue with the emergence of Central and Eastern Europe as production and consumer regions. The worldwide financial crisis has hit the port of Rotterdam with less force than the other ports, thanks to its position as a major hub, while the spokes of the networks saw the services finished first. Therefore it is not only a port’s geographical position that is important, but also its function relative to other ports within the network. In the following we will take a closer look at the development of the Netherlands as a logistics hub.

Effects on the Netherlands as a geographical hubThe mega trends outlined above don’t just have a major impact on the nature of logistics services, they also affect the Netherlands as a geographical hub and as a major hub for physical goods flows. Rotterdam still is Europe’s largest port, and it has grown considerably over the past decades, stimulated mainly by increasing globalisation and decreasing logistics costs. However, the crises of recent years confirm that growth is by no means a certainty, and it therefore makes sense to examine some alternative views of the world and analyse their effects on global goods flows, and those in the Netherlands in particular.

The geographical orientation of each of the future views is of major importance to the Netherlands. In a rapidly globalising world, the Netherlands have been able to develop as a hub in the logistics chain and as major gateway to Europe, but this picture may change if the trend of globalisation levels off, or even reverses. On a geographical scale, three different scenarios come to mind: global, regional and local (see Figure 4).

These developments need not necessarily be mutually exclusive and they can vary among different sectors. It is important however, to realise what the effects will be of any given geographical orientation for the goods flows that pass to, from, and through the Netherlands.

12 Notteboom, Theo, Economic analysis of the European seaport system, Antwerp: ITMMA, 200913 TLN, Transport in Cijfers, 2012; http://www.tln.nl/media/1_tln/publicaties/handboeken/tic2012.pdf

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Figure 4: Geographical scenarios for goods flows.

GlobalisationGlobalisation usually is a continuation of the current trend in which the total logistics cost remains low. Economies of scale determine the choice of production locations, resulting in global factories that serve the entire world market. With regard to world trade, it entails a further increase of the volume shipped between continents. Production locations will gradually shift, however. The less developed western regions of China will present themselves as an alternative for the saturated east, a development that is already beginning to take shape. Globalisation comes with increasing Chinese influence, through overseas infrastructure investments for example.

Regional production, market-drivenHigher wages in Asia, higher transport costs and an increasing pressure on the supply chains to become responsive and flexible are pushing production closer to the market. Concepts such as customisation and postponed manufacturing contribute to this effect, as production locations close to the market make it possible to introduce last-minute changes in products. For Europe, North Africa and/or Eastern Europe could become the new sweat shop locations now that these regions can compete with former low-wage countries.

Local productionExtreme demands for sustainability and very high transport costs will ensure that production is driven even closer to the market. Consumer goods will be produced locally and world trade will be dominated by raw materials. Worldwide logistics chains will give way to local chains. The focus will be on reducing transport distances, so the trend will be towards local trade and trade with neighbouring countries. Another development to stimulate locally produced goods is the development of 3-D printers which, as mentioned before, can be used to produce goods on location, with logistics being relegated in most cases to the transport of raw materials.

So what will be the effect of these world views on the logistics and goods flows in the Netherlands? The second author of this article used a model study to calculate the effects on the port of Rotterdam for each of the three scenarios. Table 1 shows the relevant premises and their effects on the port of Rotterdam.

LOCAL

Regional

Global • Global scale: based on the ‘the world is flat’ principle and

steadfastly continues the current globalisation trend.

• Regional orientation: the focus is on trade within the

continents, with clusters being formed per region or

continent.

• Local production structure: dominance of local supply

chains and trade between neighbouring countries, long-

distance transport used mainly for raw materials.

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Table 1: List of premises and resulting goods flows through Rotterdam per scenario.

As the table shows, the growth will continue in the event of globalisation, and the volume of processed physical goods flows will more or less treble relative to the current annual transit volume of about 11 million TEU.

However, regional production entails a market with much more competition and the scattering of goods flows throughout Europe. The hub function of Rotterdam will be threatened by emerging port facilities in regions of high activity, such as the Black Sea and the Mediterranean. Growth will occur, but it will be much more limited.

A local production structure could even result in in a decrease of the number of containers processed in Rotterdam, since most of the commercial activities take place locally, so the importance of large sea ports will diminish. The effects on the Netherlands as a transit country would be immense.

Opportunities for Dutch logisticsWhat are the opportunities for the Dutch logistics industry in each of the above scenarios? Will a regionalising or localising world cut the industry’s turnover figures? Probably not, provided we manage to innovate enough and adapt to the specific properties of each scenario. In each of the three scenarios, the services industries will need a different focus:• A globalising world will be looking for low cost and flexibility in geographical chain

management.• A regionalising world will cater for mass individualisation and will focus on

responsiveness and customisation.

Scenario 2040 Globalisation Regional orientation Local production

Production and Trade

Global; production shifts to less developed areas

Production locations closer to the market, for Europe, North Africa and Eastern Europe

Consumer goods produced locally, trade between neigh-bouring countries increases and intercontinental trade decrease

Logistics Worldwide logistics chains Sharply increased value time-critical goods, continental logistics chains; individual logistics

Local logistics chains, emphasis on local content

Transport Ultra large container ships, new transport corridors (e.g. Eurasian rail transport)

Increasing transport costs, focus on shorter distances

Very high transport costs, strong pressure on polluting transport modes

Infrastructure (Chinese) investments in European port around the Mediterranean and Black Sea. Development of Trans-Siberian rail link

Developments in ports around the Mediterranean and Black Sea due to increasing activity in these regions

Little extra infrastructural development

Container flows through Rotterdam (million TEU/year)

27 16 10

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• A world in which local-for-local is important will look for sustainability and services that support a more relaxed lifestyle, albeit at higher cost.

We will now describe a number of development trends that respond to the three scenarios.

Responsiveness and customisationMass individualisation, the increasing concerns over climate change, and the rapid developments and new possibilities in the world of ICT have a serious impact on the design and management of logistics chains and networks.The developments demand a new generation of logistics. Customers are becoming increasingly demanding and seek improvements in service. In the future the influence of individual customers on the logistics processes will only increase, and it may well be the case that customers will gain a proactive role through direct manipulation of delivery times and locations.14

The diversity of products will also increase, and so will the number of distinct customer segments. Instead of large consignments of uniform products, shipments will consist of products with slight differences to cater for specific target groups. This requires a great deal of responsiveness and flexibility from logistics chains and from the companies managing those chains. Even though the cost of logistics forms only a small part of the total cost of a product, the logistics services connected with the product, such as delivery time, reliability and security, relate directly to the value of the product and are highly dependent on the logistics chain. The companies and regions that offer the best solutions to the service demands made by the market will manage to attract such services.

A prominent services segment is that of complex logistics, i.e. a logistics network for products with the emphasis on availability, e.g. spare parts for complex equipment (IT), installations (industry) and transport (airlines). Another example involving complex logistics is the large-scale, global launch of popular products such as smartphones, tablets or games. The introduction of these products demands 100 percent availability during peak demand, and then there are the confidentiality requirements and the high value of the products.

In this kind of logistics operations, the impact of any failure to deliver on time will be huge. The sectors involving such complex logistics will keep growing.15 The life cycles of technology products will become shorter, and the digital creative industry will grow. Eventually, these customer-specific and responsive services will gradually be introduced in less advanced market segments such as container logistics.

14 Klaus-Dieter Ruske et al., Transportation & Logistics 2030. How will supply chains evolve in an energy-constrained, low-carbon world?

15 Tavasszy, L.A., C.J. Ruijgrok, M. Thissen (2003), Emerging global logistics networks, Growth and Change 34 (4)

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Innovation for a healthier worldUnder pressure from consumers, companies increasingly find themselves forced to reduce their carbon footprint. Not only are related concepts such as recycling and return logistics becoming more important, the modes of transport themselves will also have to become more sustainable. Sustainability legislation will result in more fuel-efficient and cleaner ships, aircraft, lorries and trains. New transports such as the zero emission vehicles used by TNT, but also the development of the latest large container ships, will help reduce the emission of CO2. In this respect, considerable gains could be achieved by improving the efficiency of transport.

The benefits resulting from efficiency improvements will probably be insufficient to achieve our sustainability targets for 2050. Technical changes, tax measures and changes in behaviour would appear to be unavoidable.16 We will also need to be prepared for radical and controversial policy initiatives, such as the recently voiced European Commission intent to eventually route 50 percent of all goods traffic on distances longer than 300 kilometres via rail or inland waterways.17 The attendant decoupling of services from physical flows offers a major opportunity for the Netherlands, one which we will discuss under Virtual logistics.

Figure 5: The M.V. Beluga SkySails is the world’s first modern cargo vessel to get part of its propulsion

from sail power. (Photo: US Navy press release)

The focus on sustainability is stimulating an interest in means to improve the efficiency of ship propulsion systems. Several companies, such as KiteShip in the U.S. and SkySails in Germany, are working on sustainable propulsion systems for commercial vessels using large kites. According to SkySails the use of these kites can reduce fuel costs by 10 to 30 percent. A study by the United Nations shows that the application of such techniques on the global commercial fleet could reduce the annual CO2 emissions from shipping by 100 million tonnes.

16 PBL (2009), “Getting in the right lane for 2050”, report 5001500001, The Hague: PBL17 Tavasszy, L.A., J. van Meijeren, Modal Shift Target for Freight Transport Above 300 km: An Assessment,

ACEA, 2012

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Although mega transports are especially suitable for global transport, the same is not the case for last-mile delivery. The last leg in the transport process is relatively expensive due to delays caused by urban congestion and the demands placed upon the transport. The problem is exacerbated by increasing urbanisation, in particular in emerging economies. Parties in the transport industry will be made increasingly responsible in these general urban issues, and will be forced to come up with effective solutions.

Virtual logisticsComplex supply chains require adequate information support in order to effectively plan, monitor and manage goods flows. Developments in the fields of ICT, process automatisation and data capture are taking place in rapid succession. New technological developments such as RFID, Wi-Fi, GPS, mobile on-line access and other sensor techniques are rapidly developing and increasingly deployed in day-to-day logistics operations. In addition, collaboration between different though often similar chains is on the increase.

The 4C concept consists of a control centre from which several logistics chains can be managed and coordinated together. End-to-end visibility is the supreme realisation of sharing information within a supply chain. This means that rather than restricting access to information to the direct chain partners, from now on the entire surrounding network of companies and institutions, including customs and financial services, will be provided with current data. By also integrating supporting processes, chain processes can be even further optimised.

Another important application field for virtual logistics is supply chain financing, optimising the financing of goods and cash flows within a supply chain. Just for the south of the Netherlands alone, the consistent application of supply chain financing in SMB companies would release a working capital of EUR 1,000 million annually. This amounts to a saving of 25 percent on the cost of financing, or in absolute terms, annual savings to the tune of EUR 40 million.

The supporting services that enable a physical logistics chain to exist do no longer need to be close to the chain itself. Virtual services can also be applied on physical flows that do not even pass through the Netherlands or even Europe. New services will be created to support e-customs, supply chain finance, cross chain control and extreme tracking & tracing, all of which can be provided from within the Netherlands. Companies such as CEVA, Tri-Vizor and CAROZ are already coordinating and managing multiple worldwide supply chains from control centres using names like Freight Management, Supply Chain Orchestration and Carpooling for Flows.

In summary, extensive virtualisation of the supply chain will ultimately be essential to retain the management function of the Netherlands. This approach of separating the physical processing of the product flow from the virtual management of the flow offers a major opportunity for a logistics control centre in a sustainable world, for it will allow us to reap the economic benefits of the flows that do not pass through the Netherlands.

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In this chapter we have looked at the different futures that may be lying in store for the Netherlands, both geographically and with regard to logistics. The geographical aspect appears to be more difficult to control than the aspect of logistics services itself, as we are at the world’s mercy in this respect. It will be essential to make a strategic choice for the right investments that will make Dutch Logistics stronger as a brand and give it a permanent position in our future. It is of course difficult to provide an answer to the question which of the three world views will become reality, but one thing is certain: the companies and governments that take the trouble to examine these three scenarios will turn out to be more robust in the face of long-term developments than those that stay focused on a single world view.

Maintaining the logistics lead

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Summary of chapter 3

This contribution starts with the observation that in recent years the logistics trailblazing position of the Netherlands within Europe has come under increasing pressure due to growing competition from neighbouring countries as well as from Central and Eastern Europe. The current situation begs the question whether the Netherlands will still be at the European forefront of logistics in 2040, and whether companies from overseas will still be interested in setting up business in our country.

The conclusion is that yes, in each of the four ‘new outlooks’ presented by STT the Netherlands will be able to maintain its high profile as a preferred logistics base with a permanent lead on other regions in Europe. The reason is that the Netherlands will be able to combine new opportunities with the historical advantage offered by its geographical location, with main sea ports and airports close to the German market, its main hinterland.

In the long term, new opportunities will result mainly from the increasing importance of technology and digital data in our society, in which new developments such as the internet and robots will transform the world as we know it. The use of modular robots will enable to offset the negative effects of our high cost of labour and limited demographic growth, both now and in the future. Nevertheless, we must bear in mind that the number of new overseas logistics nodes will fluctuate with the ups and downs of economic growth.

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Kees Verweij, Principal

consultant, Buck

Consultants International

The Netherlands as a logistics business location in 2040

As a location for logistics businesses, the Netherlands, thanks to its geographical position and commercial roots that go back centuries, managed to gain a leading position in Europe as early as the nineteen seventies, with the ports of Rotterdam and Amsterdam and Schiphol Airport at the forefront. Between 1980 and 2012 over a thousand American and Asian companies set up their European Distribution Centres (EDCs) in the Netherlands, with most of these contracting out their logistics operations to specialist logistics service providers. This puts the Netherlands among the European leaders, together with Belgium, Germany, and to a lesser extent, Great Britain. Most of these EDC operations landed in the main sea ports and airports as well as the corridors to the hinterland, with the regions of Amsterdam, Rotterdam, Brabant and Venlo becoming the logistics hot spots of the Netherlands.

In recent years however, the position of the Netherlands as Europe’s logistics leader has come under increasing pressure from growing competition, partly from the surrounding countries, but increasingly from Central and Eastern Europe. Will the Netherlands in 2040 still be at the forefront of European logistics, and will overseas companies remain as willing to set up business in our country?

Future view 1July 2040, the Maasvlakte port area. Using the magnet/suction system installed fifteen years ago, the Chinese Triple-E supersize container vessel carrying 25,000 TEU gently eases into its berth at one of the main sea terminals. Immediately the gigantic cranes spring into action to unload the 10,000 TEU or so destined for transit through Rotterdam. The numbers are staggering, but then there are only a few European ports with the depth and facilities to process these enormous Triple-E supersize ships. The port of Rotterdam has been known for decades as a place that can efficiently and sustainably move such large loads. This is due in part by the considerable investments by the Asian parent companies of the sea terminals, which by now have gained possession of all the major privatised sea terminals in the world, controlling the world’s trading network.

Some of the unloaded containers are placed on hold in the stack, but these days the total wait times for containers in stacks have been reduced to a few hours. Thanks to extensive synchromodal network management, the rail and waterway services are much better synchronised with the arrival times of the ocean ships than they were, say, thirty years ago. None of the containers is kept waiting more than six hours at the sea terminal, thus reducing the need for stacking space. The stacks have been moved partly underground in order to

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make the best use of the available space on site. It also makes a big difference that in 2020 the decision was made to build a road and rail tunnel that enables much of the cargo transport towards the north to be handled by rail straight from the sea terminal. Thanks to the new environmentally friendly and quiet trains this has become much more accepted than it would have been in the Netherlands of thirty years ago.

The remaining road transport is handled by computer-controlled trucks that find their own way and automatically keep distance so they can be run a lot closer together, making much more efficient use of the motorways than we used to. As a result, congestion has finally become a thing of the past, barring exceptional circumstances such as accidents. The inland waterways account for an increasing number of container transports, which is due in part to the fact that the barges have fixed berths, allowing them to reliably stick to their schedules. The ships use LNG fuel, but other than that they look practically the same as thirty years ago. Some designs are simply timeless.

Long lines and new viewsPredicting the future is never an easy task, and this applies equally to predicting the future of existing and new logistics activities in the Netherlands. If we look at forecasts like these, we can distinguish two types: long lines and new views. Long lines are based primarily on today’s society and trends, extrapolating them to the future, often resulting in a future view that is pragmatic and imaginable. New views on the other hand often involve a future that is more futuristic, sketching a more extreme image of the technological and social changes that affect the logistics processes. This article uses the second type of future view as its point of departure.

What will the long lines and new views look like for goods transport in the Netherlands in 2040?

Long linesThese are future visions based on existing quantitative developments. The Wealth and Living Environment (Welvaart en LeefOmgeving, WLO) scenarios of the CPB Netherlands Bureau for Economic Policy Analysis and other planning agencies dating from 2006 [CPB et al, 2006] still form the nationally accepted vision on the development in this sector of the Dutch economy up to 2040. Based on these scenarios, TNO formulated prognoses for the development of the goods flows in the Netherlands up to 2040, as shown in Figure 1.

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Figure 1: Growth of goods transport in the Netherlands according to four WLO scenarios (2006)

The four WLO future scenarios vary widely in goods volume. The highest growth scenario, Global Economy, assumes an increasing world free trade and the global goods flows that go with it, whereas the other three scenarios show a less marked growth of the goods volume. In 2010 a number of parties, and the Port of Rotterdam Authority in particular, took a critical look at the goods flow forecasts that formed the basis for these four WLO scenarios in 2006. This already took into account the extra adjustments made by the CPB in late 2006 for the growth of the container flows in the Dutch ports [CPB 2006]. The main reason for this review was that practical experience had revealed that transit traffic in sea ports reacts much more rapidly and distinctly to developments in the world economy. This had already been indicated by the CPB itself in 2006, which is why specific scenarios are called for.

In 2010, while preparing the Port Compass 2030 review, which was presented by Rotterdam in 2011 [Port of Rotterdam, 2011], the conclusion was that new transit forecasts would have to be developed specifically for the sea ports in order to gain better insight into developments in goods transit relevant to the Dutch ports. The result was that two new transit forecasts were detailed for the sea ports in the Hamburg-Le Havre range, i.e. European Trend, High Oil Price, and Low Growth. These two, together with an update of the Global Economy scenario from the 2006 WLO study (GE+), form the basis for the long-term vision of the Port of Rotterdam Authority, the ports in the North Sea Channel Area (Noordzeekanaalgebied, NZKG) and Zeeland Seaports [BCI, 2012].

The expected growth is greatest in the GE+ scenario, in which the Rotterdam transit figures grow to 884 million tonnes in 2040. This is more than double the transit figures for 2012, with most of the growth coming from container transhipments.

50

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1980 2000 2020 2040

Gross National Product 1980-2004 Tonne-kilometres in NL 1980-2004

Regional Communities 2004-2040 Strong Europe 2004-2040

Transatlantic Market 2004-2040 Global Economy 2004-2040

1980-2004 2004-2028

Index 1980 = 100

Realised & forecast growth of goods transport in the Netherlands, 1980-2040

1980-2004:+76%

2004-2028:+72%

-6%

Source: CPB/RPB/MNP/CBS 2006Compilation: TNO

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The Port of Amsterdam and Zeeland Seaports are also banking on containers for the maximum growth scenario, with 36 and 33 million tonnes of container transhipments in 2040, respectively.

Table 1: GE+ scenario transhipment forecasts for Rotterdam, NZKG and Zeeland Seaports up to 2040

Source: BCI 2012, based on data supplied by Ports and the Ministry of Infrastructure & Environment

New viewsThis second type of future vision is not based on extrapolating current trends in the economy, trade and logistics, but instead uses an explorative vision of the possible directions in which a society might develop. This is the approach that was used by the STT Netherlands Study Centre for Technology Trends (Stichting Toekomstbeeld der Techniek), which in 2007 published the ‘Hub Holland 2025’ vision [STT, 2007]. This document outlines a future vision on the development and use of infrastructures in the Netherlands in order to answer the question whether the Netherlands can manage to keep on its successful development as a European infrastructure hub up to 2025. This continued development is based on three scenarios:

1. Global Trust Trader2. Helianthus3. The Golden Road

Global Economy + Transit Rotterdam Transit NZKG Transit ZeelandTransit in M tonnes Transit in M tonnes Transit in M tonnes

Wet bulk 2008 2020 2030 2040 2008 2020 2030 2040 2008 2020 2030 2040Crude oil 100,0 102,0 103,0 105,0 0,0 0,0 0,0 0,0 0,2 6,3 6,2 6,2

Mineral oil products 59,0 81,0 95,0 109,0 31,4 49,1 50,2 51,2 7,2 11,4 13,4 14,9LNG 0,0 8,0 10,4 11,2 0,0 0,0 0,0 0,0 1,7 2,2 2,6 3,2

Chemical products 26,0 35,0 44,0 57,0 2,7 2,5 3,5 4,5 2,9 3,9 4,9 6,4Vegetable oils 9,0 12,0 14,0 17,0 0,0 0,0 0,0 0,0 0,1 1,2 1,4 1,9

Wet bulk subtotal 194,0 238,0 266,4 299,2 34,1 51,6 53,7 55,7 12,1 25,0 28,5 32,6

Dry bulk 2008 2020 2030 2040 2008 2020 2030 2040 2008 2020 2030 2040Agricultural bulk 10,0 11,0 11,0 13,0 11,6 12,0 14,0 16,0 0,1 0,1 0,1 0,1

Iron ore 43,1 40,2 39,0 34,4 10,5 11,0 11,2 11,4 1,0 1,0 0,9 0,8Coal 28,6 44,0 47,0 46,0 22,3 24,0 24,7 25,3 3,3 4,3 4,5 4,4

Dry biomass 0,4 1,9 4,0 5,0 0,0 1,8 2,6 3,3 0,0 0,5 0,7 1,0Other dry bulk 12,0 13,7 15,3 15,7 7,7 10,9 12,8 14,6 3,9 4,4 4,6 5,0

Dry bulk subtotal 94,1 110,8 116,3 114,1 52,1 59,7 65,3 70,6 8,3 10,3 10,8 11,3

Parcel goods and containers 2008 2020 2030 2040 2008 2020 2030 2040 2008 2020 2030 2040Containers total 107,0 211,7 310,3 412,8 3,9 16,4 26,2 35,9 0,1 14,2 31,0 33,4Direct Deep Sea 64,2 125,8 185,4 244,2 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.

Transshipment 26,9 63,8 93,7 128,7 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.Short Sea 15,9 22,1 31,1 39,9 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.

Steel 3,8 10,9 14,6 18,0 2,9 5,6 7,7 9,7 1,3 1,7 2,1 2,8RoRo 17,9 23,0 28,3 37,8 1,1 1,1 1,6 2,1 2,0 2,5 3,3 4,2

Other parcel goods 3,4 3,1 2,8 2,5 0,7 0,1 0,1 0,1 9,5 9,9 9,8 9,7Total parcel goods 132,1 248,6 356,0 471,1 8,6 23,2 35,6 47,8 12,9 28,3 46,2 50,1

Total 420,2 597,4 738,7 884,4 94,8 134,5 154,6 174,1 33,3 63,6 85,5 94,0

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In the first scenario, Global Trust Trader, the Netherlands will develop as a global front runner in the sectors of water and law administration, with other sectors receiving much less attention. In the Helianthus scenario, the Netherlands will retire within its borders, driven in part by the fact that the logistics position of the Netherlands has become eroded by a shift of the economic centre of gravity towards Eastern Europe. In The Golden Road the Netherlands will develop as a sustainable network, one of the reasons being the loss of transit traffic and a new focus on the logistics of high-value products.

In the past year, STT has further detailed this view in a vision of a super intelligent transport system for the Netherlands towards 2040, which is the result of the interaction between social and technological developments [STT, 2011]. The future vision is based on four scenarios for development of Dutch society. These four scenarios in turn are based on the differences between international versus national orientations, and individualisation versus globalisation. The four scenarios, which are described in more detail elsewhere in this book, are:• Individual wealth• Worldwide environmental awareness• Powerful region• Self-sufficient unit

In practical terms, the Long Lines and New Views scenario types are difficult to align into a coherent future vision. This isn’t really necessary however, since the scenarios are based on different premises. However, sometimes scenarios can coincide at least in part, as the CPB’s GE and the Port of Rotterdam’s GE+ do with the STT’s Individual Wealth scenario.

Technology and ICT drivers for logistics in 2040The four STT development scenarios for the transport industry in the Netherlands are based on five social trends that are considered the most relevant with regard to future transport demand in the Netherlands:

1. Increasing urbanisation, which will cause distribution structures to change. Due to further technological developments and bundling of goods flows, urban goods distribution will become much simpler after 2020, and will come to resemble the distribution of public utilities such as water, gas and electricity.

2. Population changes, with a further increase of the average age and changing personal movement patterns. People will eventually travel less over medium distances, and they will require fewer physical products because they will prefer digital experiences.

3. Increasing individualisation, with a focus on people’s personal needs. This will increase, with the use of smartphones and tablets being no more than the tip of the iceberg.

4. Increasing globalisation: it will become increasingly important to connect to global goods flows if countries are to maintain their position among the competition, and processes will need to be as effective and sustainable as possible.

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5. Increasing informatisation: the application of ICT in our daily life and work is growing hand over hand.

Of these five developments, the increasing informatisation of our lives will have a major effect. It is of course difficult to make long-term forecasts of what ICT will make possible in 2040. Scientist Michio Kaku [M. Kaku, 2011], in his book Physics of the Future: How Science Will Change Daily Life by 2100, predicts that the Internet-enabled contact lens will be the most important technological development in the medium-long term (2030 to 2070). These contact lenses can provide you with all the information you want about whatever you’re looking at, they can digitally magnify your vision, and they can add virtual structures to real-world images. In the logistics industry they will be helpful to obtain all the necessary information about an SKU or shipment, or to visualise a route. The Internet-enabled contact lens is in fact a simple extrapolation of the development started with notebook computers, smartphones and tablets, which enable us to view, process and store information whenever we want and wherever we want. The question is, will we still be needing all the physical products we now use, or will we be consuming more and more in digital form?

A second major technological development will be the increasing use of robots, not just for repetitive jobs, but also for more diverse tasks. This will become possible because robots can benefit from the results of intelligent agent research, enabling them to make the correct decisions in increasingly complex circumstances, even in logistics. This development of robots will be accelerated in the next two decades due to demand from the healthcare industry, where modular robots will increasingly be taking over tasks. These modular robots are designed for specific tasks, e.g. managing and maintaining infrastructure (roads, waterways) or cleaning and running distribution centres. Modular robots will increasingly form a part of our daily lives, and their activities will become normal to us. What might this look like in the year 2040?

The individual wealth 2040 scenario

Future view 2July 2040. It is a hot day, with temperatures above 35 degrees celsius, and the sunlight is reflected by a variety of low-rise and high-rise distribution centres along the Betuwe Corridor between Rotterdam and Duisburg in Germany. The light screens on the buildings flash news items, ads and product information in English, Dutch and Chinese, emphasising the international nature of the industry. You could use your Internet-enabled contact lenses to look at the buildings and download a virtual image stream to see what goes on inside. But very few people do so, for they have seen it all before.

Immediately after the economic crisis of 2008-2015, American, Chinese and Indian companies took a vivid interest in establishing EDCs along these corridors. Since then, at least 500 new EDCs have set up business here. Not

Attraction | 51

surprising in hindsight, as the Betuwe Corridor lies right between the port of Rotterdam and Germany, which is still the largest consumer market in Europe. And of course, the region has three transport corridors running through it: road, water and rail, and there was a relatively large amount of space available. The regions of Brabant and Venlo also profited from the revival, albeit to a lesser extent because the port of Antwerp at one point decided to shift its focus to bulk flows and niche markets.

The activities at the EDCs have changed a lot from what they were thirty years ago, though. Foreign companies have integrated their EDC operations to enable the best possible bundling of goods flows, to cut costs, and to improve customer service levels. This was possible because many physical activities have now been automated and are run by robots, which is partly due to demographic developments. Hardly anyone works on the shop floor any more, and most of the employees can be found in the control room. The use of robots has become much more accepted in society as a whole than it used to be thirty years ago, and in today’s state-of-the-art EDCs robots do all of the order picking, loading and unloading. Simple VAL (Value Added Logistics) activities such as repackaging and labelling are all done at overseas production locations. What we do find at the EDCs in the Betuwe region are specific, high-value logistics activities such as warranty processing, repairs and component recycling. This may come as a surprise, since labour costs had been expected to push all physical VAL activities abroad, but as it turned out, the use of robots and chain management meant that the Netherlands were the most effective place for these activities. The buildings too are maintained by modular robots. The coming and going of goods is handled by automatically controlled vehicles. This is a recent innovation, because European legislation forced HGVs to have drivers on board up to 2035. The requirement was eventually dropped, since the employees are hard to find and automatic transport has proved itself safer and more sustainable.

Logistics industry in the NetherlandsIn the current crisis the logistics industry is one of the sectors seeing the establishment of new companies on a regular basis, whereas this is much less so in the office market. A recent rapport by the STEC Group [STEC Group, 2011] offers an overview of the main factors influencing the establishment of business location for larger companies in the Netherlands over the 2000-2010 period. During that time, 420 companies representing a total of about 75,000 jobs were established or moved supra-regionally, i.e. 5-10 percent of the market for commercial moves. Just over half of all decisions involved main offices (27 percent) and distribution centres (25 percent). The provinces of North Brabant (26 percent) and North Holland (17 percent) received the highest number of new businesses, but if only foreign new businesses are considered, North Holland (35 percent) outclasses North Brabant (12 percent).

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With regard to new distribution centres, companies in the 2000-2010 period mostly opted for locations in the Brabant and Venlo regions, due to, in order of preference, location, the availability of sufficiently large sites with multimodal access, and planning regulations in line with the prevailing market combined with a proactive attitude of local and regional authorities. Of course, the location factors that apply to the Netherlands as a whole with regard to labour force, labour market, training, languages, business climate, legal climate, and tax climate are equally important.

Ultimately, companies tend to select locations near the main ports or along the major transport corridors leading to the European hinterland. These location patterns can be clearly seen on the map showing distribution facility space in the Netherlands in 2010, as compiled by DTZ Zadelhoff. Remarkably, the Betuwe Route stretch between Rotterdam and Tiel shows relatively little distribution activity, but in my opinion this region in particular offers potential for new business locations over the next years.

Figure 2: Presence of distribution centres in the Netherlands: mainly at main ports and along transport

corridors. Source: DTZ Zadelhoff, 2010.

The STEC Group expects the annual number of new business locations in the Netherlands to remain at its present level of thirty to forty until 2016. This number is of course firmly tied to the economic developments in the Netherlands and the rest of the world. There are therefore no reasons to assume that the number of new business locations will decline drastically because American and Asian companies will increasingly settle in Central and Eastern Europe. The most

Airport

Seaport

Transit terminal

City

Highway

Railway

Waterway

Betuwe Route

Capacity in use

Capacity on offer

6,000m2

1.200.000m2

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important goods flows will keep arriving in North-Western Europe, and EDCs are often established near these entry points. In a future Europe too, the Netherlands appears to hold a strong hand for providing the best services to companies from other parts of the world that want to distribute their goods throughout Europe. On the other hand, do the Dutch authorities and population really want to commit themselves to the choice of logistics as a spearhead industry?

The three other scenariosThe logistics operations future vision for 2040 outlined so far in this paper is based mainly on the development Individual Wealth scenario formulated by the STT.This scenario is based on an increasing individualisation of society, with consumers expecting to be able to order any products and services they need, and to get them delivery in short time and at a reasonable price. This requires complex logistics networks in which a robust basis (fixed and bundled flows to keep the price acceptable) is combined with flexible setup and running (fast and effective processing of individual requirements). This will of course be facilitated by the increasing application of technology and digitalisation in our society. The role of the logistics service provider will take on new dimensions because its position as a chain manager allows it to seamlessly bundle, control, and manage a considerable number of goods flows.

However, the other three STT growth scenarios have not been discussed yet. All of these assume that the organisation of our society will change. So what might the Betuwe Corridor part of the Netherlands look like as a logistics business location in the other three scenarios?

Worldwide environmental awareness 2040In this scenario, a worldwide sea change in sustainability thinking has led to a turnaround in the past thirty years. There was of course no other option, since the ash cloud of 2010 and the tsunami of 2011 turned out to be no more than but a prelude to a full-blown environmental crisis in China and India in 2018. This was followed by an uproar among the rising middle class in these countries, which led to a turnaround in political thinking in Asia in the 2020s. Europe followed suit, because the massive financial crisis of 2008-2009 had been followed by a decade during which the European economy failed to escape from the doldrums.

Nevertheless, by the mid-2020s the world economy entered a true renaissance, driven by a political consensus about the need to apply new technology and ICT to effect a spectacular drop in the emission of CO2 and other pollutants. For the Netherlands this resulted in an increase in regional and local production and consumption, and goods flows via the main ports that are still considerable in size, but without reaching the peak values predicted by scenario 1, Individual Wealth.

Future view 3September 2040. The town of Tiel in the Betuwe Corridor is busily preparing for its annual fruit and wine festival. In addition to the fruit orchards of old, these days the town is also surrounded by vineyards, the ongoing climate

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change having gradually made it possible to grow grapes for making wine in the Netherlands. The emission of CO2 has dropped sharply in the last decade, but once past the tipping point, climate processes take a long time to be reversed. The vineyards have been planted on the roofs of production and distribution centres that have been integrated into the landscape to become almost invisible. In the past ten years these complete production systems have been on the rise in the Netherlands, in particular since robotisation means that there is little benefit to be got from overseas production. The Netherlands has become increasingly self-sufficient, and advanced transport systems are one of the ingredients that have made this possible.

There is less enthusiasm for the location of new overseas industries, because worldwide trade has been concentrating on those goods that are produced overseas for reasons of economy of scale or natural resource benefits. The trade is still thriving though, because not everyone can produce the robots and Internet-enabled contact lenses that are increasingly being used all over the world. The Netherlands has become specialised in the production of systems for water management, agricultural technology and robot systems, which are also exported across the world.

Self-sufficient unit 2040This scenario also involves an environmental crisis that hits Asia in 2018 after the massive European financial crisis of 2008-2018. However, the renaissance of the world economy after the mid-2020s fails to arrive, and the world falls apart in fragmented and highly competitive blocks. Bad news for the Netherlands as a trading country, because world trade figures have dropped and the extension schemes for the port of Rotterdam and the Schiphol Airport have been shelved. However, the Netherlands still remain attractive as a logistics business location, although the investment volumes are clearly lagging behind the figures of the 2000-2015 period.

Future view 4June 2040. The Internet exchange economy has soared and everyone in the Netherlands is offering products or services through a flexible and advanced market place. The number of product varieties has exploded, with as many as 500 varieties of potato being offered on-line. The exchange of these products takes place by means of a public goods transport system that proved to be sustainable and profitable to set up using advanced technology in the 2020s. At the distribution centres, which have spread out more evenly across the Netherlands, cross-docking activities take place, handled mainly by robots.

Overseas businesses are still establishing new logistics activities in the Netherlands, because our country offers excellent business conditions when compared with other countries, particularly when considering the added facilities offered by technology. However, the volume processed by these EDCs is a lot less than we thought it would be, several decades ago.

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Powerful region 2040In this last development scenario too, economic growth and world trade figures have remained limited through the past decade, due to harsh environmental restrictions. People have increasingly started to work in local groups, hardly leaving their own regions any more. Indeed, there is less need to go abroad, since advanced technologies have made it possible to experience holidays through virtual means, for example. The emphasis has also shifted from individual ownership to the collective use of products. Again this is of course bad news for the Netherlands as a trading country, although in this case too, the Netherlands remains attractive as a logistics business location, albeit with a sharply reduced number of business newcomers.

Future view 5June 2040. There is still a lot of activity in the large distribution centres that were built a few decades ago. The difference is that the activity involves mainly production with a local focus that can be managed effectively using the available technology. The preparation of food in particular has become highly regionalised, so logistics networks have also become localised in nature. The number of overseas companies setting up business in Europe has dwindled, but when they do arrive, the Netherlands still remains a highly attractive business location.

ConclusionThis contribution started by stating that the position of the Netherlands as a leading logistics location in Europe has come under increasing pressure in recent years, due in part to emerging competition from surrounding countries as well as from Central and Eastern Europe. It was therefore reasonable to ask whether the Netherlands would remain at the forefront of European logistics in 2040, and whether overseas companies would be permanently interested to set up business in our country.

The conclusion is that yes, in each of the four STT ‘new views’ we have reviewed, the Netherlands can maintain itself as a logistics place of business with a permanent lead over other regions in Europe. The reason is that the Netherlands can combine its age-old advantage of a geographical location, with major entry points by sea and by air close to the main German market, with new benefits. In the long term, these new benefits will come from the increased use of technology and ICT throughout our society, with new inventions such as Internet-enabled contact lenses and robots transforming the world as we know it. The use of modular robots will enable us to offset the adverse effects of our relatively high cost of labour and the limited demographic growth we will experience now and in the near future. On the other hand, the number of new overseas logistics distribution business locations will fluctuate in unison with economic growth figures.

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References[BCI, 2012] BCI, Ruimte voor groei zeehavens: Vraag vs. aanbod

zeehaven-terreinen t/m 2040 op basis van nieuwe overslagprognoses (‘Space for growth of sea ports: Demand vs. supply of sea port sites up to 2040 on the basis of new transit forecasts’), 2012

[CPB et al, 2006] CPB, CBS, RPB and MNP, Studie Welzijn en Leefomgeving (‘Wellbeing and Living Environment, a Study’), 2006

[CPB, 2006] CPB, Aanpassing WLO-scenarios voor het containervervoer (‘Adapting WLO scenarios for container transport’), 2006

[DTZ Zadelhoff 2010] DTZ Zadelhoff, Seinen op groen (‘Green signals’), 2010

[M. Kaku, 2011] Prof. Michio Kaku, Reis naar de toekomst, het leven in het jaar 2100 (‘Physics of the Future: How Science Will Change Daily Life by 2100’), 2011

[Port of Rotterdam, 2011] Port of Rotterdam, Port Compass/Havenvisie 2030, 2011

[STEC Group 2011] STEC Group, Logica in locatiepatronen: hoe kiezen bedrijven? (‘Logic in location patterns: how do companies choose?’), 2011

[STT, 2007] STT, ‘Hub Holland 2025’, 2007

[STT, 2011] STT (M.P. van Voorst tot Voorst), Een blik op de Toekomst , scenario’s maatschappelijke context transport in 2040 (‘A look at the Future, social context scenarios for transport in 2040’), 2011

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Supply chains go agile

Complexity

60

Summary of chapter 4

This article attempts to answer the question how products will be transported in the year 2040. Various demographic, economic, ecological, sociological, technological and geopolitical developments are analysed to support the conclusion that global economies and companies will have to find ways of dealing with increasing levels of volatility (instability, unpredictability, changeability) as a result of which the supply chains of the future are expected to become increasingly agile (manoeuvrable, adaptive, flexible).

This development has the additional advantage that agile supply chains are less dependent on a specific scenario to be unfolded in the future. This means that the resulting effects on product logistics are fairly clear-cut.

To achieve the product shipping system of the future and to create agile supply chains, the way in which products are transported must change. It is not unreasonable to expect that 2040 will see a frequent transit network with smart products finding their own optimised routes. Organisations engaged in the business of transporting products in 2040 will be expected to specialise, professionalise and continuously innovate much more than is the case today.

Even though 2040 might appear to lie in the distant future, this is a journey that we can, and perhaps should, set out on today.

Complexity | 61

Jack A.A. van der Veen,

Professor of Supply

Chain Management,

Centre for Marketing &

SCM, Nyenrode Business

University.

Dick A. van Damme,

Lecturer of Logistics,

Amsterdam University of

Applied Sciences, and

Logistics Consultant at

TNO Mobility & Logistics

Transport of the future will be driven by volatility1

What will goods transport look like in 2040, and how can we prepare ourselves for what is to come, or at least keep tabs on developments to avoid surprises? These are the questions this article will attempt to answer.

Predicting the future is a tough job, and the further away that future, the tougher it gets. When considering what goods transport may possibly look like in 2040, a modicum of discretion will not come amiss. After all, in 2012 that future is still 28 years off. Remember what the world looked like 28 years ago, in 1984? There was no Internet, or rather, there were hardly any computers for business use. The world was still split into East and West. Dutch society was still largely divided along traditional religious and socio-political lines. In economic terms, we were still recovering from the second oil crisis. The environment only became a serious item on the agenda after large tracts of building land were found to be heavily polluted, and acid rain had begun to fall. Acronyms like ERP, APS and RFID were still unknown, and Supply Chain Management still had to be invented.

If we look back, it becomes evident that the past 28 years witnessed immense social, geopolitical, economic and technological changes. These changes have left their mark on our society, on industries and on goods transport. It is also interesting to note that a number of factors that currently determine the way we think and work had already started back then. Individualisation, environmental awareness and the ever increasing need for efficiency didn’t just suddenly happen one day.

When we think about the distant future, the only starting point we can go by is the present, since we cannot know what we do not know yet. The only certainty is that the future will bring us things that are inconceivable in today’s mind. What’s more, expectations are that the uncertainty will increase and that the predictability will decrease. Due to the increased interconnectedness of and blurring of boundaries between organisations, networks, systems, and countries, changes will have much more impact.2 Enterprises will therefore have to prepare themselves for unpredictable changes with a lot of impact, so-called ‘black swans’.3

1 Although this article was written in a private capacity, with the authors taking full responsibility for its content, the reasoning expressly includes the results of the discussion that took place within the EVO Council for Logistics Knowledge in response to the four future scenarios (Sketches of the social context in 2040) prepared by the STT Netherlands Study Centre for Technology Trends (Stichting Toekomstbeeld der Techniek) as part of the STT future exploration, ‘Superintelligent Transport’. The authors would like to thank Maryse Tjoeng, policy consultant/logistics project manager at EVO, for her many welcome suggestions for focusing and improving this article.

2 Dick van Damme (2005), Naar een grenzeloze logistiek. Amsterdam logistiek knooppunt in beweging (‘Towards boundless logistics. Amsterdam logistics hub in motion’). Amsterdam University of Applied Sciences, Amsterdam: HvA Publications.

3 Nassim N. Taleb, De Zwarte Zwaan – de impact van het hoogst onwaarschijnlijke (‘The Black Swan – the impact of the Highly Improbable’). Nieuwerzijds, 2010.

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However, we may also expect a number of existing trends to continue, particularly if those trends are based on a certain logic. This article will therefore investigate the trends and their underlying patterns in order to see which of the emerging developments of today might fundamentally affect the future of goods transport.

The article consist of the following parts. The next section will discuss the trends relevant to goods transport and their direct effects, after which the consequences of these trends for supply chains will be looked at. We will then outline a view of goods transport in the future. Finally, we will draw a number of conclusions.

Trends and direct effects on goods transportNo one needs a crystal ball to be able to predict a number of demographic, economic and ecological trends. This becomes a lot trickier in the fields of geopolitics and information technology. Below is a summary of the various trends and those aspects of them that are relevant to goods transport.

Demographic trends: services here and goods thereThere is no doubt about it: the western world will increasingly have to deal with declining population numbers and increasing average age. This is the direct consequence of the increasing levels of wealth and continually improving medical science. This also means that in the western world, even more so than currently is the case, products and production will be replaced by services.4 For goods transport this means that logistics services will become even more important than logistics itself. In other words: services will overtake wheels.

In contrast with the rich western world, the rest of the world faces explosive population growths. This involves the creation of major new goods flows as well as a gradual shift of existing goods flows.

Economic trends: specialisation and globalisationEver since the Berlin Wall came down in 1989, the world has seen a steady expansion of its capitalist market economy. Due to such factors as the disappearing contrast between East and West, the abandoning of the absolute communist planned economy by superpowers such as China and Russia, and the liberalisation of world trade, new, powerful economic centres are appearing all over the world. It is only natural to assume that the BRIC countries will be followed by many others in the future. The African continent in particular offers many unexploited opportunities.

In an economic sense, this trend can easily be explained on the basis of classic economic models such as Adam Smith’s ‘invisible hand’ and David Ricardo’s law of comparative advantage. What it boils down to is that, if people all focus on their own specialities in a free trade situation, all will benefit. In other words, a situation

4 Daniel H. Pink, Een Compleet Nieuw Brein – Waarom de rechterhelft van ons brein ons succesvoller maakt (‘A Whole New Mind: Why Right-Brainers Will Rule the Future’). Business Contact 2009.

Complexity | 63

of free trade involving as many participating countries as possible will in the long term result in a better economic situation for all the participating countries (win-win).

There are of course many factors that can disrupt this economic pattern. Protectionism, opportunism and/or the moral disapproval of other regimes (think ‘axis of evil’) will ensure that the world remains divided into compartments and will fail to reach its full economic potential.

What at the macro level applies to states and economies, at the meso level applies to regions, and at the micro level to organisations.

Stimulated by increasing urbanisation, strong metropolitan regions will grow and gain importance, witness the rapid development of for example Silicon Valley and Shanghai, each with its own specific strengths. It is possible that these regions together will form a network between which for example green lanes could be established. Urbanisation could lead to reduced accessibility of densely populated regions, increasingly turning the supply of these areas (urban distribution, the last mile) into a challenge.

In addition to an increase in globalisation, on a regional level a certain degree of return to ‘local for local’ may take place. As an example, take China again. Its tumultuous growth will cause its internal market to grow as well. This has several effects. In the first place, more of its production capacity will have to be used for the internal market, leaving less capacity, at least in relative terms, for export. This effect could be reinforced by the fact that a larger proportion of employees will no longer want to do factory work. In the second place, the cost of labour will rise, reducing the discrepancy in labour costs between China and, say, Western Europe. The trade-off between producing in China (global) rather than in Europe (local) for the Western European market will have to be reconsidered. This trade-off will be further affected by the rise of transport costs due to the increasing cost of fuel.

At the enterprise level, we will see a continuing development towards core competences, i.e. doing just what you are good at, and outsourcing all the rest. The result will be that supply chains will become increasingly long and complex.5

The effects of economic liberalisation and specialisation at various levels will be profound for the goods transport industry. Most countries, regions and companies will be unable to go it alone and will increasingly start to collaborate in groups or chains. As a result, the number of international flows will increase.

Consequently, goods transport in the Netherlands will become an increasingly small link in an increasingly long and complex chain of transport. In addition, it is

5 Thomas L. Friedman, De Aarde is Plat – Ontdekkingsreis door een geglobaliseerde wereld (The World is Flat; a Brief History of the Globalized World in the 21st Century), version 3.0. Nieuw Amsterdam, 2008.

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to be expected that goods transport will increasingly be outsourced to specialist companies, logistics service providers. For transport organisations too, this will mean the need to increasingly specialise, since no single company can do everything for everybody, certainly not if top value for money is required.

Ecological trends: shortages and recyclingEven though new discoveries are still pushing the end date ahead, there is no denying that our natural resources of raw materials are being exhausted. By the year 2040 we will already be noticing the effect much more than is now the case. Cradle to cradle will no longer be just a slogan; it will have become a case of dire necessity. This fact alone is reason enough to assume that the recycling of materials will become big business.

With increasing economic activity and also increasing wealth, environmental awareness will gain importance. Any environmental impact as an external factor of economic activity will become increasingly difficult to accept, simply because the increasingly articulate group of people being landed with ‘the mess’ will rebel against it.

The goods transport industry will also be affected by these ecological trends. Different carriers, new fuels and more efficient connection will contribute significantly to meeting the increasing number of environmental restrictions. With increasing re-use, new goods flows will emerge that will easily outgrow the concept of return logistics.

Sociological trends: individualisation and convergenceThe increasing level of wealth will also cause people to adopt an increasingly easy lifestyle. No longer will the family be the cornerstone of society, and traditional classifications according to religion, social class, nationality or ethnicity will become less important. These trend are often collectively referred to as individualisation, with persons all seeking to satisfy their individual needs.

That is not to say that individualisation involves isolation, far from it, man is after all a social creature. However, people will no longer want to be confined to the stifling traditional subgroups, and they will continually be looking for kindred spirits, increasingly forming part of a large number of different social groups.Even so, it is not set in stone that the trend of individualisation and convergence of cultures and groups will continue.

Some countermovements can also be observed. Nationalism is on the rise all over Europe, there is an established antiglobalist movement, and recently the Occupy Movement managed to attract quite a lot of attention and followers. As history has taught us over and over again, large organisations and governments don’t always act in the best interest of the people, which makes the sense of distrust all the more understandable.

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Whatever the scenario that will develop at the macro level, at the micro level individualisation will undoubtedly continue to develop, in particular in the increasing number of rich and more highly developed countries. The goods transport industry will increasingly find itself facing a wide range of requirements and demands, which is why fine-meshed, made-to-measure logistics services have the future.. Technological trends: the new office and smart productsOf all the developments in recent years, that of the information and communication technology (ICT) must be the most formidable. It would appear to be certain that the trend of increasing numbers of steadily improving means of communication has not run its course yet by a long chalk. Thanks to the Internet, connecting the world in real time has ceased to be a dream.

Social networks may have only just started to exist, but they are already affecting the way we go about our lives. This applies to the individual level (the new communities) as well as to the macro level (witness the revolutions in the Arab world ). Companies will therefore increasingly have to take into account what customers think about them. Before you know it, someone’s opinion could become a trending topic on Twitter. All in all, it is only to be expected that just like the mass media have changed the world, the social media will do so too.

ICT also affects the way we work, with office work no longer restricted by place and time. Thanks to portable communication technology, everyone can be in the office 24/7 and ready to do business anytime, anywhere. The main consequences for goods transport are twofold. In the first place, more flexibility will be required in terms of delivery time and place. In the second place, goods transport is a perfect example of a process that is tied to a particular time and place: the transport and its driver need to physically be in the right place at the right time. This requires employees who not only are prepared to accept the more traditional way of working, but actually enjoy doing their job. When observing today’s younger generation, i.e. those who will be working in the organisations of 2040, we need to ask ourselves how we can make this kind of work really attractive to them.

Another ICT trend to be expected is the capability to make individual products smarter. We are increasingly reluctant to be dependent on large operating systems. Let us hope that in 2040 the current generation of extremely restricting ERP systems will be a thing of the past, so processes can once more lead the development of ICT rather than vice versa. Individual products will be fitted with intelligent microchips that will enable them to find their own optimised route from sender to recipient in real time, rather like the way people today arrange their personal transport. Every product on-line to the Internet in real time, that’s where the future lies.

Geopolitical trends: big effects, but unpredictableGeopolitics has always been a major force to reckon with, and it’s not about to go away. The emergence of new economic super powers will cause the world’s balance of power to shift. China for example, will increasingly be claiming its

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rightful position on the world stage. The increasing shortages of natural resources, both raw materials and fuels, will make the suppliers increasingly powerful, see for example how Russia handles its natural gas deliveries.

History teaches us that any force results in a counterforce. The leading power of the western world for example, the United States, is far from popular with many people in many countries, and is often regarded as ‘the enemy’. Within Europe too, political developments go in fits and starts, with unpredictable results. Will nationalism win, or will we finally become real Europeans?

It is not difficult to predict that all these factors will play a role in the future, but at the same time we cannot foresee how these political games will develop.

It is evident that the goods transport industry is highly dependent on geopolitical developments. In many cases, customs and tax regulations affect transport flows even more than the economic rules of effectiveness and efficiency, as they are subject to the fickleness of politicians.

Scenarios: lots of uncertainty and a single constantWhen we consider the trends outlined above, we can see a number of opposing forces. Wealth leads to individualisation, but future wealth is anything but a given in large parts of the world. Laws of economics tell us that internationalisation is forthcoming, but the extent to which it will occur depends for a large part on the opposing forces resulting from sociological and geopolitical developments.

In spite all the unpredictability, there appears to be a single important constant: the world is becoming increasingly volatile, i.e. changeable, short-term, unstable. The uncertainty is increasing, and the predictability is decreasing. This will have major consequences for the goods transport industry. We will discuss this in more detail in the following sections.

Effects of volatility on supply chainsBefore we take a look at goods transport in the future it would be useful to discuss the effects on supply chains of the trends we have spotted. After all, goods transport is not a goal in itself; it always forms part of a larger process, a group of activities that add value for an end user. And all these activities, including goods transport, are performed by the different organisations which together form the supply chain.

If we extrapolate from the past based on the trends for the future we discussed in the previous section, the tempestuous developments that supply chains have found themselves subject to for so many years are bound to continue for a long time yet. Both the demand side and the supply side of chains will be deeply affected by these trends.

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The demand side of supply chains will become increasingly volatile. This is due to an accumulation of developments. Increasing individualisation and internationalisation will result in a growing demand for, and supply of, new personalised products. New markets will become increasingly important, and product life cycles will become ever shorter. ICT will ensure that contacts between consumers all over the world will improve, which will make it increasingly difficult to separate distribution channels. The financial world is already familiar with the phenomenon of hot money, and the physical world will increasingly move in the same direction. A fast and flexible response to an ever changing demand will become increasingly important. In logistics terms: due to the volatility on the demand side, supply chains will need to become increasingly responsive.

The supply side of supply chains will also become much more volatile as a result of accumulating trend effects. The tendency towards specialisation will cause supply chains to become more and more international, and extensive outsourcing will result in scattered chains. As a result of this and of the increasing internationalisation of supply chains, the risks will increase, since the end result is the sum of the parts, and the greater the number of parts, the greater the risk.

These risks are manifold. As described in the previous section, it is difficult to say which direction social and geopolitical development will take. Changes in prices of raw materials, excise and taxes combined with the possibility of disrupted international relations will directly impact the supply side of chains. The same goes for any technological breakthroughs resulting in new products and services. Any breakthrough leading to nuclear fusion technology, super efficient solar panels, or lightweight and sustainable batteries will immediately create a new situation. Developments such as 3-D printing, urban farming, in vitro production of meat, and virtual reality could also create a world of difference.

Longer and more complex supply chains are also more vulnerable. They suffer more from external influences such as pandemics and other diseases affecting humans, animals and crops, or calamities such as earthquakes. The result of the increased volatility on the supply side is that supply chains will be forced to prepare themselves even more to absorb positive and negative risks. In other words, they will have to become more resilient.6

6 Bart Lammers, Walther Ploos van Amstel & Pascal Eijkelenbergh, Risicomanagement en Logistiek – Kan uw bedrijf tegen een stootje? (‘Risk management and Logistics – Can your company take a knock?’) Prentice Hall, 2009.

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To illustrate the effects on chains of the developments outlined above, we can use a framework by supply chain guru Hau Lee5 (see Figure 1).

Figure 1: Effect of volatility on the supply side (indicated by high or low supply uncertainty) and the

demand side (high or low demand uncertainty) on the design of the supply chain.

Historically, supply chains operated within a combination of low supply uncertainty and low demand uncertainty. Today, the bulk of the initiatives in the logistics management field are still aimed at reducing costs, i.e. creating an even more efficient supply chain. However, due to the increased volatility on the demand side it is gradually becoming more important to respond quickly and flexibly to the diversified customer demand. As the demand volatility increases, efficient chains must yield to responsive chains. In fact, demand-driven chains have already become the norm rather than the exception. The corresponding instruments such as EDI, VAL, VMI, continuous replenishment and mass individualisation have already proved their worth.

Supply volatility forces supply chains to improve their protection against risks. An incident anywhere in the world will have an immediate impact on all the parties in the supply chain, the chain partners. Recent events emphasise the need to cover such risks. Just think think of the effects of the EHEC outbreak in Europe, the tsunami in Japan, the volcanic eruption in Iceland and the credit crunch that escalated to world proportions when Lehman Brothers folded.

The figure demonstrates the need for an agile supply chain whenever a quick response is required to the unpredictable needs of customers while there is a possibility of supplies becoming disrupted.

Supp

ly un

certa

inty

Demand uncertainty

Low

High

Low High

E�cient Supply Chain

Responsive Supply Chain

Low-risk Supply Chain

Agile Supply Chain

7 Hau L. Lee, Aligning Supply Chain Strategies with Product Uncertainties. California Management Review 44(3), Spring 2002.

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So what makes a supply chain agile? Perhaps the most important part is to do away with Planning & Control (so beloved of logistics experts, and perfectly suitable for creating an efficient supply chain) and replacing it with Sense & Respond. Once anything becomes unpredictable, forecasting and planning simply become too complicated, and inadequate at the best of times. The new keywords in the chain are ‘visibility’ and ‘transparency’. The trick from now on is to know at any given time what the exact situation is on both the demand side and the supply side, so disruptions and changes to the pattern immediately become apparent. An accurate response to changing circumstances requires that the foremost supply chain competencies, efficiency and reliability, be joined by speed and flexibility.

It is evident that the ICT developments outlined in the previous section will bring considerable improvements with regard to Sense & Respond capabilities, but before ICT can work its magic, the chain partners must first be prepared to be candid and share information. For a supply chain to become agile, it is essential that the various chain partners get together and work towards a common goal, which is to meet the requirements of the customer to the best of their abilities. It is not just a single party’s performance that counts, but that of the entire chain. In other words, establishing an agile supply chain requires an extreme form of Supply Chain Management (SCM) or chain collaboration. The same can be said about horizontal collaboration as in the case of different logistics service providers working together.

Goods transport in the future The developments and their consequences for supply chains as sketched in the previous sections therefore have a major impact on the organisation of goods transport in the future. After all, it is transport that maintains the connections between the links in the supply chain and between the supply chain and the consumer.

The effect of the sketched developments will be that the goods transport industry will find itself having to deal with an increasingly difficult challenge. The increasing wealth and individualisation in major parts of the world and the increasing world population demand an increasing number of transport movements. In the previous section we looked in detail at the practical limits of planning and the need to Sense & Respond, i.e. to adapt quickly and flexibly to changing circumstances. Congestion in conurbations and environmental considerations impose major restrictions on the available transport options. It would therefore seem obvious that goods transport in the future should be organised on a footing that is entirely different from today’s. We will discuss three speculative views on this subject below.

Underground network for intelligent goodsProduction logistics have taken up assemble-to-order on a large scale, because it is an ideal combination of efficiency and flexibility (customer-specific customisation).Modules can be produced efficiently and assembled to meet specific customer

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orders. Much of today’s transport takes place on a make-to-order basis, with trucks delivering freight at a certain destination at the customer’s request. In e-fulfilment for example, this would appear to be a strategy that has run its course. Transport flows are becoming too thin and the empty return kilometres keep mounting. Given the trends outlined in the previous sections, the obvious solution would be to adopt assemble-to-order in the goods transport industry too.

The increasing volume, the wide variety of customer requirements, and the demanded robustness without planning could be supplied by a kind of underground service for goods transport (sometimes referred to as a Frequent Transit Network). If the goods are all fitted with intelligent chips, and information is shared on-line in real time, a system is conceivable in which the goods find their own way through a finely meshed network without any planning, just like passengers can be carried quickly, efficiently, and flexibly by the London Underground network. As in public transport systems, ships, trains, trucks, vans or other transports depart at regular intervals from one place to another. Missed your train? Not to worry, there’ll be another one along in fifteen minutes. The services (the modules) are efficient and perfectly plannable, reduce congestion and spare the environment. At the same time, the number of shipper to customer combinations is almost infinite.

That the idea outlined above is not just a fantasy is demonstrated by three projects that the Dutch Logistics Top Team recently put on the agenda, i.e. Synchromodality, Main Ports’ Management Role, and Cross Chain Control Centre (4C). The essence of Synchromodality is that it should be easy to change a shipment to another transport mode on the basis of real-time information. The Dutch Main Ports (Schiphol and the ports of Amsterdam and Rotterdam) are seen as major hubs in the underground network. A Cross Chain Control Centre can be seen as the control tower of the underground goods transport system. Each of these three innovation themes can be seen as a form of ‘supra-chain’ optimisation.

Professionalised goods transport specialistsIf we follow the economic laws of specialisation, there will be an increasing demand for professionals in goods transport. Many experts8 envision a future world with three parties:1. Retailers who know the requirements of customers better than the customers

themselves, and who can combine different goods and services to create an unique portfolio with one-stop shopping for end users.

2. Designers capable of combining the customer requirements and their know-how (both technical and otherwise) to continually create new and innovative products and services.

3. Logistics service providers who handle production and transport at the request of the retailers and designers.

Specialisations enables each of these three organisations to become better at what they do and to create added value. At the same time each of the three parties

8 See for example, John Hagel III & Marc Singer, Unbundling the Corporation. Harvard Business Review, March-April 1999.

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needs the other two because they cannot operate without each other. For the logistics service providers such a development will require an extreme form of professionalisation. In order to compete, you will simply need to be extremely good at what you do. You will need to have the best people, follow the latest developments, use the latest technology, etc. This requires considerable investments in people, production means, time and money. Such investments can only be afforded by large organisations, which is why considerable consolidation and internationalisation of the logistics industry would also appear to be on the cards. At the same time, these large organisations will probably not be managed in a very strict hierarchy following a Planning & Control regime. It might not be a coincidence that cooperative operations such as the Dutch Rabo Bank tend to function particularly well in today’s hectic world.

Services and managementThe concept of a logistics services provider is a bit of a contradiction in terms. On the one hand the logistics services provider, driven by resource management, must try to maximise the utilisation of the transport means at its disposal. On the other hand, driven by the service concept, there is a need to adapt flexibly to customer demand, even if that means running a half-empty truck. It would therefore seem logical if transport companies in the future are split up into purely transport specialist (logistics) companies on the one hand, and on the other hand, companies without transport means or storage locations who specialise in managing the logistics of their customers, i.e. real service providers. Following this line of thought, 4PL companies will gain an increasingly important role.

One type of service that will be increasingly in demand is one in which customers can indicate their own preferences. For example, one could be given the option of the same product but with different types of service at different price levels. From a logistics menu customers could then choose between fast delivery, but at a cost, or slower and cheaper delivery. This concept can also be used to realise individualisation logistics, as is already being done to a degree by combining different distribution concepts, for example by ordering goods over the Internet and picking them up at a nearby petrol station. The takeover of Internet mail order retailer Bol.com by the Ahold supermarket concern is an indication of a development that will see a far-reaching implementation of combined distribution concepts.

ConclusionsBack to the questions that we set out to answer. What will goods transport look like in 2040, and how can we prepare ourselves for what is to come? As we stated in the introduction, it is practically impossible to find a straight answer. The event horizon is simply too far off. Nevertheless, some indications of the direction in which the goods transport industry could well be developing seem to be clear, with the direction being largely disconnected from the scenario that will develop in the future. From the various trends outlined in the second part we can deduct that uncertainty and unpredictability will increase. We have also concluded that the

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supply chains of the future will therefore need to become increasingly agile. An agile supply chain can adapt rapidly to changing circumstances. The added benefit is that an agile supply chain can be used in any of the future scenarios. In other words, an agile supply chain will always be future-proof, whatever that future may bring. A major challenge lies in making logistics chains both agile and efficient.

Having a surprisingly clear path to the future laid out before us does not means that the goods transport industry does not have a long way to go. In the last part of this article we discussed various aspects of future goods transport systems, including major improvements in service levels, management, professionalisation and innovative capabilities. For today’s industry the motto is innovate or perish, join or give up, collaborate or fall behind. The choice would seem clear.

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The airport: physical and virtual link

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Summary of chapter 5

Every year millions of travellers pass through Amsterdam Airport Schiphol – an international hub of people, cultures, goods, services and ideas. What is the function and significance of Schiphol when placed in a larger perspective? What is the complex environment in which Schiphol operates, and how can the airport best anticipate emerging opportunities and threats? How can the future function as a main port be secured?

Together with its stakeholders, Amsterdam Airport Schiphol acts as a pivot point to the Dutch aviation sector. The essence of a main port is to create a synergy of different connections, and this is reflected in the airport’s social function: the airport and the airlines together connect the Netherlands with the rest of the world. Schiphol maintains close links with its neighbours, the residents living in the surrounding area and businesses established in the vicinity.

The publication of this Yearbook presents an opportunity to discuss six crucial developments. Although these developments are only now emerging on the horizon, it is essential that we take them into consideration in formulating a clear vision for the future: increasing competition, expanding globalisation, tougher demands, developments in the low-cost segment, sustainability and uncertain economic prospects.

In the light of these developments, Amsterdam Airport Schiphol will need to maintain its ability to meet high quality demands and capacity requirements, and to attract passengers through a solid infrastructure, excellent transfer facilities, high level of service, sustainable business operations, and inspiring environment. The airport will be able to secure its main port position most effectively by retaining a high level of capacity and providing a superlative level of service and outstanding facilities at competitive prices.

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Schiphol: still connecting the Netherlands with the world in 2030

In January 2012, Schiphol Airport celebrated a special occasion when ‘Little NEMO’ was welcomed. For the next year, NEMO, the striking science museum located at the Oosterdok in Amsterdam, will present itself at the airport with an exhibition specially developed for Schiphol. Passengers young and old can do tests and experiments to discover the fascinating world of science and technology.

Robbert Dijkgraaf, chairman of the Royal Dutch Academy of Sciences, was there. At the opening ceremony he explained why the museum wanted to exhibit at Schiphol Airport: it is a unique location with millions of travellers, it is an international crossroads of people, cultures, goods, services and ideas, the beating heart of the Dutch network of connections. It is simply the place to be if you want to reach out to people and explore new horizons.

This short anecdote offers an opportunity to take the reader of this EVO Yearbook on a visit to a fundamental vision of our airport. What is the function and the significance of Schiphol in the grand scheme of things? What is the wider, more complex environment in which Schiphol operates, and what are the opportunities and threats the airport should be ready to anticipate? And how can we secure its main port function for the future?

How strengths reinforce each otherWhen identifying the significance of Schiphol Airport, some quantitative information will come in useful. Schiphol Airport, together with Air France-KLM and Dutch Air Traffic Control (Luchtverkeersleiding Nederland, LVNL), forms the lynchpin of commercial air traffic in the Netherlands, an industry that accounts for a total of 290,000 jobs, 62,000 of them at the Schiphol location. The contribution of the airline industry to our GNP is 3.3 percent, or in excess of EUR 25,000 million. This is comparable with the total annual amount spent on education in the Netherlands.

Schiphol is the home base for five hundred companies, including Microsoft and Terremark, a subsidiary of the Verizon telecommunications company. Terremark opened a major data centre last year, and it is connected to the Amsterdam Internet Exchange, one of the world’s major Internet nodes. The company supplies services all over the world, including cloud computing, information security, and IT infrastructure. What’s interesting is that an innovative company that specialises in digital connections opts for a business location that excels in physical connections. Proof of how different strengths can reinforce each other.

This is the essence of a main port: to make sure one plus one equals three. Or four, or five. The greater the number of direct connections you can offer, the

Enno Osinga, Senior

Vice President Cargo of

Schiphol Group

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greater the economic spin-off. There even is a survey which concludes that direct connections with major economic centres result in up to twenty times as much trade when compared with indirect connections. Fortunately, Air France-KLM and the other airlines offer a lot of direct connections, 313 to be exact.

The Schiphol region is a transport hub where goods from all over the world come together and get sent on their way. This is exactly why this region is such an attractive location for many overseas distribution centres to set up business. The establishment of these businesses in turn generates more transport. Every day, hundreds of trucks travel up and down between the Aalsmeer flower auction and Schiphol alone. Other time-critical products such as electronics, newspapers and donor organs also arrive at Schiphol to be carried by trucks to their final destinations in the Netherlands or elsewhere in Europe.

Schiphol features a powerful shipping and carrier network. The proximity of the port of Rotterdam ensures a concentration of logistics companies in the Netherlands. Both the port of Rotterdam and Schiphol Airport reap the benefits of this. Approximately 70 percent of all cargo transported to and from Schiphol consists of transfer cargo destined for markets outside the Netherlands. Transfer cargo improves the position of Schiphol as a transport hub.

In February, the Dutch Tourism Office (Nederlands Bureau voor Toerisme) announced that a record number of foreign visitors were received to our country last year: 11.3 million. Together they spent about EUR 4,500 million. This would not have been possible without the easy access to our main port and the efforts of the airlines. Not every foreign visitor arrives by air, of course, but we can certainly see the rising market demand reflected in the airport figures.

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However, there is more than just economic interests at stake. There is also culture, with Schiphol as the gateway to the Van Gogh Museum and the Dutch National Ballet. There is science, with Schiphol as the gateway to the universities of Utrecht, Amsterdam, Leiden and Delft. There are politics and international relations, with Schiphol as the gateway to the centre of government and the International Court of Justice in The Hague. There is sport, with Schiphol as the gateway to the Amsterdam ArenA and the Thialf Stadium. And there is freedom, with Schiphol as the gateway to the destination of your choice. Schiphol is your stepping stone to the world. Most people take the latter for granted by now, but for a country with such a limited home market as ours, it is anything but self-evident.

Interacting with the world around usWhat is the essence of Schiphol? The airport is an airline business with a social function. Our mission is to work with the airlines to connect the Netherlands to the world. Our main port is at the service of the Netherlands, with all its different aspects. In doing so, Schiphol operates in a complex environment, surrounded by many different parties with a wide range of interests, including the authorities, the population and businesses such as airlines.

The Dutch state is our main shareholder, holding an interest of almost 70 percent. The municipality of Amsterdam holds 20 percent of the shares. Last year’s net returns came to EUR 194 million, half of which goes to the Dutch state, besides the corporate tax of about EUR 60 million. The other half Schiphol invests in the main port itself. The national authorities are not only shareholder, but also legislator and market manager. Together with the European Union they set the playing field.

Then there are Schiphol’s neighbours to keep happy, the residents of adjoining towns as well as people who are running a business in the vicinity of the airport. We keep in close contact with them as part of our effort to run a socially responsible business. And of course to whip up the necessary support for the airline industry. Without that support there is no future for the airlines in the Netherlands.

The main port’s success depends on good interaction between the partners in the ‘golden triangle’ consisting of the Dutch state, Schiphol Airport and Schiphol’s home carrier, Air France-KLM and its SkyTeam partners. SkyTeam accounts for 70 percent of all the flights at Schiphol. There is no doubt whatsoever that a strong Schiphol cannot exist without a strong SkyTeam, and vice versa. Well-oiled interaction between home carrier, Schiphol and the authorities has brought success to the main port in the past, improving Schiphol’s hub functions, and with it the company’s position in the Netherlands. Smooth interaction has also ensured that the airport has achieved a greater volume and a greater network than might be expected given the home market. Amsterdam is one of the best connected towns in Europe, and perhaps in the whole world.

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The airline industry provides thrust to our economy. It is true that profit margins are under great pressure, but the fact remains that market demand is increasing. Looking back on 2011, a year in which many industries were feeling the pinch in no uncertain terms, we can see that the airline industry managed to attract more customers. Together with the airlines Schiphol welcomed almost 50 million passengers, a record.

We managed to strengthen our position among the competition, with our market share among the ten largest European airports growing from 10.6 percent to 10.9 percent. In a global context, the airline industry is expected to grow about 5 percent per year over the next decade. The overall market is expected to double in the next twenty years, although the growth will be less marked in Europe. Of course there are many uncertainties given the current economic turbulence in Europe and the rest of the world. However, few would doubt that the airline industry has potential for growth.

The question is how the Netherlands can benefit the most from that potential. Success won’t just drop into our laps. It is essential to keep close tabs on the developments all around us. The Netherlands needs to anticipate the threats as well as the opportunities.

Trends for the future This yearbook offers the opportunity to discuss six different developments. Developments that are still on the horizon and that are important if we are to have a clear vision of our main port.

Increasing competitionThe first thing we can see on the horizon is increasing competition. In Europe, in the Gulf States and in Turkey. To run a business, it is essential to keep a check on the competition at all times. Never make the mistake of thinking nobody can touch you. European competitors are preparing themselves for the future. Fraport is substantially improving its capacity and quality. Munich is working on an ambitious investment programme involving thousands of millions of euros. London Heathrow with Terminal 5 has a state-of-the-art airport facility at its disposal, and Paris Charles de Gaulle and Madrid aren’t exactly resting on their laurels, either.

The Gulf carriers and Turkish Airlines are also forging ahead in close collaboration with emerging hubs such as Dubai, Abu Dhabi and Istanbul. The number of passengers flown between Europe and Asia by the Gulf carriers has quadrupled in the first decade of this century.

The developments continue. Looking at the map of the world, the strategic position of Turkey is obvious, like a spider at the centre of the web between three continents. Istanbul plans to have three airports up and running in 2020. Ten years from now, Turkish Airlines intends to be as big as Lufthansa and established as a transfer company. Airports in China, South Korea and Singapore have set a new international quality benchmark.

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These are simple facts and Schiphol will have to deal with them. Fierce competition is part and parcel of the business. There is no harm in this per se, provided the company takes up the gauntlet and provided there is a level international playing field. A globally level playing field is essential to ensure that everyone is subject to the same rules and that competition is fair.

Increasing internationalisationA second development making its appearance in the market is increasing internationalisation and the forging of international alliances, in which the Netherlands have been at the forefront. Take the 1992 Open Skies Treaty between the U.S. and the Netherlands, the first treaty of its kind, and a treaty that gave a new dimension to our airline industry. KLM reinforced its ties with Northwest, which resulted in substantial growth of transatlantic traffic. In the 1990s no other European hub grew as rapidly as Schiphol did.

In 2004 the merger between KLM and Air France became reality. For the first time, two national airlines were joining forces. Collaboration in the air requires collaboration on the ground, too. To play any role of significance on the world stage, good interaction between home carriers and airports is essential. There is evidence of a European trend for home carriers to operate from multi-hub systems, a development that will require extensive coordination of processes on the ground.

Schiphol is responding by intensifying its collaboration with Aéroports de Paris. After all, Schiphol holds a cross-partner share of 8 percent in Aéroports de Paris. Intensive collaboration also yields efficiency benefits. For example, Schiphol Airports and Aéroports de Paris combine to buy their passenger loading bridges.

Internationalisation offers new opportunities. Asia is the most important cargo market for Schiphol. About 40 percent of the total air cargo volume is carried to and from this region. A large number of countries, including the Netherlands, profit from the impetuous economic growth in South-East Asia and the liberalisation of the Chinese air cargo market. Airline companies such as SkyTeam members KLM Cargo, China Southern Airlines and Korean Air, plus companies including Martinair, Malaysia Airlines, Singapore Airlines, China Cargo Airlines, and Jade Cargo are steadily increasing their full-freighter flights to the region.

Higher demandsA third development is that as a main port, Schiphol has to satisfy increasingly tougher demands in every respect. Consumer demands as well as airline requirements are continually upping the ante for the airport. The regulations imposed by the authorities are also rapidly getting stricter, in particular where environmental impact and security are concerned. Since 9/11 the security regulations have been tightened considerably. Increasingly stricter measures entail mounting costs. Over the past decade, security costs have tripled to almost EUR 250 million in 2011.

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Consumers are also increasing their levels of expectation, challenging the airport to deliver the best possible quality. Passengers expect to be able to pass the time at Schiphol Airport in a useful and enjoyable way: ‘Your holiday starts at Schiphol’. Business passengers want every conceivable facility to be at their beck and call, including free Internet access. The market sets its demands, and Schiphol takes up the challenge. The results are looking good, with 93 percent of the passengers leaving from Schiphol considering it a good to excellent airport. And Schiphol has been receiving award after award as Europe best business airport.

It is essential for the airport to offer optimum facilities to the airlines in all their processes, which are being run on an increasingly tight and efficient basis. Transfer times are shortened. Schiphol now offers a minimum connecting time of fifty minutes for intercontinental flights, and only forty minutes for European flights.Running an airport requires constant innovation. Self-service is increasingly being adopted. New equipment comes into service, such as the Airbus A380. This means that Schiphol is on a constant innovation cycle to deliver, not when the demand is there, for that would be too late, but always ahead of the market.

Self-service check-ins have already become common practice at the airport, with today’s passengers even being able to check in their own luggage. Together with our home carrier, Air France-KLM, Schiphol is among the first to have introduced self-service luggage drop-off points on a large scale. And the next step has already been set: self-service passport control is now available for groups of passengers holding biometric passports. This increases capacity and makes travelling a more relaxed experience for our passengers.

The baggage handling system has been upgraded at an investment of EUR 800 million: the 70 MB (70 Million Bags) programme. Schiphol now has the most advanced baggage handling facility in Europe, simply because airlines as well as transfer passengers have come to expect the best in reliability and efficiency from Schiphol.

Cargo carriers too have become more demanding towards the airport. One of the latest developments in air freight is Schiphol SmartGate Cargo, an integrated goods checking system for freight leaving the EU from Schiphol which ensures that the goods can be processed even quicker and more efficiently. Some parts of Schiphol SmartGate Cargo have already been completed, including the Customs Control Centre, a central customs gate; the Cargo Checkpoint, a processing line for checks and inspections. The ‘Information Broker’ has already come into service. This is an electronic system that indicates which goods need to be checked. This ensures that all the parties in the cargo handling process know at an early stage whether a shipment needs to be checked or not.

Low-cost segmentA fourth development is the increase of the low-cost segment in the European airline industry. The transfer market will continue unabated and will remain a driving force behind our growth in the future. On the other hand, low-cost companies are

Hubs | 83

increasingly at the forefront. At Schiphol last year, their presence grew by almost 25 percent. One in every seven passengers arriving at the airport flies with a low-cost company. This is for real, and Schiphol realises that this means that the industry, and the network carriers in particular, will be facing major challenges. Of course, Schiphol intends to serve the many different interests that make up the market to the best of its abilities.

SustainabilityA fifth development that has a major influence on our daily jobs is the growing importance of sustainability. Schiphol is an enterprise with a social function, and corporate responsibility permeates its every thought and action. If we want to still have a flourishing and growing Dutch main port Schiphol twenty years from now, sustainable value will have to be created for our stakeholders. In other words, value that does not adversely affect the population or the environment. This is why in everything the airport does, it seeks the right balance between the interests of people, planet and profit. Sustainability is one of the core values of Schiphol.For example, Schiphol reduces energy consumption wherever possible. This could be something as simple as stopping the conveyor belt more quickly when the last suitcase has come past, which can yield savings of up to 15 percent. All our power comes from ‘green’ sources. Ten percent of our vehicles use biodiesel fuel. The terminal is heated, and cooled in part, using heat and cold storage. There are green roofs that not only provide thermal insulation, but also clean the air and catch water.

Schiphol saves water. As an example, runway lights are cleaned using dry ice, CO2 extracted from the ambient air and cooled. This saves water and reduces the use of harmful chemicals.

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Economic prospectsThen there is another, sixth factor to be taken into account, the uncertain prospects for the European and global economy. A business like Schiphol requires financial robustness like any other business. Every day, Schiphol invests one million euros in quality and capacity, all financed by the airport itself, at no cost whatsoever to the tax payer. In order to attract venture capital with reasonable terms, the airport needs to be, and stay, financially healthy. The A rating is the exponent of this.

Now and post-2020Whatever the case, the six developments outlined above are reason enough for Schiphol to keep a sharp eye on quality and capacity. The airport managed to absorb the growth of passenger numbers in 2011 with success. Even so, on busy holidays, Schiphol is starting to feel the pinch in the current capacity of its terminal and piers. The busiest day so far was 29 July 2011, when 178,000 passengers passed through the airport. That is the entire population of a major provincial town passing quickly and comfortably through the operational and security processes in a single day, a major accomplishment, with ice creams and musical performers being brought out to ease the wait. Big fun of course, but structural measures would be preferable.

Schiphol needs to be able to attract passengers in the future too. This requires a good infrastructure, excellent transfer facilities, top-class service, sustainable business processes, all in a stimulating environment and of course at a competitive price. This requires thinking beyond the boundaries of the airport proper, for what’s the use of a fast direct flight to Hong Kong if you’re stuck in traffic on the motorway?

Of all our outgoing passengers, 40 percent arrive at the airport by public transport. It is a good thing that the government has made considerable investments in rail connections that offer more frequent and better access to Schiphol. The road congestion problem is also being tackled. The relationship Schiphol – South Axis – Amsterdam is being tightened with urban development coordination improving all the time. The coherence of thought and action within the area is improving.

With regard to the necessary long-term investments, Schiphol is in consultation with the home carrier, Air France-KLM, the other airlines and the Dutch government. The central question is how much investment will be needed to secure the main port position after 2020, when Schiphol will need to be able to handle an annual total in excess of 60 million passengers. If they are all to be served in the best possible way, more capacity and quality will be required in the form of terminals and piers. Of course, the airport needs to keep the affordability of the investments well in sight.

Given increasing shortages of capacity, port development also involves focusing on main port-related traffic, and stimulating the move of non main port-related

Hubs | 85

traffic to regional airports such as Eindhoven and Lelystad. Eindhoven Airport has experienced considerable growth in low cost companies. Transavia for example, has been rapidly expanding its business there. And in March, the Lelystad Alderstafel, one of the consultation boards advising the cabinet on the balance of growth of Schiphol, Eindhoven and Lelystad airports, presented a recommendation with a plan for the future of Lelystad Airport. The regional airports are important as auxiliary engines to our main port.

In addition, Schiphol will need to keep thinking in international terms, entering into strategic relationships with partners that can reinforce the hub function. Tying networks together is what it is all about. The collaboration with Aéroports de Paris has already been mentioned, but Schiphol is also active in New York, with JFK being one of its ‘twinned airports’. Schiphol is working with the local port authority to extend Terminal 4 for Delta Airlines, a SkyTeam partner. This is being done to reinforce the relationship between the hubs where Skyteam is active. Another major partner is Incheon Airport in South Korea, the home base of Korean Airlines, also a SkyTeam partner. International benchmarks show Incheon as the world’s best airport. This is therefore a real example of teaming up with the best. Collaboration includes e-freight, paperless air cargo, and an optimised passenger processing system.

The core responsibility for Schiphol is to offer the best facilities to its home carrier, including its international partnerships. This is the best way that Schiphol Airport can serve our main port and the Netherlands to help maintain their leading position among the competition.

What is the best way to safeguard the main port position in times of turbulence? By maintaining the capacity of the airport. By cross-border thinking. And of course by always offering the best possible quality at competitive prices. Together with the airlines Schiphol has established its current position by always looking towards the future and anticipating new developments. This is what the airport will keep doing. In an era that sees various pillars of the economy being toppled, Schiphol together with the airlines intends to remain a pillar of strength which the Netherlands can depend on.

Consumer demand drives logistics

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Summary of chapter 6

This article outlines the views of the Dutch ornamental plant cultivation cluster on the way the consumer of the future will be purchasing and using cut flowers and plants. The scenarios included in the DaVinc³i project tie in particularly well with a specific scenario sketched by STT (and explained elsewhere in this book), the Individual Prosperity scenario.

This is not to say that the ornamental plant cultivation cluster is unprepared for the other scenarios. The common ground between some of these scenarios will no doubt make it possible to apply the concepts that are being developed within the framework of DaVinc³i to the other scenarios as well. In a nutshell, we expect that the results of DaVinc³i will enable the cluster to be prepared for the future.

In a certain sense, the STT scenarios are more fundamental than those used for DaVinc³i. The four scenarios put forward by STT allow for the possibility of fundamental global changes, including for example a reversal of the globalisation trend.

The DaVinc³i scenarios are based on a progressive desire by people to give shape to their lives just like they do today, perhaps by fundamentally different means and with a different emphasis, but not in a fundamentally different way. The future will show which is the right scenario.

Ornamental plant cultivation | 89

Robert Ossevoort,

Logistics, Decision

and Information

Sciences, Wageningen

University, Edwin Wenink,

FloraHolland, Professor

Jack van der Vorst,

FloraHolland

The Dutch ornamental plant industry adapts to the future

EVO has asked us to write an essay outlining our vision on Dutch ornamental plant logistics in tomorrow’s world. Given a number of future scenarios presented by the STT Netherlands Study Centre for Technology Trends (Stichting Toekomstbeeld der Techniek), EVO wants to know how various industries and organisations are readying their logistics for the future. The questions submitted by EVO are, what do you think the Netherlands and the world of tomorrow will look like, which scenario or scenarios do you consider most likely (and why), and how will your logistics innovation fit the bill?

The ornamental plant industry is actively working on its future, and logistics is an intrinsic part of this. The EVO questions tie in well with a research project launched last year under the moniker DaVinc³i (Dutch Agricultural Virtualised International Network with Consolidation, Coordination, Collaboration and Information availability) and financed by the Dinalog logistics institute and the Productschap Tuinbouw, the market garden commodity board. This four-year project investigates how the Dutch ornamental plant industry within the virtual trade network can improve its leading position in worldwide sourcing and sales of flowers and plants in Europe.

In this article we will first take a closer look at the Dutch ornamental plant cluster. Next, we will discuss which trends are changing consumer behaviour and how we see this in relationship with the outlined scenarios. Finally, we draw our conclusions and present the future views we use in the DaVinc³i project.

The Dutch ornamental plant clusterFor a proper understanding of the way the Dutch ornamental plant cluster is preparing for the future, it will be necessary first to introduce the cluster. This section therefore provides a rough outline of the cluster. We will also define the cluster’s strengths that may play a role in providing the cluster’s response to the consumer’s changing behaviour.

Five so-called greenports, collectively known as Greenport Holland, contain the highest concentration of market gardening businesses, including companies that focus on the cultivation of ornamental plants. The number of jobs and added value of the market gardening industry at the greenports works out at approximately 130,000 and EUR 5,200 million respectively. In these respects the greenports are comparable with the port of Rotterdam. About 13,500 companies are active In the primary production process, with another 15,500 companies or so operation further down the value chain. The employment figures in the industry as a whole are estimated at 455,000, of which 290,000 jobs are directly related to fresh products. In the Netherlands in 2009, a value of EUR 7,700 million was produced,

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and EUR 14,500 million worth of products were exported. The industry’s trade surplus of almost EUR 7,000 million accounts for 21 percent of the total Dutch trade surplus, bringing the Dutch market share in Europe to about 70 percent. In 2009 the value of goods sold through the FloraHolland auctions amounted to approximately EUR 4,000 million.

The logistics handling of market garden products usually involves road transport. Over a quarter of the volume of Dutch road transport, 28 percent to be more exact, is related to fresh product logistics. Compared with the EU average of 19 percent this is a considerably greater proportion. Where international transport is concerned, the difference is less marked. Figure 1 shows this in graphical form.

Figure 1: Agricultural logistics contribution to road transport by weight (2007)

Source: Eurostat, TLN (2008)

The ornamental plant cultivation logistics chainThe Netherlands is the logistics turntable for ornamental plant products. The entire value chain is represented in the cluster, from agriculturalists and growers to specialist dealers and exporters. The current general setup of the value chain consists of the following links: growers, auctions, dealers, logistics service providers and different sales channels. In the following section we will give a short description of the parties, with a graphic representation included in Figure 2.

• The six auctions operated by FloraHolland1, the cooperation of about 4,500 Dutch and foreign growers. The auctions sell flowers (70 percent of turnover) and plants (30 percent). In addition there is FloraHolland Connect, an intermediary facilitating contracts between growers and customers. With regard to logistics the auctions are the turntables with a strong break/bulk function, i.e. where different product flows are combined.

28%

27%

28%

19%

25%

19%

national

international

total

All agricultural products in general

10%

1%

2%

7%

1%

1%

Agricultural products and livestock

1 It should be noted that another auction organisation, Plantion, is also active in the Netherlands, However, with a market share of 98 percent FloraHolland is significantly larger.

Ornamental plant cultivation | 91

• The function of dealers is threefold. They act as wholesalers, exporters and importers, with a single dealer sometimes combining a number of these functions in one company. There are about 1,200 Dutch dealer companies. The main countries from which they import are Kenya, Ethiopia, Israel, Ecuador and Germany. The main export countries are Germany, the United Kingdom, France, Italy and Belgium. Russia is a rapidly emerging market, as are the countries in Central and Eastern Europe.

• The transport between two links is mostly contracted out to logistics service providers, although some companies handle their own transport. Sometimes the logistics service providers also handle other tasks such as quality checks and product packaging.

• The sale of flowers and plants takes place though a number of channels: mass retail (e.g. supermarkets, garden centres and DIY chains) and retail (e.g. independent garden centres, florists, flower stalls). The market shares of the sales channels vary according to country.

Ornamental plant cultivation logistics has a number of specific characteristics. One is that supply and demand are relatively uncertain and dynamic. One of the reasons for this is that orders are often changed at the last minute, which the entire chain then has to be able to respond to immediately. The current chain is designed to rapidly meet this demand. In the second place, the mass retail channel is fundamentally different in nature from the retail channel. The large-scale mass retail channel is demand driven and requires reliable deliveries of a limited range of products, whereas the small-scale retail channel is rather more supply driven and focuses on itself adding value. This is also reflected in the current logistics chain of the ornamental plant industry.

There are four major differences in the logistics chains of flowers and pot plants:

• Quality changes occur much more rapidly in flowers than they do in pot plants, in particular in unconditioned environments. Once cut, flowers can lose up 15 percent of value per day, whereas plants suffer much less, although they keep growing of course, so the product remains subject to changes. Therefore the logistics chain of flowers must be fast, and conditioned as well.

• Plants are more difficult to transport. Their value by weight tends to be less than that of flowers, which usually makes it unprofitable to transport them over long distances as is done with flowers. The international sourcing of plants therefore tends to be regional in nature. The plants offered for sale in the Netherlands for example come mostly from within our own country or from neighbouring countries.

• Consumers don’t often buy a single flower, but they do buy single plants. which makes the role of garden centres or DIY chains in the sale of plants more important. The result of this is that there is more direct trade between growers and sales channel for plants than there is for flowers.

• The motives for buying flowers and plants are different, with flowers mostly being used to mark special occasions.

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Figure 2: The current value chain of flowers and plants.

Source: Koppes, 2012

The world is changingThe ornamental plant industry is in motion due to such factors as the emergence of the Internet, the globalisation of demand and supply, increasing customer demands and technologies such as RFID and refrigerated containers. In this essay we would like to focus on changes in the behaviour of ‘the consumer’. Changes at this level usually affect the way in which the cluster provides services to the consumer. In this section we will explain how the consumer is changing, a least in our perception. In addition there are trends that influence the consumer at a macro level for example. We will also look at these trends.

Individual consumer behaviourConsumers are the most important end users of flowers and plants. In this section we will discuss the trends we see in the behaviour of individual consumers, and how these reflect on the scenarios developed by STT.

In the first place the individual consumer is becoming increasingly fashion-conscious, which is reflected in a shorter time-to-market of many products, and in shorter product life cycles. The popularity of different varieties and concepts is changing more rapidly. This puts different demands on the chain, for example where flexibility is concerned.

We also notice that consumers are increasingly like to do thing the easy way. On-line shopping through the Internet is one example, as is the preference for easy products. For flowers and plants specifically this trend means that a consumer will look at the care needed by flowers and plants. People would rather choose a low-maintenance plant than a cumbersome bunch of flowers. Easy can also mean that the product must be available at the right moment through the most easily accessible channel. Another form of ease is easy shopping. Consumers no longer want to visit different shops to buy different products. Instead they want to be able to get everything at a single location, usually a mass retailer, e.g. a supermarket, DIY centre or garden centre.

Dutch grower

foreign grower

Dutch importer

Dutch wholesale

Dutch retail

Dutch mass retail

foreign mass retail

foreign wholesaler

foreign mass retail

foreign importer

Auction

exporter

major flow for plants

grower and retail chain can be located in different countries, e.g. Kenya and France

Ornamental plant cultivation | 93

Another, more general trend is the rising average age combined with the increasingly multicultural composition of European societies. One expected result of this is a shift towards other sales channels. The older consumers prefer to go to the florist, whereas younger consumers will order through the Internet. The indigenous population will get a plant from the DIY centre, whereas immigrants like to go to the market. As the composition of a society changes, so does the ‘logical’ sales channel.

Finally, we notice that consumers are increasingly becoming ‘virtual consumers’. In 2010, 9,3 million Dutch people aged 12-74 shopped through the Internet, half a million more than the year before. The proportion of Internet users who had never purchased or ordered goods through the Internet had dropped to 23 percent. Of this group, two thirds give as their main reason that they prefer to visit real shops.

Other trendsThere are also several trends that occur not so much on the level of the individual consumer, but are still relevant for the ornamental plant cluster in the Netherlands. In the first place, the production capacity in countries such as Ethiopia is rising rapidly, increasing the volume and importance of the trade flows from those countries even further. Once the trade flow reaches sufficient volume, it becomes possible to ship products directly to customers in other regions.

In the second place, new countries have emerged in which the demand for flowers has risen sharply in the past few years, in particular in Central and Eastern Europe. In a minimum of time, Russia has risen to become the fourth destination country for Dutch, overtaking such major export countries as Belgium. When importing flowers, prosperous Russian customers focus on getting a high-quality product, with considerations such as the production location or the ecological footprint of the product being of minor importance.

For a general discussion of trends and developments in agricultural logistics, the reader is referred to the essay ‘Toekomstverkenning transities tot 2040 voor de topsectoren AgroFood and Tuinbouw vanuit logistiek perspectief’ (‘Future exploration of transitions up to 2040 for the Agricultural Food and Market Garden spearhead industries from a logistics perspective’, Van der Vorst, 2011).

The most likely scenario for the future The scenarios as described by STT are distinct in two dimensions. Firstly there is the distinction between the individual and the collective, with people focused on optimising the individual welfare in the first case, relegating the effects of their actions on others to the background. The second dimension describes the contrast of local versus national or international. This contrast is expressed in a number of ways, for example in local production and consumption, and in the preferred orientation of consumers. Therefore each scenario shares different properties with two other scenarios.

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Looking at the trends in the consumer behaviour as we see them in the ornamental plant industry, the Individual Wealth scenario appears to be the most probable. Clearly the production of flowers and in particular plants can take place locally, but that would mean reducing the number of available varieties, and the wide range of varieties is exactly what is important in this industry, and what can only be obtained from an international range of sources.

If we extrapolate the trends we have discussed, an image emerges of a consumer who in particular wants a good and healthy flower or plant at the lowest possible price.2 The product must be fairly easy to maintain and obtain. Our research shows that today’s average consumer doesn’t care much about the origins of a product, nor about the environmental impact caused by its production and the related logistics. The consumer thus makes the international production of food and other goods possible.

The preference for an easy lifestyle is also expressed by the use of modern information and communication technology, used for example to purchase a flower subscription for the next quarter from the comfort of an easy chair. As we will describe later, the Dutch ornamental plant cluster with its strategic initiatives focuses mainly on the individual wealth scenario, with an additional focus on flow compaction. This reduces the cost of logistics and has the added effect of minimising the environmental impact.

We conclude that the other scenarios too, and the Worldwide Environmental Awareness scenario in particular, show features that tie in with the trends that are relevant to us. For example, the consumer demand for a good and healthy product at the lowest possible price in this scenario too results in worldwide production and distribution. A European network of regional hubs could be used to retain the European management of flowers and plants logistics, for example in the Powerful Region scenario.

In the Worldwide Environmental Awareness scenario, consumers also like to keep in contact with others using modern information and communication technology. The crucial difference however, is that in this scenario, according to STT, there is more room for collective consumer interests and considerations, in particular with regard to environmental impact. The lessons from research into consumer behaviour when buying and using flowers and plants teach us that consumers attach relatively little value to this aspect, not now and in all probability not in the future either. Therefore we will begin by focusing on the Individual Wealth scenario.

Strength through collective actionThis essay frequently mentions the industry, collaboration and other concepts that lean heavily on the concept of collectivity. However, we have just stated that, given the STT scenarios, we consider the Individual Wealth scenario to be the most

2 As fits the motive of the consumer on the moment of purchase. Consumers don’t mind buying more expensive products, but they want to be sure they haven’t paid too much.

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probable. The industry therefore anticipates a society that is heavily focused on serving the individual by means of a collective response.

The reason for the industry’s collective response is simple: collaboration traditionally is a strong factor in the industry. This has enabled the industry to gain the position of world leader, in spite of being dominated by small and medium-sized businesses offering products which consumers may find hard to tell apart. The auctions are turntables that have stood at the cradle of strong clusters in which competitors and colleagues could profit from each other’s presence. This collaboration is reflected in the DaVinc³i project, an expression of the will to remain at the top. We will look at this project in more detail later.

Box 1 GreenRailThis involves the transport of plants by rail from the Netherlands to Italy. The purpose of GreenRail was to show the industry that it is possible to take the urgency out of the chain. GreenRail was also intended to demonstrate that goods can be transported sustainably and at a lower cost, and that transport by road is not the only option. The project, which has been successfully concluded, proved that multimodal transport can also be used for ornamental plant products.

With regard to logistics, the forming of a cluster has made it possible to efficiently combine different product flows. At the market locations, various thin and fat flows are combined into new flows, both fat and thin, creating a kind of collective logistics without being restrictive. In principle, all the participants are responsible for the logistics handling of their own products. However, in view of the increasing environmental pressure and to improve accessibility, the industry has taken the initiative to set up HubWays, as explained in Box 2. Rather than resulting from a desire to set a strategic course for the future role of the Netherlands, this project was driven by a concrete and acute problem.

Box 2 HubWaysIn the HubWays project, industry parties are working on a neutral coordination platform for ornamental plant cultivation logistics. HubWays seeks to improve transport flows between the Dutch market places. If the current developments continue, the traffic within and between the various auctions will come to a halt. Given also the increasing environmental awareness, this is a reason for the industry to start organising its transport on a more efficient basis. A collective approach will be required to solve this industry-wide logistics problem. This will enable a sustainable and future-proof logistics improvement to be achieved that would be out of reach to individual companies. In this respect, the various parties involved are using HubWays to adapt to the Worldwide Environmental awareness scenario. Given the production and trade in flowers and plants, the goal is to minimise the environmental impact of the transport involved.

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DaVinc³i: adapting to changeThe basic layout of the industry as described above has been in existence for quite a while. However, the changes in consumer behaviour are causing considerable changes in the industry. The purpose of the DaVinc³i project is to prepare the cluster for those changes by looking for ways in which it can use new logistics concepts to best serve its wide range of customers, and so maintain or even improve its leading position. Within the project framework, the industry, represented by growers, FloraHolland, dealers and the VGB trade association, logistics service providers and TLN, collaborates with Wageningen University, UV University Amsterdam and Eindhoven Technical University.

The main question the project seeks to answer is how the Dutch ornamental plant industry can improve its leading position in Europe a virtualising world, with internationalisation and the availability of accurate, real-time information? The subquestions which the project seeks to answer are:

What are the possible future scenarios for the industry given the increasing virtualisation?

• What should the logistics network look like for each scenario? Could an international hub/trade park network be the best infrastructure, for example?

• What are the best new control concepts in logistics and commerce for the cluster to provide the best possible service to its customers?

• Which new bundling concepts, based on synchromodal transport networks, could be useful for optimising the logistics networks?

• What are the options for making chain information available in real time so it can be used to support decision-making processes throughout the entire chain network? What should this virtual information network look like?

• Which new collaboration concepts and profit models in international trade park networks will enable the cluster to maintain and enhance its leading position?

The consumer point of viewIn defining the scenarios, DaVinc³i begins at the beginning: the purchaser of flowers and plants, in most cases the consumer. The trends in the individual consumer behaviour described previously in this essay have resulted in a number of scenarios. These scenarios form the starting point for answering the questions presented above. If consumers buy their flowers and plants in a certain way, what does this mean for the value chain and the logistics chain that are required to serve those consumers?

The scenarios developed within DaVinc³i vary in three dimensions: the dominant sales channel, the degree of change in the industry, and the type of product. A short discussion of these dimensions follows.

In the first place we can distinguish three possible sales channels: mass retail, retail and e-tail. The first two channels have already been discussed; the third is a

Ornamental plant cultivation | 97

new channel. Within DaVinc³i the e-tail channel is considered as a new on-line channel, without any physical sales points, independent from the current players, and used by consumers to purchase products through the Internet. For each scenario we will assume a different one of these sales channels to be dominant over the other two.

Secondly, the scenarios differ in the extent to which the current chains evolve. We have opted to study two variants. On the one hand there are evolution scenarios, in which the chain develops from the existing structures. On the other hand there are revolution scenarios, in which the chain changes rapidly and the parties involved in the cluster face a challenge to prepare for the future. The essential difference between the two types of scenarios is the extent to which the chain shortens. Relative to the current situation, the number of links removed is greatest in the revolution scenarios, as shown in Table 1.

Finally, we distinguish between between flowers and plants. As discussed previously, these products differ from each other. These fundamental differences can affect the way in which the chains will develop towards the future.

Consequences for the chainEach scenario results in a different chain. For example, the scenarios in which most sales to consumers are handled by a large number of mostly small-scale retailers will tend to require one or more links between grower and retailer. The commercial chains that go with each scenario have become clear and are shown in Table 1. The allocation of logistics functions to the various parties is the current subject of study and discussion. One possible outcome could be that an e-tail shop would outsource the full logistics handling, from grower to consumer, to a logistics services provider. This might also be an option for mass retailers. In the case of retailers an option might be for two logistics service providers to handle the product in the chain from grower to consumer.

Table 1: Commercial scenarios for the future of the ornamental plant cultivation industry

The figures above are a highly simplified representation of the chains. Production and sales can take place both in the Netherlands and abroad. The intermediate links are in fact the subject of the study. Changes in the last links are also within its scope.

Dominant sales channel

Evolution Revolution

Flowers Plants Flowers Plants

Mass retail

Retail

E-tail

mass retail chain

flora providerproduction

production flora market

flora provider

retail shops

retail shops

fresh providerproduction

mass retail chainsproduction

retail shops

flora marketproduction

e-tail shopproduction

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ConclusionIn this article we have sketched an outline of the Dutch ornamental plant cluster’s views on future consumer behaviour when purchasing and using flowers and plants. The scenarios as developed within the DaVinc³i project tie in particularly well with a specific STT scenario, i.e. Individual Wealth. That is not to say that the ornamental plant cluster is not prepared for the other scenarios. The common factors linking some of these scenarios should make it possible to adapt the concepts developed within DaVinc³i for use in the other scenarios. All in all, we think the results of DaVinc³i will enable the cluster to prepare for the future.

In some ways the scenarios presented by EVO are of a more fundamental nature than the scenarios being used for DaVinc³i. The four STT scenarios allow for the possibility that the world will undergo fundamental changes which might for example see a reversal of the globalisation trend. Our DaVinc³i scenarios are based on a continuing desire of people to live their lives as they do today, albeit with fundamentally different means and focus, but not essentially different. The future will tell which is the right scenario.

References• Statistics Netherlands (2011), Online winkelen steeds populairder (‘On-line

shopping gaining popularity’), (30 March 2011).• Chan, H. K. and Chan, F.T.S., 2010, ‘A review of coordination studies in the

context of supply chain dynamics’, International Journal or Production Research, 48: 10, 2793-2819.

• Greenrail, 2010, (www.greenrail.nu/nl/)• HubWays, 2011, (www.hubways.nu/)• Koppes, R. (2012), IST situatie sierteeltsector (‘Ornamental plant industry IST

situation’), DaVinc³i deliverable, Dinalog.• Ministry of Agriculture, Nature and Food Quality, 2010, Facts and Figures 2010,

The Dutch agricluster in a global context, The Hague.• Porter, M.E., J. Ramirez-Vallejo, F. van Eenennaam (2011), The Dutch Flower

Cluster, Harvard Business School, Harvard Business School Strategy Unit Case No. 711-507.

• Van der Vorst, J.G.A.J. (2011) Toekomstverkenning transities tot 2040 voor de topsectoren AgroFood and Tuinbouw vanuit logistiek perspectief (‘Future exploration of transitions up to 2040 for the Agrifood and Market Garden spearhead industries from a logistics perspective’), December 2011, on behalf of the Dutch Council for the Living Environment and Infrastructure.

• Van der Vorst, J.G.A.J., E. Wenink, A. Bril, A.J.M. Beulens, T. van Woensel, A.P. de Man, J. Bloemhof, C. Verdouw (2010), DaVinc³i project proposal, Dinalog.

• Van der Vorst, J.G.A.J.;Van Kooten, O.; Luning, P.A. (2011) Towards a Diagnostic Instrument to Identify Improvement Opportunities for Quality Controlled Logistics in Agrifood Supply Chain Networks, International Journal on Food System Dynamics 2 (1). – p. 94-105.

• Verdouw, C., 2010, Business Process Modelling in Demand driven Agri-Food Supply Chains: A reference framework, PhD thesis, Wageningen University.

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• VGB, 2010, De VGB visie op de sierteeltgroothandel 2010-2020 (‘The VGB view on the ornamental plant wholesale industry 2010 – 2020’), Dynamiek in Perspectief.

• Van der Vorst, J.G.A.J., E. Wenink, J. Bloemhof, M. de Keizer, DaVinc³i: developing innovative logistics concepts for horticultural trade networks, In: S. Wijers, W. Dullaert (Eds), Vervoerslogistieke Werkdagen 2011 (‘Transport Logistics Workshops 2011’), Antwerp 1-2 December, pp. 225-236.

Internationalisation is the future trend in

the chemical industry

Chemical industry

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Summary of chapter 7

SABIC is is growing into one of the global players in the field of chemical products. In fact, its turnover and number of employees have already reached global scale, and the organisation is currently being brought into step. The supply chain will be equally affected.

Vision 2020 is the strategic plan that addresses the question what SABIC should look like in 2020. The targets include a higher percentage of added-value products, such as performance chemicals and innovative plastics. SABIC also intends to extend our portfolio, spreading our eggs over several baskets to mitigate risk. One of the reasons for doing so is that the production is extremely capital- and labour- intensive.

The strategy spearheads are customer intimacy and product leadership, activities that are equally applicable to bulk activities. On the other hand, these are fields in which SABIC scores very high at operational and financial excellence as well as process efficiency, qualities that come in very useful in the manufacture of products with a high added value.

The four future scenarios outlined by STT in this book are worth investigating because they look at the options between internationalisation and localisation, and between the individual and collective behaviour of consumers. The main trend affecting SABIC is internationalisation, and it will certainly remain so for the time being, albeit with a watchful eye on local differences.

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Wouter Vermijs, Director

Supply Chain Chemicals

Europe, SABIC SBU

Chemicals

Globalisation and local markets

SABIC is booming, and the concern has expanded into a world player in the chemical products arena. Its global scale is already reflected in the sales and employee figures, and two years ago the organisation was adapted to match. This also affects the supply chain in a major way.

Vision 2020 is the strategy in which we ask ourselves what SABIC should look like in 2020. One of the items is that we are looking for a higher percentage of products with high added value, such as performance chemicals and innovative plastics. We also want to move to a wider portfolio, spreading our eggs over more baskets to minimise the risk. One of the reasons for this is that the SABIC’s production is very capital- and labour-intensive.

In the specialty products range, customer intimacy and product leadership are paramount. A number of elements from this can also be successfully applied to the bulk activities. In the bulk sector, SABIC focuses on operational excellence, with particular emphasis on our cost position and the efficient use of processes. These characteristics in turn come in very useful in the manufacture of products with a high added value. This is one of the ways in which both businesses support each other.

The four future scenarios outlined by the STT Netherlands Study Centre for Technology Trends (Stichting Toekomstbeeld der Techniek) are very interesting because they show the options that exist between internationalisation and localisation, and between individual and collective consumers behaviour. To SABIC the most important trend is internationalisation and this is sure to remain so for a while, although we will keep an eye open for local differences and for sustainability in particular.

SABIC towards a global organisationWorldwide, SABIC has approximately 35,000 employees, with 6,000 of them working in Europe. SABIC was established 1976, and its roots lie in the oil extraction industry in Saudi Arabia. The gases released in the extraction process used to be burned off, which was bad for the environment. SABIC started to use these gases on a large scale as raw material for various products, from chemicals to polymers and fertilisers.

This century SABIC has grown considerably as the result of a number of major takeovers. In 2002 for example, the petrochemical activities of DSM were taken over, and now the European headquarters are located in Sittard in the south of the Netherlands. In 2006 Huntsman followed, as did GE Plastics in 2008. In a relatively short time SABIC has grown into a concern with sales in excess of USD 50,000 million. Some 70 percent of the company is owned by the Saudi Arabian state, the remaining 30 percent by private investors.In 2009 SABIC decided to change its organisation on a more worldwide basis. The

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European activities now report directly to the main office in Riyadh in the Kingdom of Saudi Arabia. There are six strategic business units: Chemicals, Polymers, Innovative plastics (the former GE Plastics), Performance Chemicals, and Fertilizers and Metals. Each SBU has a worldwide profit and loss responsibility.

The Chemicals SBU produces ethylene and propylene, which are raw materials for the polymer industry, as well as by-products such as benzene and styrene, aromatics. These raw materials are processed by e.g. SBU Polymers to make products ranging from packaging materials such as the cling film you find in supermarkets, right up to car bumpers and other goods.

Chemicals itself consists of four business units which also operate globally. In addition we have global functions such as Supply Chain, which forms part of the SBU management. We handle the supply chain for the entire SBU and the four business units that form part of it. I myself am responsible the European region. My direct colleagues are responsible for Asia, America and the Middle East, which is also where a number of global supply chain activities are coordinated.

I handle all the import and export activities, with an annual total of 13.5 million tonnes, including 6 million tonnes of raw materials we purchase for the cracker operations, 6 million tonnes of chemical products, and an import flow from Saudi Arabia of about 1.5 million tonnes.

The SABIC supply chain: Think Global, Act LocalThe Supply Chain department consists of five sections. Planning & Optimization handles the short-term and long-term planning and optimisation of all goods flows. This includes the planning of the resources we need for logistics, transport and storage, i.e. shipping by sea and inland waterways as well as overland by road and rail. We also optimise the raw material feeds and production of the factories to make sure we get the best profit out of our production. The optimisation process involves finding out the best products to make at any given time, which raw materials will be required and how much.

The largest unit is Customer Services for all order-to-cash activities. In addition there is Sourcing & Contracting, our own procurement department. In Europe we have about fifteen terminals we need to secure contracts with. We also need to purchase the logistics of deep-sea shipping, barging and land transportation. In addition we have a projects department, Supply Chain Improvements, which handles all project-based activities. These include such things as setting up supply chains for the introduction of new products, calculating optimum stock levels, and optimising the terminal network. Having a separate project crowd is useful, because in the day-to-day running of things the operations always get precedence.

Finally, EHS is the department handling all the processes related to the safe storage and transport of all our raw materials and products, with environmental and health considerations also playing a major role. Both come high on our list of priorities. Think

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careful management of processes and procedures, for example. Another way to put it is Responsible Care, which as far as the supply chain is concerned, focuses on three issues: incident avoidance, emergency response and sustainability.

The focus on EHS also applies to the logistics contractors handling our products, who must also operate in a safe and responsible manner. Before we take anything out to a terminal or ship, we follow procedures to make sure everything is safe. We also carry out audits and provide support for incident analysis. You can learn a lot from that and it provides an important source of input for improvement processes.

Let us not forget that without the chemical industry our impact on the environment would be much greater. No other packaging material is as environmentally friendly as plastic. It is light, strong, flexible, cheap to make and suitable for any number of applications. By using plastics we cut more on CO2 emissions than we cause through their production. Plastics are used for example to wrap food so it stays fresh longer and produces less waste. Or think of the transport of soft drinks in glass versus plastic bottles. We save a lot of fuel just because plastic is so much lighter than glass. Another example we can see around us every day is the use of plastics in car manufacture.

In some way one might say that plastics have become a victim of their own success. Plastics are everywhere and they are cheap, and so they easily cause waste in the form of plastic carrier bags and bottles. This is not helping the public perception of plastic. So, as an industry we have an image problem, which is why we take sustainability very seriously indeed. We use part of the crude oil as a raw material which we convert into products. We can recycle and re-use these products as other products, revert them into raw materials, or use their energy content to generate electricity, for example. This is also an instance of double use, first as a commodity in which the energy is stored, and then as a fuel.

Vision 2020 as future strategySABIC intends to keep on developing as a robust global enterprise. This is a process that normally takes years. We are trying to speed up what has taken companies such as Shell, ExxonMobil, Dow, BASF and Bayer many decades to accomplish. Remember that SABIC wasn’t even around before 1976.

We need a certain economy of scale in order to survive in this world, and the only way to achieve it is by being a worldwide player. We are observing a shifting of powers, with those in Asia growing and those in the West losing strength. Modern communication technology makes it increasingly easy to operate on a worldwide scale. We have meetings in rooms with large displays showing our colleagues halfway across the world, sitting in the same kind of room. It all contributes towards globalisation.

On the other hand, there is nostalgia too, with people attempting to retain typically local qualities. This is particularly evident in Europe, for example in the tendency to save local beauty spots and regional products. This is a very natural desire, and we

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might just be heading for a world in which these two trends exist in parallel, where product portfolios get composed on a worldwide basis, but are adapted by region to suit local tastes.

The market always wins. Sure, there must be some form of regulation if certain developments lead to excess, as happened in the banking sector, but in the end there is no stopping market developments, because they are based on the fundamental logic of supply and demand.

New factories tend to get built where populations grow rapidly, or where there is easy access to cheap raw materials, as in the Middle East. In America, shale gas is now being extracted by means of horizontal drilling using chemicals to release the gases. All of a sudden, enormous gas reserves have been discovered, and America is shifting from importing gas towards self-sufficiency. The same will happen in China, where the same kind of gas reserves exist.

Even so, when choosing a business location there is a difference between bulk products and products with a high added value. The really big mass production can be found mainly in low-wage countries. For products with a high added value or for rapidly changing markets, the labour component is a minor ingredient of the total production cost, so it makes sense to keep it local.

Within any market, you always need to be able to outrun your competitors. This is why we won’t be setting up new chemical factories for bulk products here in Europe. We don’t have a growing population, nor do we have an abundance of cheap raw materials. Therefore, our European strategy comes under the header of ‘actively maintain’. No big expansions, but make sure you are among the best in your competitive arena. We invest in our crackers to make them waste less energy than anyone else’s. These are our sweet spots, the points where we can both reduce cost and improve sustainability.

How SABIC handles internationalisationSABIC will increasingly be focusing on a global supply chain, finding ways to do business in larger volumes, improve coordination, be more efficient. There is a global supply chain which gets its cue from the regions, after which the regions adapt their supply chains to the relevant levels at their end.

The trend in recent years has been almost exclusively towards internationalisation. The world is tending towards increasing globalisation, but within that process certain shifts can be discerned. China is one example. Although many Chinese make products for the world, they still live and work locally. America is a large, homogeneous market with a population that on average has less international awareness than European do. We therefore live in a world in which volumes tend to become more global, even though lives remain local. The powerful region is therefore important. The economy grows through exports, but at the same time people are creating an internal economy with an internal market.

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In the automotive industry the production is shifting towards China not just because wages are lower over there, but also because that is where the market growth is to be found. This has unexpected consequences. Volkswagen for example produces many long-wheelbase cars in China. The reason for this is that prosperous Chinese want a chauffeur-driven car with sufficient room in the back. So, products are adapted to fit the market. In countries like China, SABIC looks for joint ventures with local parties, in both manufacturing and marketing. That is the only real difference, because chemical bulk products are pretty universal as far as labour costs, standard processes and scale are concerned. Bulk is bulk, and you won’t find much difference between the two. Whether you make your polythene in Europe or in China makes little difference to the technology or the business principles involved.

We do have local sales offices, but at the same time we also have international accounts, because our customers keep growing in size. Although they often have branches in countries like Germany and Sweden, they still have a single worldwide procurement organisation. Again, we can see a trend towards increasing globalisation. The same goes for Saudi Arabia. Many of their managers went to business school abroad, and they all speak the same business language.

Collectivity and individualisationThe mass of the world population makes us more collective, but at the same time we can see individualisation occurring. Family traditions and values are becoming less important. We used to live much closer together, but today we travel much more, and contacts become more casual. In Saudi Arabia these developments are handled in a manner different from what we are used to in Europe, with religion and family still an integral part of daily life.

The awareness of the concept of sustainability has increased tremendously in the past decade. We can see this reflected in everything, including our targets and annual reports. The entire industry is involved with it on a constant basis. There is a growing understanding in the world that we are embarked on a course that cannot but harm our environment, and producers as well as consumers are increasingly opting for sustainable products.

A chain with products from nearby and from far away

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110

Summary of chapter 8

In this article we investigate the role of locally produced products in four future scenarios for the agrifood sector, and we discuss which logistical innovations will be needed to cope with future trends. The main factors affecting the agrifood sector include the growing world population, the declining population numbers in Western Europe, increasing urbanisation, climate change, and the need to focus on sustainability and transparency.

This leads us to define a 2 × 2 scenario matrix that sets two levels of logistics, local and global, against two levels of value dimensions, one driven by a single value (cost) and one driven by multiple values (sustainability, social impact, quality, etc.).

We foresee a combination of the ‘global sourcing – low cost’ scenario and the ‘multifunctional – interactive regionality’ scenario. We conclude that locally produced products are not more sustainable per se than goods imported from abroad. However, the contribution of locally produced goods towards increased consumer awareness with regard to sustainability and quality is significant.

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Frans-Peter Scheer and

Joost Snels, Wageningen

UR Food & Biobased

Research, Fresh, Food

and Chains; Jacqueline

Bloemhof, Operations

Research and Logistics,

Wageningen University

Regional products and agrilogistics in future perspective

A look at future agrilogistics networksAs part of the Superintelligent Transport future exploration by STT Netherlands Study Centre for Technology Trends (Stichting Toekomstbeeld der Techniek), four scenarios for the social context of logistics in 2040 were presented. These four scenarios have been used as the basis for answering the question what the role of regional products will be in the next thirty years, and how logistics innovations can adapt to match.

The framework of the four STT scenarios, which are described in detail elsewhere in this book, is the result of the combination of two axes, with regionalisation versus globalisation on one axis, and individual versus collective on the other. These scenarios tie in closely with the Special Report on Emission Scenarios by the Intergovernmental Panel for Climate Change, by the way [IPCC, Nakicenovic and Swart, 2000].

The four STT scenarios are:• Individual wealth• Worldwide environmental awareness• Self-sufficient unit• Powerful region

Before we look at the specific role of regional products, we will describe the effects of anticipated trends in society and in the agrifood and market garden chain on the way in which processes and actors in the agrifood industry are organised. The main general mega trends and their general effects on the agrifood complex are listed in Table 1.

Table 1: Mega trends and their effects on agrifood [Van der Vorst, 2011]

Mega trend General effects on agrifood

1 Demographic developments such as growing world population, but declining population numbers in Western Europe, urbanisation, multicultural towns and individualisation.

Increasing demand for food, and in particular meat, fish and dairy products. Stabilising markets in Europe. Increasing use of land, raw materials and energy. Increasing waste production and flows.

2 Climate change and sustainability awareness. Worldwide, only 150 types of crop are grown on any major scale. Less biodiversity. Twelve products supply three quarters of the world’s food production, with rice, wheat and maize supplying half of our vegetable food energy.

3 ICT and virtualisation. Increasing decoupling of goods and information flows, and increasing internationalisation of production processes.

4 Specialisation, internationalisation versus regionalisation.

A small number of large companies in each link of the chain dominate the market. Increasing outsourcing through focus on core activities and fragmentation of production processes.

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The most important trends and developments specific to agrifood are listed in Table 2.

Table 2: Trends and developments specific to agrifood [Van der Vorst, 2011].

Trend Effects on logistics in agrifood industry

A Shifting production activities

More and different production locations to minimise

supply risks for the processing industry and trade.

Declining agricultural subsidies in NW Europe. Agricultural

production shifts to cheaper countries.

B Sustainable and

responsible enterprise

Shortages will increase the need for efficient use of

land and raw materials. Cycles will be closed and food

waste minimised. Thanks to its advanced expertise,

the Netherlands will be at the forefront of sustainable

enterprise and capitalise on this knowledge in an

international context.

C Technological innovations High yields become possible with less phosphate

fertilisation. Chains are closed thanks to biofuel. The

highest possible value is extracted from every crop and

every hectare. Development of artificial meat in local

mini factories. Products can be transported over long

distances thanks to advanced temperature control in

containers.

D Capitalising waste flows Development of Biobased Economy: chemicals,

bioplastics and transport fuels are produced from

renewable biomass instead of fossil fuels.

E Globalisation and

regionalisation

Megapolis supplies and increasing wealth like in South

America and Asia stimulate an increase in global flows.

Market growth mainly outside Europe. Locally produced

products are easy to identify and instil confidence.

F Demand-driven innovative

chains

Consumers want to be supplied more often and more

rapidly with a wider range of products. Fragmentation

(organic, fair trade) also results in more frequent

deliveries to retailers and therefore increased

transport. Alternative sales channels (Internet,

smartphone) result in more sales points that need to be

supplied through a fine-meshed distribution network.

G Transparency towards

individual consumers

Developments towards product passport and footprint

(eco/water/carbon) place stricter demands on

transports and logistics control systems.

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Future views of agrilogistics networksWhat are the transitions that the agrifood industry will be facing? In the previous section we discussed general trends and more specific developments in the industry. Before we sketch our future views, it makes sense to consider a number of developments as given:1. The necessary growth in the quantity of food available worldwide.2. The necessary transition to more sustainable production systems.3. The availability of new production and processing technologies.4. The availability of new information and communication technologies.

The essential part is to create certainty regarding the continued supply of raw materials to processing industries and food to consumers. A specific aspect of the agrifood industry is that not only is consumer demand variable, the supply volume and quality of raw materials also vary, not only on an annual basis, but even with the seasons, mostly due to variable weather conditions.

In line with the four STT future scenarios we have sketched four future views based on the following two axes:1. Local and mostly small-scale regional production of food for a regional market

versus worldwide transport from large-scale production regions to urban markets.

2. Setup and evaluation of supply chains based on a single value, usually profit, versus a wider evaluation of aspects (People, Planet, Profit), also referred to as the Triple Bottom Line (TBL or 3BL).

This results in four possible scenarios for describing the future Dutch agrifood system (production, processing, trade and sales), see Figure 1.

Figure 1: Four scenarios for the agrifood industry.

Regionalisation/small-scale

Multi-value driven Single-value driven

A1.

Low-cost

global sourcing

B1.

Sustainable

global sourcing

A2.

Single-value & protected

region

B2.

Multi-value & interactive

region

Globalisation/large-scale

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A1 – Low-cost global sourcingWorldwide large-scale production with high-volume trade flows between regions, mostly cost price-driven. Extensive synchromodal transport with managed, bundled transport flows between production and sales regions. Accessibility, availability and low costs are more important than proximity and added value.

A2 – Single value & regional protectionLocal production and sales, trade between countries remains limited due to protectionism and local focus.

B1 – Sustainable global sourcingWorldwide large-scale production with considerable trade flows between regions based on evaluation of integral values with a growing focus on chain transparency. Integral values for People (e.g. fair trade), Planet (e.g. organic) and Profit (economic survival).

B2 – Multi-value & interactive regionLocal production and sales, multifunctional agriculture (expanded values) and intensive contact with neighbouring countries or regions.

Global LocalIf we take a closer look at the vertical axis, which ranges from Globalisation/large-scale to Regionalisation/small-scale, we can see the following expressions of local and global logistics:

Local• Typical expressions are farm shops and pick-your-own establishments where

consumers from the direct vicinity come to collect products at the production location. Although this form does away with the transport of food by the supplier, it still involves transport distances for the consumers who have to make round trips.

• C4C: City for City or urban agriculture produces within the urban environment, if necessary using artificial lighting in enclosed spaces, in the direct vicinity of the consumer.

L4L – Local for LocalThis involves products that are unique or distinctive, e.g. by taste or their traditional production method, produced and sold within a single region. One example is Willem&Drees fruit and vegetables from local farmers, with production and sales location located within a forty-kilometre radius (www.willemendrees.nl).

L2L – Local to localThis covers products that are unique or distinctive, e.g. by taste or their traditional production method, sold outside the production region, but within the same country. The GIJS brand (www.vangijs.nl) is an example of regional products that are sold nationally, in the PLUS supermarkets. With L2L the products are transported via the mass retailer’s national DCs.

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Since most Dutch mass retailers only have one or a few DCs for fresh produce, the transport distance from region to DC and from DC to region is considerable. On the other hand, L2L takes place within the Netherlands and compared with import products involves fewer food miles.

L2G – Local to globalThis is about unique products from the region being sold worldwide in limited volumes because of their unique qualities. An example of this is Parma ham from Italy.

G2G – Global to globalThis involves commodity products that are sold worldwide and in large volumes due to their low cost price, e.g. corn and maize.The above list, from local to global, results in an increase of the number of food miles per product unit. So, can we say that local products are more sustainable than global ones, and that they should be given preference? This question will be answered in the next section by looking at the integral aspects of a food product.

ValuationIf we take a closer look at the horizontal axis, which ranges from Single-value driven to Multi-value driven, different considerations can be applied to the various values when setting up the supplying food chain. The marketing of regional products tends to refer to a number of added values that appeal to a wider sense of sustainability:• Authenticity, nostalgia, purity, transparency• Traditional, small-scale, local economy• Natural, delicious, healthy, addition-free• Passion, perception, etc.

Different consumer groups are reached by using a mix of the above values. In terms of the marketing mix, the following values are referred to:• Promotion: distinctive• Price: added value• Product: tasty/tastier, fresh/fresher, healthy/healthier• Place: local – regional

So what is the value of the ‘region’ or local/regional aspect in this range of aspects? We will try to balance the different aspects objectively, as trade-offs, as opposed to a valuation based more on marketing value or consumers’ gut feelings.

A good measure of the objective contribution of activities within a chain is to compare CO2 emission contributions. These emissions are not restricted to the food transport stages. The production, storage, processing and preparation also involve the emission of CO2. The contribution of transport to the total CO2 emission for agricultural products generally is very limited. Figures for the European pork chain (1.49 percent) and the chain of tomatoes produced and consumed within the Netherlands (0.98 percent) show how little of the total CO2 equivalent is down

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to transport (Groot et al., 2011, Groot et al., 2012). See Figure 2 for a visual representation.

Figure 2: Greenhouse gas emissions of fruit and vegetables (Blonk Milieuadvies, 2009)

Figure 2 reveals a number of interesting facts:• The CO2 contribution from transport is slight compared with the contribution from

production, processing and use of materials.• The CO2 contribution from imported fruit and vegetables can be less than from

local products. This is the case when growing in the Netherlands requires heated greenhouses, as opposed to unheated greenhouses in Southern Europe. The added transport miles are more than offset by the reductions during the production phase, as with tomatoes. For apples the situation is reversed, because the production phases in the Netherlands as well as in New Zealand are open-air.

• The CO2 contribution from organic products is of the same level as for regular products, or slightly higher. One of the reasons for this is the slightly lower yield per hectare of organic products.

Another aspect that we think should receive more attention in the general discussion, is food waste. A recent FAO study (FAO, 2011) shows that on average, one third of the food produced worldwide does not get eaten by consumers. This includes all the links, i.e. from production, processing, storage, transport, retail and catering to consumers. In other words, with the food that gets wasted, the contribution of the entire supply chain gets lost.

If we compare food waste and transport, food wasted by consumers contributes to the product’s CO2 emission for 100 percent, as opposed to the 1-2 percent that transport contributes to the total CO2 emission of the product. In other words, if

Strawberries, NL, greenhouse-grown

Strawberries, NL, rack-grown

Apples, NLCauliflowers, NL, summer crop

Cauliflowers, NL, organic, summer cropCauliflowers, NL, early crop

Cauliflowers, NL, organic, early cropApples, New Zealand

Pineapples, Costa RicaPineapples, Costa Rica, organic

Bananas, EcuadorStrawberries, NL, field-grown

Tomatoes, SpainTomatoes, NL incl. CHPFrench beans, NL, tins

Mushrooms, NL, machine-picked, fresh French beans, NL, jars

Tomatoes, NL, excl. CHPMushrooms, NL, hand-picked, fresh

Tomatoes, NL, organic

Mushrooms, NL, machine-picked, tinsMushrooms, NL, machine-picked, jars

0

Growing energy Soil and fertiliserkg CO2 equiv. per tonne of product

Materials and processingTransport

500 1000 1500 2000 2500 3000 3500 4000 4500 5000

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more transport contributes to a reduction of food waste, for example by improved coordination of demand and supply, shorter supply lines, or faster delivery, it is a sustainable alternative.

The above considerations relate to aspects that are quantifiable, such as CO2 and costs. Things become more complicated when we include qualitative aspects in the balance. For example, how should we value such aspects as taste, wholesomeness, authenticity or support of the local economy? These are irrational values that consumers tend to think of as valuable for regional products. Also, these values get different ratings from different consumers. The different value systems make it difficult to reach a single verdict or balance.

What is possible though, is to weigh the importance of a qualitative value in exchange for a quantitative value, for example by comparing the CO2 emission and cost structure of a regional product with those of a regular product. Suppose that a comparable regional product sells for 10 cents more than the regular product. This would then appear to indicate that qualitative elements such as perception and taste represent this added value to certain consumers.

Practical examplesThis section describes a number of practical examples that illustrate the ways in which values are balanced.

Regional logisticsFewer food miles between producers and customers of regional products is not an isolated phenomenon. This short chain could potentially reduce losses thanks to short distances and thus short product lead times. However, since the turnover rate of regional products tends to be lower than that of national sales, it is not so simple to say in advance which chain is ‘faster’ and therefore best for reducing losses.

In addition to business to business (B2B) transport there are various regional initiatives that supply directly to consumers (B2C). Example are www.thegreenbee.nl, www.bestelvers.nl and www.versvandekweker.nl. Again it is claimed that products with fewer links in the chain are faster and therefore fresher when they reach the consumer. On the other hand, the transport of regional products usually involves the use of smaller lorries, smaller drop sizes, and longer drop-off distances, resulting in higher CO2 emissions per tonne kilometre. The lower transport efficiency of regional products is caused both by the collection from producers and by the delivery to consumers, known as the last mile. To gain at least some improvement, central drop-off/collection points can be used, but this means that consumers are forced to visit the collection point location, which involves extra travel. Another possibility is to outsource the transport to logistics service providers who can combine deliveries, which in many cases can reduce the total transport distance.

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Global localIt has already been mentioned that importing products can in some case reduce CO2 when compared with production within the country itself. This is due to location advantages elsewhere in the world which enable production to be more efficient. The effect of the much lower production contribution far outweighs the slightly higher contribution due to additional transport.

Nevertheless, in order to minimise the transport contribution, new transport modes by ship and rail could be used which represent a lower CO2 emission per tonne kilometre than road transport. A new development is to set up international cluster locations with multimodal access which allow direct transport between the countries of origin and destination.

Another possible contribution is to process products in the country of origin, for example by drying fruit or making concentrate, which increases the value density of the product, since the weight of end product per cargo unit is increased.

Retail logisticsAdditional transport can contribute to a lower total emission. Supermarkets have to weigh the benefits of full shelves (preventing out-of-stock events) and minimised product loss. As sales are variable and products must be ordered and delivered on prognosis, shorter delivery times help to optimise this process.

Short delivery times mean that deliveries need to take place more often, and this results in increased CO2 emissions. However, since it also prevents product loss, thus lowering CO2 emissions, the effect of which offsets that of added transport, the overall result is a reduced total CO2 balance. Of course, congestion and fine dust in urban environments also need to be taken into account.

Healthcare logisticsIn hospitals, large quantities of food often go to waste. A major step towards waste reduction turned out to be to allow patients to say how much food they wanted when meals were served rather than serving plates with predetermined quantities of food, say three sandwiches or four potatoes with two scoops of vegetables.At the Maxima Medical Centre, the new regime was found to reduce food waste from 40 percent to 2 percent! In addition, patients enjoyed the service and ate more heartily. The ingestion of food has a direct relationship with convalescence, number of hospital days and use of medication. Also, healthcare institutions in particular might find it to their benefit to provide regional products, since patients tend to really appreciate this. This shows that a wide evaluation of various aspects can result in benefits with regard to food waste, health, and the supply of regional products.

Closed loop supply chain (capitalising waste flows)In the previous section we saw that wasting food can have a highly adverse impact on CO2 emissions, among other issues. This awareness and recent developments, in technology and economy as well as sustainability, make it worthwhile to collect

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and capitalise waste flows from the production and processing stages to create a closed-loop supply chain. The capitalisation process has a hierarchy and is best arranged from high-value to low-value, as described in the so-called Moerman’s Ladder, see Figure 3.

Figure 3: Moerman’s Ladder

The transport of these seemingly worthless flows will have to be handled very efficiently, and contrary to what currently is the case, the new return flow should not be considered as waste, but as raw material. It will therefore require different treatment, e.g. conditioning, GMP+ certification for animal feed and HACCP for human consumption. As a result, these flows will initially be restricted to relatively small regions in order to minimise transport costs. To generate sufficient volume for renewed production however, a certain scale will be required.

The described examples illustrate that a wider-ranging evaluation will be required to compare the sustainability of different food chains. It is not a case of regional production being more sustainable per se than its national or international counterparts.

Regional products and logistics in perspectiveIn this section we will take a look at the future role of regional products and how logistics innovations can help to prepare the industry.

Which of the scenarios do we consider most likely?Research regarding local and international volumes shows the following [Scheer, Globallocal, 2009]:

Storten  van  GFT  (storten  van  voedselresten  is  verboden).  

Preven:e  (voorkomen  van  voedselverliezen)    

Toepassing  voor  humane  voeding  (bijv.  voedselbanken)    

Converteerbaar  voor  humane  voeding  (be-­‐,  ver-­‐  en  herbewerking)    

Toepassing  in  diervoeder    

Grondstoffen  voor  de  industrie  (biobased  economy)    

Verwerken  tot  meststof  door  vergis:ng  (+  energieopwekking)    

Verwerken  tot  meststof  door  composteren    

Toepassing  voor  duurzame  energie  (doel  is  energieopwekking)    

Verbranden  als  afval  (doel  is  vernie:ging,  waarbij  tevens  energie  kan  worden  opgewekt)    

Prevent (avoid food waste)

Direct human use (e.g. food banks)

Convert for human use (reprocessing)

Use as animal feed

Use as raw materials for the industry (biobased economy)

Ferment into fertiliser (+ energy production)

Compost into fertiliser

Incinerate as waste (purpose is destruction, energy production is optional)

Dump vegetable waste (food waste cannot be dumped).

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• Worldwide no less than 88 percent of agrifood sales are L2L, so ‘only’ 12 percent are global.

• For the EU these figures are 66 percent local and 34 percent global.• L4L (regional) accounts for only a few percent and in our definition is part of L2L.• The Dutch agrifood industry accounts for 9 percent of global and 17 percent of

European export flows.

We think that a combination of the Global low-cost and the Local multi-value (including quality and sustainability) scenarios is the most probable future view. We call this development Global/local, as shown by the green oval in Figure 4. Within this, Global (A1) will be more profit-driven, with Local (B2) being more sustainable. We range the four scenarios as follows (in decreasing order of importance):

Multi-value & interactive region (B2)The above figures confirm that for agrifood B2 is the most important scenario, and we expect the importance of local food production to be a permanent factor, one reason being the way the agrifood industry is connected with the local land.

Low-cost global sourcing (A1)In view of global developments, A1 will gain importance. Due to the specific properties of agrifood, such as a limited shelf life, the worldwide distribution of production areas, and the large volumes of relatively low value involved, we expect the effect of globalisation to be less marked than for other industries such as fast-moving consumer goods. However, technical developments such as advanced refrigeration and hydroponics my change this.

Sustainable global sourcing (B1)The integration of sustainability in business is unstoppable trend given the shortages of raw materials, the growing world population, etc. However, because there is a limit to the feasibility of worldwide agreements regarding sustainability, we consider this scenario less likely than A1.

Figure 4: Global/local future view.

Regionalisation/small-scale

Multi-value driven Single-value driven

A1.

Low-cost

global sourcing

B1.

Sustainable

global sourcing

A2.

Single-function & protected region

B2.

Multi functional & interactive region

Globalisation/large-scale

Local

L4L

L2L

L2G

G2G

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Single-value & protected region (A2)This scenario scores low on the feasibility scale because it stands out negatively from A1 with regard to cost price, and from B2 with regard to added values.

Important agrilogistics innovationsIf we apply the agrilogistics trends from the second part of this article to the four scenarios outlined above, we can describe the logistics developments and required innovations, with the scenarios again being presented in order of decreasing importance:

B2. Powerful region/multifunctional and interactive region✓ Regionalisation/localisation: increasing interest in buying regional products that

are produced on a small scale and close to nature. This scenario offers the best chances for a mature development of regional logistics.

✓ Products are distinguished through such factors as taste, freshness, wholesomeness and production methods, which also means they have distinct logistics.

✓ There is a large variety of products, mainly seasonal, so many things are not available the year round. International products such as imported and exotic varieties are limited in availability and higher in price than in scenario A1.

✓ Consumers use the Internet to select a range of regional products. Delivery to the doorstep is less important in this scenario than in B2, because consumers like to keep in touch with products and producers.

✓ Cradle to Cradle may succeed given the small scale of the community in which a product is used. The local region is the living environment, re-use and production take place on a local scale.

✓ The position of main ports (large seaports and Schiphol Airport) will come under pressure. Chain management will take place on a local scale.

✓ A long-term economic crisis may result in shifts within the region, but less so between regions.

✓ Transport will initially be fragmented and small in scale. Scaling up to L4L transport requires a professional intermediary to handle the organisation, billing, food safety and quality. One solution would be to have a neutral network of a regional fresh produce DC for a number of customers with a central management, or a to have a number of parties set up their own national L4L network, or to connect to the logistics systems of suppliers while adding the company’s own audit and field services.

A1. Individual wealth / Low-cost global sourcing✓ Products stand out through consistent shelf life, taste and such, making them

suitable for multimodal/synchromodal transport.✓ Consumers use the Internet to buy food at low cost and have it delivered to their

doorstep.✓ Quality-driven logistics will have sensors on the packaging that measure

temperature, humidity, etc. Quality progress models will predict the quality, so

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on-line changes can be effected. FEFO (First Expired First Out) will replace the current FIFO (First In First Out).

✓ Production activities will shift as a result of climate change and communal agricultural policies. The importance of agriculture and industry in the Netherlands will decline, and the Netherlands will focus more on logistics handling to the hinterland.

✓ Increasing import flows will increase the importance of main ports (large sea ports and Schiphol Airport) and Extended Gates by means of hinterland connections.

✓ Regional production will not really take off in this scenario. The large social lower class with limited income will turn to regional production.

✓ Increased number of direct international deliveries to new cluster locations, in Eastern Europe and elsewhere.

B1. Worldwide environmental awareness/Sustainable global sourcing✓ Cycles become closed, kick-starting the return logistics of waste flows.✓ Government worldwide focus on environmental awareness and responsible

use of raw materials. In view of the many years of efforts to reach a climate agreement that will really plot a different course, this would seem a laborious method. Even so, steps are taken in this direction since the effects of raw material depletion and climate changes are beginning to be felt.

✓ Regional products will play an important role, since the production of goods will be managed on the basis of eco-efficiency, i.e. at the lowest-cost location with the least environmental impact. The volume of goods produced and consumed within the Netherlands will remain limited relative to international trade.

✓ Specific cultivation of crops for which the Netherlands boasts the highest yield, combined with lower consumption of water, energy and pesticides.

A2. Self-sufficient unit/Single function and protected region✓ Many similar products that are distinguished by their geographical production

and sales.✓ Taxes on import and export and supra-statutory requirements regarding food

safety and quality hinder international transport. Shortages of raw materials and the economic growth of e.g. the BRIC countries reinforce the tendency of producers to keep products in their own country.

✓ Decline of the food-processing industry in the Netherlands.✓ Local transport network becomes optimised and managed by a small number of

major service providers.

B2 & A1. Global local combination✓ A wide range of local and global products is available the year round.✓ A transport network connects bundled local and synchromodal international flows.✓ Differences per product group; the transport of live animals for example is

minimised, while the transport of meat over long distances is accepted.✓ General appreciation of local and global, and interaction with single or multiple

values. Consumer groups select products based on their personal preferences.

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Conclusion and discussionThe third part of this article explains why a wider evaluation of values is necessary if the sustainability levels of different food chains are to be compared. Regional chains are not always more sustainable than national or international chains. Food is surrounded with many values that justify wider-ranging evaluations. We have already mentioned cost, CO2 emissions, wholesomeness, freshness, taste, food safety, origin and perception.

By taking a closer look at the trade-offs, social issues regarding the setting up of global/local food chains (local, L4L, L2L, L2G, G2G) may become easier to solve.Our recommendations for doing so are:• Quantify food chains as objectively as possible in terms of cost, kilometres, CO2,

shelf life, etc.• Quantify the trade-off with qualitative values such as local, tasty, etc.• Define key drivers: food waste? transport? sales? capitalisation?• Test and scale up to the real-world environment.• Learn and create a closed-loop knowledge chain.

We consider the combination of global sourcing, low-cost with interactive regional sourcing focusing on multiple values to be the most probable future view. Finally, we will add a few tentative conclusions:• Customers will eventually come to value L2L less, because of the relatively large

number of food miles relative to L4L or ‘really regional’.• The contribution of ‘regional’ to sustainability awareness of consumers will

exceed the actual reduction of the footprint (CO2 etc.)• Longer transport distances can result in a more sustainable chain if this reduces

food waste.

References• Blonk. H. (2009), Berekening van broeikasgasemissies door de productie van

tuinbouwproducten (‘Calculation of greenhouse gas emissions by the production of market garden products’), May 2009.

• FAO (2011), Cutting food waste to feed the world, May 2011.• Groot, J., F-P. Scheer et al. (2011), VENLOg, Venlo European Network Logistics,

FBR Wageningen UR, January 2011.• Groot et al., Decision Support Tool for Sustainable Logistics in the Pork Chain. EU

FW6: Q-porkchains, Module 4.4. FBR Wageningen UR, 2011.• Hilderink, H.B.M. (2004), Population and Scenarios: Worlds to Win? RIVM Report

550012001/2004, Bilthoven.• IPCC, Nakicenovic and Swart (2000), Special Report on Emission Scenarios

(SRES) of the intergovernmental panel for climate change.• Scheer, F.-P., J. Snels, Regioproducten, USP of Utopie? (‘Regional products, USP

or Utopia?’), Platform Agrologistiek, 2011• Scheer, F.-P., et al (2009) Global Local, FBR Wageningen UR, May 2009.• Van Voorst tot Voorst, M-P. (2011), Toekomstverkenning Superintelligent

Transport en Transport in de Maatschappij, Startnotitie, (‘Future Exploration of

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Superintelligent Transport and Transport in Society, Initial Memorandum’), May 2011, STT, The Hague.

• Vorst, J.G.A.J. van der (2011), Toekomstverkenning transities tot 2040 voor de topsectoren AgroFood and Tuinbouw vanuit logistiek perspectief (‘Future exploration of transitions up to 2040 for the AgriFood and Market Garden spearhead industries from a logistics perspective’), on behalf of the Raden voor de Leefomgeving en Infrastructuur (‘Councils for the Environment and Infrastructure’), December 2011.

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From waste to raw material logistics

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Summary of chapter 9

Everyone produces waste which is destined for disposal. With increasing numbers of people on our planet, production and consumption are rising hand over fist and the demand for raw materials is becoming ever greater. Handling waste and residue responsibly and using secondary raw materials will ensure that we don’t need to fall back on our primary raw materials as much.

As consumers, we, together with governments, manufacturers and the (waste) industry, need to develop a much stronger joined-up approach in order to turn Waste into Resources. In the future, the important thing won’t be about possessing goods and products, but about using them correctly.Moreover, the rising value of secondary raw materials is creating shifts in the field of collecting and treating household waste. Not only a cleaner environment, but also the pricing of our personal waste management will be ever more effectively determined by us as consumers.

Innovations in the field of waste treatment, storage and transport will make an important contribution when it comes to selecting and reusing discarded materials better, and will help to ensure that these materials end up on the ‘raw materials roundabout’.

Underground storage of materials using compactors is now a reality, and the use of underground pipelines for transporting waste and storage tanks for organic residues is on the rise.

Thanks to new lines of thinking such as Cradle to Cradle and SuperUse, our mentality towards reusing discarded materials has received a positive boost and a whole new creative industry has been born as a result of our sustainable thinking.

With a clever mix of waste prevention, optimal waste recycling and waste-to-energy conversion, we can pursue our goal of ‘zero waste’ in the years to come and it may even be achieved more quickly than we imagine. We will need to keep in mind the 3 Rs: Reduce, Reuse & Recycle.

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Cor Gerritsen,

commercial director,

Icova.

Why produce waste if you’re going to throw it away?

You and I are both waste producers. Day in, day out, we leave our tracks littered with materials, often suitable for re-use, that have ended up rejected to be discarded as waste. However, we are increasingly conscious of the fact that waste is far from worthless. Companies and private persons are becoming increasingly aware of the intrinsic value hidden away in waste materials. Sustainability policies and socially responsible business practices have given major impulses in today’s society to achieve a cleaner living environment. A future world without waste, is it feasible, or will it turn out to a castle in the air?

In this article we will take a close look at a number of future scenarios for waste processing and re-use, with far-reaching consequences for logistics. But first we will take a short jump back in history with the following quotation:

“By better clearing away the manure, not only will the townsman be provided with work, but it will also bring mental and physical benefits to the humblest of abodes; since of all the disadvantages to which the poor are subject, the omnipresence of manure and the consequent spoiling of the atmosphere must be one of the gravest and most dangerous.”

It was an Amsterdam physician, Dr. S. Sarphati, who ca. 1850 put down on paper these thoughts on the lack of hygiene in the old centre of Amsterdam. A visionary voice from the past, predicting our current CO2 issues. At the time, the authorities did not consider waste disposal to be one of their tasks, a point of view that was in line with the liberal views on society of the time. Small wonder that a private establishment, initiated and firmly stimulated by Dr. Sarphati, set to work to remove the waste and manure, which offered economic possibilities. Dr. Sarphati as a new waste logistics businessman with a social conscience.

Historically, waste collection and disposal has always simply been a method to establish a certain level of hygiene for the direct living environment. Today, there are many more arguments to stimulate the further professionalisation of waste management. The primary factors emphasising the importance of good waste management are: depletion of natural resources, population growth, climate changes, environmental pollution, and social conditions.

With an increasing number of people (read consumers) populating our planet, production and consumption are increasing hand over fist, so the demand for primary raw materials becomes ever greater. Sensible treatment of waste materials and re-use of secondary raw materials ensure that we can draw less heavily on our primary raw materials. It also has a direct effect on the emission of CO2 and greatly reduces the amount of materials that go to waste. Improving the re-use of waste

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flows in less developed countries in particular should be considered an essential development to be firmly stimulated in the years to come.

If we look at the European Union, we can see great differences between the member countries with regard to the way in which the logistics and processing of waste materials are organised, and the extent to which waste flows are re-used. Even so, our European collection methods and modern processing techniques can serve as excellent examples in developing countries, in which the professionalisation of the processing and re-use of waste are often still regarded as an unnecessary investment, so that many opportunities remain unused.

Getting the main stakeholders to start thinking and undertake collective action, that is the basis of each future vision being developed. We, the consumers, together with the authorities, manufacturers and the industries (including the waste-processing industry) will need to reinvent the chain concept if we are to succeed in moving from Waste to Raw Material.

Sustainability – from talking the talk to walking the walkOne of the most widely used words in recent years must be sustainability. The concept of sustainability has by now become firmly entrenched in our society, and no industry would be complete without it as a business subject.

More than half of Dutch businesses are prepared to introduce sustainable applications even if these would adversely affect their operating results. In a recent edition of the annual Business Report of international accountants and consultants Grant Thornton, 55 percent of entrepreneurs indicated their willingness to invest in sustainability.

Today it is no longer just a way to project a green company image; it has increasingly become a case of environmentally sustainable business concepts forming an integral part of modern business practice. The sustainable development of industrial waste management is increasingly hailed as a sensible alternative, and increasingly takes the form of a set of targets that get acted upon and achieved.

Sustainability is also increasingly being practiced by consumers. The average Dutch householder dutifully deposits waste materials in local paper and bottle banks, although perhaps still too little aware of all the other valuable household materials that can be extracted after use.

Although with 78 percent re-use the Netherlands is at the forefront of recycling in Europe, even in our country there remains a large potential of re-usable materials. Industries, but private individuals too, still have a long way to go to maintain or even achieve the European recycling targets for 2015. Achieving the target for the plastics fraction in particular will take some effort. The motivation for more recycling should not be driven by legislation alone, it should be much more the result of an increasing awareness that raw materials are running out.

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The demand side of the chain must supply the effort, sensible chains should be rewarded more often, and consumer perception must be influenced more effectively. It is important to develop future scenarios for industries and consumers that cover modern logistics, smart technology, re-use of raw materials, and advanced communication.

It is essential to translate sustainable thoughts into sustainable actions. This can be achieved more quickly by improving communication about:• investments in new product/services combinations (innovation);• policies (plan, targets, integration and consolidation);• visualising external effects: product safety (including CO2), health and

environmental impact;• the art of collaboration (strategic partnerships);• insight in the production chain (LCA/CO2 footprint);• code of conduct, supplier criteria (sustainable procurement).

Future scenarios for raw materials re-use: dialectics of progress or stimulative arrears?As mentioned before, our country leads Europe as far as recycling is concerned. The Dutch policies are stricter than the European ones, which is evident in the high extent to which we have scaled the steps of Lansink’s Ladder, a well-known waste management standard.

The introduction of tipping prohibition in the Netherlands brought about a number of effects. Not only did it give a positive impulse to the recycling industry in our country, it also resulted directly in the growth of incineration capacity in the Netherlands.

Vegetable/garden 31,0%

Paper/cardboard 16,0%

Plastics 19,0%

Glass 4,7%

Fabrics 3,9%

Metal 3,2%

Household chemicals 0.2%

Remainder 22.0%

Figure 1: The current composition of Dutch household waste.

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European policies focus more on prevention as well as product and material re-use than on solid waste incineration. Waste prevention is also interwoven with the policies, in the form of measures regarding chains, eco design, producer responsibility, sustainable procurement and Cradle to Cradle.

In line with the current policies in the Netherlands and in Europe I will introduce you to a number of conceivable future scenarios regarding the re-use of raw materials that may emerge in the near future.

Scenario 1: functional useThe first scenario assumes a situation in which the focus is not on the possession of goods and products, but rather on the functional use of them. The depletion of natural resources will force future generations to reconsider possession versus use of appliances, a concept of which we can already see a number of examples around us. Think for example about the increasing popularity of car sharing, a field in which companies like Greenwheels and Car2go promote the effective and responsible use of cars.

A natural exponent of this school of thought is the establishment of a ‘Raw Materials Bank’ which will play a central role in the registration of the primary raw materials that manufacturers process into products. The buyers of these products are also registered by the bank, for the purpose of tracking the processed raw materials right up to the end-of-life stage of the product.

This future scenario responds to the rising value of the processed primary raw materials and the extraction of these raw materials after the product’s life cycle. When the discarded products are returned, the secondary raw materials are once again put to use in the production chain of the associated manufacturers.The sketched model is therefore based on a future situation in which the buyer of a product does become the owner of the product, but at the same time undertakes to return the processed raw materials contained in the product to the Raw Materials Bank once the product reaches the end of its life. In other words, the owner has the registered materials on loan.

Scenario 2: waste materialsThe second conceivable scenario regarding the re-use of raw materials is somewhat closer to the role your household has as a supplier of various types of valuable waste materials. The proportion of valuable waste materials currently being returned by Dutch households (approximately 78 percent), could become a tidy source of income for us consumers. The increasing value of our household waste could become a decisive factor on the secondary raw materials market due to the optimised separation at the source, which ensures a low level of pollution of the returned waste materials.

Have you ever wondered why in these days, in which you can select your own energy provider or choose from a number of telecom service providers, you cannot

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capitalise on the valuable waste materials you produce? Your local council forces you to separate your waste materials into a number of flows for collection, but the municipal waste collection fees are not changed to reflect the increasing value of those waste flows that is currently developing on the world market.The obvious course would be for the rising value of secondary raw materials to cause a shift in the field of household waste collection and trading. As a consumer, you will increasingly be confronted with this development, and you will become increasingly aware that not only does a cleaner environment start at home, you will also become increasingly able to set the price of your personal waste management. The ability to use our own waste bins as piggy banks would be highly motivating and should be actively promoted.

Businesses and private individuals will become increasingly united and motivated in the prevention of waste, and at the same time they will also become more selective when buying products with excessive amounts of packaging. We will increasingly experience a sense of satisfaction when re-using waste materials. In the years to come we can look forward more than ever before to turning waste into raw materials while at the same time lining our purses.

Future scenarios for waste storage & collection: separate for a better societyFor the time being, the Dutch Landelijk Afvalstoffen Plan (National Waste Management Plan, LAP2) is based on an increasing annual quantity of waste in the Netherlands, up to 68 million tonnes in 2015. This prognosis will probably be revised at some point, given the current falling trend in a number of industries, including the building industry, combined with a less rapidly growing waste production in Dutch households. In spite of the falling trend, ways must be found to convert the large quantity of waste into useful raw materials much more rapidly than is presently the case.

Separated waste collection, processing and recycling has become a natural part of goods and product flows all over the world, and developments will continue in that direction.

The transport of waste within the EU and to countries outside the EU is subject to permits. European regulations that clearly affect businesses, institutions and households in the Netherlands include:• Regulation (EC) No. 1013/2006 on shipments of waste (Waste Shipment

Regulation – WSR).• European List of Waste (Commission Decision 2000/532/EC), indicating hazard

levels.• Waste Framework Directive, (Directive 2008/98/EC), on which the Dutch national

Environment Management Act (Wet Milieubeheer) is based.

The increasing environmental pressure and shortages of raw materials affect policies and behaviour. Modern waste management will increasingly play a defining

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role in the selection and re-use of discarded materials. In the Netherlands this is getting to be known as the ‘raw materials roundabout’ which we all have to circle increasingly often due to the materials chain policies that are in effect.

Getting our waste onto the roundaboutSo how can we get our waste onto the roundabout in the Netherlands? To answer this question, we must involve the innovations and changes that are taking place in the fields of waste technology and waste logistics. Both internally and externally, technical and logistics innovations can bring about major improvements in the separation, storage and transport of material flows. The number and diversity of useful sub-flows will increase, but this should not result in an increase in transport movements. This requires more effective storage, logistics and supporting ICT systems.

The waste collection and recycling market, which represents an annual turnover of approximately EUR 4,000 million, will increasingly use cleaner collection vehicles, and will also invest in new, more advanced recycling equipment. A good example of new storage and collection technology is the increasing use of underground collection systems, a trend that started in recent years and offers excellent possibilities for the future. In the Netherlands, people often take their household waste to underground collection bins in the direct vicinity of their home to be collected by specially adapted vehicles. More than 50,000 of these underground systems have already been installed in the Netherlands.

The next generation of underground containers is already being developed, and in the next few years the first generation of underground, non-compacting bins will be replaced with compacting containers that will substantially increase the density of the material collected in them. This will reduce the number of transports by 80 percent. Once full, the systems will report to base using built-in GPRS technology. Access control, user registration and cost accounting per household can be realised using DIFTAR, a differentiated tariff system that keeps a tally of the amount of waste deposited by each household.

Businesses have also discovered the benefits that underground waste storage brings regarding aesthetics, volume and cost. Many hotels, restaurants and cafés are installing underground tanks that are kept at a constant low pressure. An internal system of pipes forms an effective vacuum transport system to take organic waste from the kitchen to the tank, which only needs to be emptied six times a year, whereas standard waste skips had to be changed every week.The use of an underground pipeline to transport waste materials and/or waste water is another new development that can be used in various ways to considerable environmental and financial advantage. Of course, in the Netherlands we already have a national pipeline network we all use on a daily basis, and in a future scenario our invaluable sewer system might perhaps be put to a wider use than the disposal of sewage alone.

In other countries household and industrial waste shredders have been in common use for many years, so shredded fruit and vegetable waste can be disposed of

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through the sewer system to finish up at the sewage treatment plant as an ‘end of pipe’ solution. Granted, to our mind this might seem to be a less desirable option, but perhaps it should be compared in detail with more accepted ways of collecting fruit and vegetable waste, which is often by means of a separate compartment in waste bins. A well-executed Life Cycle Analysis (LCA) might yield surprising results.In the Netherlands, the town of Almere decided years ago to install an underground waste transport system to reduce the number of urban transport movements.

Even though this type of system is also in use in other towns in Europe, America and Japan, the scale of the Almere installation is unique. The financial feasibility of such a system rather depends on local conditions, such as existing versus newly constructed buildings, but generally speaking it involves a considerably higher cost per connection when compared with other collection and transport systems.Another new application is the fermentation system that was recently established as part of the Greenmills project in the port of Amsterdam, and which demonstrates another example of applied underground transport. The water treatment plant of the fermentation system installation treats 80,000 cubic metres of water per year which it receives from the Cargill company through a two-kilometre long pipeline laid especially for the purpose. The plant also supplies Cargill with green energy and heat. This example of innovative partnership is a model of sustainable strategic collaboration.

New waste processing systems are to be expected not only underground, but above-ground too. Their purpose will be to bring more method in the collection of an increasing number of waste material fractions. The rising importance of the hygiene aspect is also noteworthy, with an increasing number of small compacting containers being used that are cleaned both internally and externally after every collection. The use of disposable collection aids for smaller, valuable waste material flows will also become increasingly popular, e.g. in the form of cardboard boxes that are available in a number of sizes and can be transported as modules on special trolleys. A special issue in such a modern storage and transport system is how to optimise the use of the available return freight capacity. It certainly pays to consider cheap return loads, and this option will be increasingly used as the fine-meshed collection network for waste materials gets rolled out. Reverse Logistics as part of modern urban distribution will increasingly be discovered as a trend.So what we see here is a range of examples of future materials distribution that are supported by more general trends such as multimodality and synchromodality and that are being observed and tested with increasing interest by various parties, including the world of waste collection, transport and recycling.

Clean and silent urban transport has been receiving the necessary attention and will develop per urban region, often influenced by the geographical conditions and local legislation. Smart urban distribution such as the road transport offered by Cargotrans in Utrecht and by the electric boats that ply canals in Utrecht and Amsterdam to transport goods and waste materials, are trendsetters with a clear future vision.

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CO2 Performance Ladder + Lansink’s Ladder = zero wasteThe purpose of the environmentally friendly business policies of companies and organisations is to integrate the considerations for People, Planet and Profit into the business operations. Environmentally friendly enterprise covers a wide field, and it entails different things for different organisations, simply because the practical execution depends on the nature of the business and its activities.

As regards ‘planet’, it often means that we need to think ahead and set targets for issues such as energy and waste management. The ultimate goal for an organisation is to achieve completely waste-less business operations. This can be done either by working on all fronts to transform waste into secondary raw materials, or by preventing waste from being produced in the first place.Lansink’s Ladder has long been a primary guideline in optimising waste policies. Introduced more recently, but by no means less important, is the CO2 Performance Ladder. As an organisation you can opt for certification based on the CO2 Performance Ladder. This was launched a few years ago by the ProRail company, and today has become the leading certification scheme within the building industry. I use this certification scheme as an example, because the combination of both ladders can actually result in a full conversion of waste into raw materials. Whether it is the building industry or your own, all roads to certification start with a well-prepared road map and an explicit environmental policy statement from the management.

The road map leading to an ‘ECO’-nomic improvement must show evidence of an unambiguous mindset that can be applied to inspire and focus during the practical implementation. Cradle to Cradle is such a mindset, which is currently finding favour with business circles. German chemical engineer Michael Braungart and American architect William McDonough developed this new vision on product design. One of its pillars is the statement Waste = Food. Waste from one product can become the raw materials for another product.

A similar vision which might find a place in your road map is known as SuperUse. This train of thought seeks to create new products from all kinds of discarded products, the idea being to keep the product flows as short as possible. Re-use while minimising energy costs and maximising new value. 2012Architecten in Rotterdam is one of the companies that has successfully been using SuperUse for many years and can provide support to other organisations that intend to use the method.

Visit the superuse.org website to find a list of examples of creative uses that were applied to used products. SuperUse is an example of upcycling, a process that results in remarkable new products that can often be sold at a highly attractive profit.

Another entirely different phenomenon is to exchange your used office paper for a new, recycled product. If you go for this modern option, your paper is not stored in an intermediate location, but gets sent straight to the place where it is converted into recycled hygiene or printer paper.

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Possibilities abound for putting together your own optimised recycling package to fit your particular organisation. And once you have managed to divert as much waste material to recycling as you possibly can, you’re firmly set on the road to a Zero Waste status. The last step can be made by having the remaining waste turned into an energy product. A good example of a Dutch installation that can transform your remaining waste into an energy carrier is the Icopower factory, which for over 28 years has been producing secondary fuel from the high-calorific fraction of industrial and office waste. In the past decades, more than 1.4 million tonnes of valuable fuel pellets have found their way to urban heating systems. Using a smart mix of waste prevention, optimised re-use of waste materials and a waste to energy solution, the Zero Waste target can be closer than you think.

Unfortunately, Dr. Sarphati is no longer at hand to help us ‘restore the ether’, so it will be down to us take action and make our contribution towards an improved living environment. And don’t forget the 3 Rs: Reduce, Reuse & Recycle!

Scenarios for clean logistics

Sustainability

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Summary of chapter 10

What are the available innovations that can help to improve the economic position of the transport and logistics industry, and really make it sustainable? How can we seize these opportunities for innovation and speed up their practical application? What will the sustainable HGV of the future look like? These questions prompted the Dutch environmental organisation Natuur & Milieu to develop the C,mm,n cargo project. The purpose of C,mm,n cargo is to achieve a 60 percent reduction of road transport-related CO2 emissions by 2035.

The conclusion is that right now is the time to start improving the focus and cohesion of the logistics chain and to ensure that vehicle use will be optimised. It will take quantum leaps to facilitate the transition in the haulage industry, quantum leaps in vehicle development, logistics planning, ICT, and behaviour.

The C,mm,n cargo action plan looks at the four scenarios described by STT Netherlands Study Centre for Technology Trends (Stichting Toekomstbeeld der Techniek) in this book. Although the scenarios are all very different, what stands out is their similarity is that they are all based on a shortage of raw materials, the need to recycle from cradle to cradle and the need to use clean energy. These are therefore a given. If raw materials become harder to find, chances are that travel and goods transport will become the privilege of a smaller group of people, as outlined in the Individual Prosperity scenario.

Exploring Future (2040) Logistics delivers four scenarios that involve quantum leaps. What is certain is that the world of 2040 will be very different from the world as we know it. The illustrations accompanying this article show a number of future visions as they might appear according to C,mm,n cargo.

Sandra Nap, project

leader C,mm,n cargo,

Natuur & Milieu

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C,mm,n cargo: the road to sustainable goods transport

What are the innovations at our disposal to help improve economic position of the transport and logistics industry and really make it sustainable? How do we implement these innovation opportunities, and how can we speed up the process? What does the sustainable truck of the future look like? Questions like these were the reason for the Dutch environmental organisation Natuur & Milieu to develop the C,mm,n cargo project. The purpose of C,mm,n cargo is to reduce the road transport industry’s emission of CO2 by 60 percent in 2035. This ties in with the theme of this EVO Yearbook, Exploring future (2040) Logistics.

Future perspective from C,mm,n cargoWill the postman still be bringing round letters in 2035? What will the letterbox of the future look like, and where will it be? Will we still be carrying money around, or will payments all be digital? Will we still buy books in a bookshop? The pace with which changes are coming at us is quickening. The answer to most of these questions will probably be: no, not really.

So what will come in their place? What will the goods transport of the future look like? An magnetic levitation train that speeds like a roller-coaster from city to city? A Segway-like, electrically driven personal transport, with a refrigerated unit that can be used to run quick errands to inner-city restaurants? Or a combined transport monorail for both short and long hauls? Self-sending packages?

Design for a Segway-like trolley with refrigerated unit for supplying inner-city restaurants.

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We have also looked at future scenarios in the C,mm,n cargo project. The focus of the C,mm,n cargo project was on backcasting, as opposed to the Exploring Future (2040) Logistics project. We reformulated the European targets for 2050 into targets for 2035, and then we reasoned out what it would take to get there.

At the presentation of the DHL future scenarios in March 2012, the DHL CEO, Frank Appel, indicated that the rate at which we have to face changes has risen in a drastic fashion, and that is impossible to make linear forecasts. This perspective affected the purpose of C,mm,n cargo. The question therefore is not which of the scenarios will prove to be the right one; the question is: how can we bring about the changes we want in order to achieve sustainable and economically viable goods transport? How can we make use of the lessons learned? How can we take concrete steps? In other words, how do we ourselves bring about the changes, and how can we ourselves be part of them?

EU target for overall CO reduction relative to road transport prognosis 20502

total GHG emissions

transport emissions

transport Blue map scenario

total GHG target (-60%)

total GHG target (-80%)

Source: CE Delft 2011

The logo of the C,mm,n cargo

action plan.

The European Union intends to drastically reduce the emission of CO2 by road transport in 2050.

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Given the target of reducing road transport CO2 emissions by 60 percent in 2035, we started by asking questions to peel back the different layers, as it were. Can we manage it based on business as usual? No. Can we do it by means of technical innovations to vehicles and fuels alone? No. Our conclusion is that we should start now, in 2012, by applying more focus and cohesion in the logistics chain and optimising the deployment of vehicles.

Major leaps forward will be required to make the transition in goods transport possible. Major leaps in vehicle development, logistics planning, ICT and behaviour. We know that new ideas all too often are designed to work in an existing system. We also know that this will not work, for if you change something inside a system, you change the system too. So how can we speed up innovation in this industry?

To speed up, connect and capitalise on sustainable innovations in the goods transport industry, we opted for a practical approach. On the one hand it involves linking cost to behaviour changes, while on the other hand we link insight into the obstacles with the parties that can remove these obstacles. On the pull side we create business cases for innovation, taking into account the sharing of profit and loss in the chain, and new earning models. On the push side we create ambitious standards for vehicles and transport, and remove the innovation-blocking factors.

The Blueliner, aerodynamic, lightweight and fuel-efficient, a model of the long-haul truck of the future.

The action plan proposes to organise the collaboration between all the major players in the transport chain via a turbo team. The turbo team consists of representatives from shippers, carriers, logistics service providers, vehicle manufacturers, fuel and energy suppliers, authorities, ICT companies, educational and research institutions, and social organisations. They will work on concrete initiatives, living labs where innovation is implemented in practical examples.Three living labs have been defined:• Smart containers in and around the port area• Smart city: distribution 2.0• Development platform for building the truck of the future

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The four scenariosWhich of the ingredients from the four STT- scenarios described in Maatschappelijke context vervoer in 2040 (‘Social context of transport in 2040’) are essential to C,mm,n cargo?

Individual wealthWhat is striking about the four very different scenarios are their points of similarity: all the scenarios assume a shortage of raw materials and a need for recycling or cradle to cradle and clean energy. These are therefore givens. If raw materials become scarce, the odds are that travel and movement of goods will become possible only by and for a select group, as in the Individual Wealth scenario.

Self-sufficient unitFor a larger group, the Self-Sufficient Unit scenario will become necessary, and some individuals will also opt for self-sufficiency from an idealist point of view. We therefore expect that parts of the Self-Sufficient Unit scenario will come to develop, one result of which will be increased short-haul goods transport.

Worldwide environmental awarenessThe Worldwide Environmental Awareness scenario is a lovely image, but it leans heavily on management and government responsibilities. The question is whether this will be effective. To achieve the desired large-scale transitions to sustainability, it is essential that the industries themselves take the initiative and responsibility to collaborate and introduce changes throughout the transport chain. In addition to technical innovations these changes above all include management and organisational innovations.

Powerful regionsThe change from ownership to usership or right to use, as described in the Powerful Regions scenario, is a very interesting development. What will happen to the transport of luxury goods for consumers and companies, which are used less often? How many goods will no longer be transported if their use gets shared? Will short-haul transport between users increase?

Exploring Future (2040) Logistics present us with four scenarios to take into account, each of which involves giant leaps forward. What is certain is that the world of 2040 will look very different from the world of 2012. The illustrations accompanying this article include a number of future visions showing what things might look like according to C,mm,n cargo.

C,mm,n cargo is an initiative by Natuur & Milieu in collaboration with Rotterdam University, TU Delft, TU Eindhoven, Twente University, the Ministry of Infrastructure and the Environment, the Port of Rotterdam Authority, RAI, TNO and Logica. This article includes only a small selection of examples from the C,mm,n cargo project and the action plan.

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In April 2012 the next step in the realisation of the C,mm,n cargo action plan was taken with the establishment of an acceleration team and the implementation of the development agenda and living labs. (See also: www.cmmncargo.org.)

Transport growth intermodal only

World port

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Summary of chapter 11

The transport of goods by road to and from the port of Rotterdam will see considerable growth in the years to come. Estimates vary, but the most favourable economic scenario mentions a threefold increase in the number of shipping containers moved by road to the hinterland in 2035. The only way to make this feasible is by ensuring that transport becomes cleaner, smarter and more efficient.

In December 2011 the Rotterdam Council unanimously approved the Port Vision 2030 (Havenvisie 2030) plan. In 2010 the total transfer of containers and other mixed cargo amounted to 135 million tonnes. For 2030, the most gloomy scenario predicts 225 million tonnes, while the economically most optimistic estimate arrives at 360 million tonnes. This means that even in the most pessimistic scenario the industry will grow considerably.

In order to accommodate such growth, agreements have been reached with users of the new container terminals in the Maasvlakte 2 area, presently under construction, to ensure a modal split in 2035 and to establish the necessary growth route to achieve this. In 2035, no more than 35 percent of the containers destined for the hinterland from Maasvlakte 2 may be moved by road. These modal split agreements are essential if the predicted growth of container movements is to remain within the established environmental limits.

A more efficient use of the existing infrastructure will not be sufficient to offset the growth of road transport. More roads will need to be built. Even so, any increase in road haulage will be acceptable only if it incorporates the latest in sustainable technology.

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Hans Smits, Chairman,

Port of Rotterdam

Authority

Road transport must become cleaner, smarter, more efficient

The volume of road transport to and from the port of Rotterdam will grow considerably in the years to come, so much is clear from every scenario you look at. The reason for this is that the container segment will continue to grow vigorously in the long term. True, the number of containers finding their destination by rail or by barge is increasing, but that does not mean that road transport will not experience enormous growth. The estimates vary, but the most favourable economic scenario forecasts a tripling of the number of containers that will leave for the hinterland by road in 2035. This will only be possible if road transport can be made cleaner, smarter and more efficient. After all, there is a limit to what can be invested in added infrastructure.

In December 2011, the council of Rotterdam unanimously approved Havenvisie 2030 (Port Vision 2030). This speaks clearly about the general support for this overall vision of the development of the port and industry complex in the next twenty years. The port vision contains a description of relevant trends and developments, estimates of transit volumes, visions on the desired and the feasible development of port and industry, the prerequisites for realising the vision, and a time schedule for all the actions and projects.

For the road transport industry, the development of the transit volumes for containers and other general cargo is the most important factor, since other types of goods such as wet bulk (crude oil, oil products, bulk chemicals) and dry bulk (coal, ore) hardly ever get transported by road. In 2010 the transit of containers and general cargo amounted to 135 million tonnes. In 2030 even the most pessimistic scenario estimates this to become 225 million tonnes, while the economically most rosy scenario forecasts a figure of 360 million tonnes. This means that even if the most gloomy scenario were to come true, the industry would still grow considerably.

In order to accommodate such growth, agreements have been reached with the operators of the new container terminals in the Maasvlakte 2 area to ensure a modal split can be achieved in 2035, with no more than 35 percent of the containers from Maasvlakte 2 to be transported to the hinterland by road. These modal split agreements are needed to ensure that the predicted growth of container traffic remains within the environmental limits. A structural shift of cargo from road transport to transport by barge and rail is a positive development in any case, because the inland waterways in particular still have ample capacity to spare, whereas our road network suffers from structural congestion. Therefore our society as a whole would benefit enormously from a shift from road transport to transport by water.

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Room for improvement in the way we utilise the existing infrastructure is not confined to the waterways, since the current use of our road system is far from optimal. During rush hours the roads are congested, but outside these periods, some of the motorways are actually quiet, and this is certainly the case at night. An obvious strategy would therefore be to stimulate businesses to drive outside rush hours. Various tests with commuter traffic have shown that considerable improvements in traffic flow can be achieved by removing a limited number of vehicles from the rush hour traffic. The commuter tests used a financial incentive: every time people avoided the rush hour traffic, their bank account grew by a few euros. A similar model or another financial stimulus, and road-pricing in particular, appears to be the most obvious way to motivate people not to drive during rush hours. Another way of reducing the impact on existing infrastructure would be to make the entire logistics system more efficient, for example by avoiding empty trips. This will of course require companies to be prepared to exchange information and reach agreements with each other.

More efficient use of the existing infrastructure will not be sufficient to absorb the growth of road transport. The port vision 2030 document indicates that the current connection of the A15 to the west of the Vaanplein intersection, i.e. the A15-A29 connection towards Zierikzee, will not be sufficient to accommodate the growth in traffic. The Blankenburg Tunnel, between the A15 and the A20 near Rozenburg, will need to be constructed before 2020. Also, the southern section of the A4 will need to be constructed before 2030. This will not only alleviate congestion, it will also make the road network around the port more robust, so that in the event of an incident traffic will not be bogged down due to a lack of alternative routes.

The anticipated growth of road transport will only be acceptable, or permissible in some areas such as the Maasvlakte, if the logistics industry adopts the latest technology. This is important to ensure that pollution levels will not rise. In the

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Scenarios for the growth of transit volumes at the port of Rotterdam. All scenarios show an increase

in total transit volumes, with the container sector growing fastest. (Source: Havenvisie 2030, Port of

Rotterdam Authority)

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Maasvlakte area, starting 1 January 2014, HGVs may not be older than seven years, and any HGV registered after 1 January 2013 must be fitted with a Euro 6 engine. Measures like this are essential if we are to keep the emissions of our growing road transport within limits. This is not just a legal obligation, it is a social duty too. The future looks bright for the road traffic industry, but growth will only be acceptable if it is also sustainable.

Questions and answers about future scenarios

FAQ

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Summary of chapter 12

Logistics managers of the future will need to be in close touch with the social context of their industry. After all, society dictates the structure of logistics and the demands placed on that structure. The STT Netherlands Study Centre for Technology Trends (Stichting Toekomstbeeld der Techniek) has identified five social trends in urbanisation, demographic developments, individualisation, informatisation and internationalisation. These five trends were used as the basis for a set of four future scenarios. Each of these scenarios occupies a position in a plane with two intersecting axes, one of which is graded from a high level of individuality to a high level of collectivity, while the other runs from internationalisation to regionalisation. STT describes the scenarios in an article included elsewhere in this yearbook.

During the spring of 2012, the EVO Council for Logistics Knowledge (EVO Raad voor Logistieke Kennis), in collaboration with STT, organised two knowledge session under the banner ‘The logistics manager 3.0’. These events included discussions about the four future logistics scenarios outlined by STT.

As part of the two knowledge sessions, members of EVO and other interested parties were given the opportunity to put forward questions about the trends and the future scenarios. This led to lively discussions about what logistics managers can expect in the next few decades. This article is based on the questions that came up during those sessions and the answers that were given.

The central issue revolved around the way the logistics managers of the future will operate, in particular within the social context, and what the effects of that context will be on the transport industry. The exploration yielded a tentative view of the future thirty years from now. The report of the knowledge sessions contains the questions that were most often raised, which is why it is presented in the form of a FAQ, a list of Frequently Asked Questions.

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Logistics Manager 3.0: Frequently Asked Questions

How will the logistics manager of the future function? To find out, in the spring of 2012 the EVO Council for Logistics Knowledge (Raad voor Logistieke Kennis), in collaboration with STT Netherlands Study Centre for Technology Trends (Stichting Toekomstbeeld der Techniek) arranged two knowledge sessions under the title Logistics Manager 3.0 (De logistiek manager 3.0). The sessions were used to discuss the four future logistics scenarios that had been prepared by STT on the basis of five social trends.

The five trends identified by STT are urbanisation, population development, individualisation, informatisation and internationalisation. Based on these five trends, four future scenarios were prepared. Each of the scenarios covers an area between two intersecting axes, one of which extends from a high level of individuality to a high level of collectivity, while the other extends from internationalisation to regionalisation. The trends and the scenarios are discussed in a separate article by STT in this book.

What do these scenarios mean for the logistics manager of the future? In order to form some sort of image, the following contains a representation of the discussion about the future of the logistics manager in the form of a FAQ, a list of Frequently Asked Questions.

Where will consumers be living in 2040?Worldwide urbanisation will continue. Two years ago it was announced that more than 50 percent of the world population were living in urban areas, and this figure is expected to reach over 70 percent thirty years from now. In the Netherlands a number of regions will urbanise even more, such as the western part of the country and parts of the south. Within these urban areas, structural densification will occur. Clearly this will have far-reaching consequences for the logistics industry of the future. Where will goods need to be taken to? Will there be a small number of very large cities, or will the countryside become increasingly urbanised? Therefore, the first trend investigated by STT was urbanisation and multiple use of space.

Will the world population and the economy always keep growing?No, eventually the population growth is expected to slow down. Although the world population is expected to grow explosively with another 2,500 million people up to 2050, at that point it may start to decrease. The Netherlands will see some growth, but numbers will peak in 2040, after which the population will decrease slightly. Therefore, by 2040 a rising average population age will have to be taken into account. This will cause shortages on the labour market as the number of people of working age will become relatively smaller due to the declining birth rate. The Netherlands will therefore have to be prepared for a future that will not bring

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only growth. For the logistics industry it is also important to realise that the number of single-person households will increase, which means more doorsteps to deliver to and consequently, network fragmentation.

What will be the effect of technology on logistics?As far as the satisfaction of our needs is concerned, individualisation is on the increase, in other words, more people are looking to satisfy specific requirements. The consumer will want to have a wider range of products made to measure, which will reduce the demand for mass production. Digital technology will help to make this possible to some extent. Another example of technology in progress is the use of autonomous vehicles. Technologically speaking these have become reality, and Automated Guided Vehicles are already in use at the port of Rotterdam. You won’t find them on public roads yet, because there are all kinds of regulations that prevent it. Even so it offers a possible technological solution for a whole range of problems, including the lack of trained truck drivers.

Does globalisation play a role, or will people just want local products?People want to know what is available worldwide, and they want to be able to purchase those things, but at the same time this trend will be accompanied by localisation. The process has been described as glocalisation. Consumers want products that have been made in their direct vicinity, but at the same time they want the wide range of options offered by a global market.

How did STT translate the five main trends into future scenarios?To begin with, the five main trends were identified: urbanisation, population development, individualisation, informatisation and internationalisation. Based on these trends STT prepared four social scenarios. These are each based on a pair of intersecting axes, with one axis representing the range from international to local, and the other axis ranging from individual to collective. At the individual end, people will give their own interests priority over collective interests, whereas at the other end each individual still has a degree of self-interest, but puts its second to the collective. These trends were then applied to each of the four fields bounded by the axes.

The future is still a long way off, so where are we now? What is the starting point of these scenarios?We aren’t all at the same point, as that point depends on the market. It is very clear that the worldwide scenario of Individual and International is already at work. Increasingly complex chains are being formed at a global level. We can combine this with the trend that everyone wants to be able to specify their own product, an iPhone application for example. On the other hand, to many people the environmental performance will be a reason to choose local products. Local standards and values can also vary. A business will need to look at the market and product segment to find out what kind of demand needs to be met.

What is the essence of the Individual Wealth scenario?The first scenario is called Individual Wealth and lies between the axis ranges of

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Individual and International. This scenario leans heavily on individual responsibilities. The authorities will keep a lower profile and leave the initiative to individual persons. There will be a strong focus on increasing wealth, but there is a possibility of a social divide between people who manage to achieve that growth and those who don’t. People will also want products made to measure. Raw materials will become even scarcer, and therefore a source of conflict, because everyone will want their part.This will be reflected in the demand for transport. Individuals will travel all over the place, choosing their own means of transport and destination. People will want to be able to travel all over the world, and their only restraint will be the means of transport at their disposal. The closeness, the own environment, will come second to accessibility. The same goes for products. They can come from far away, as long as they meet the demands of the consumers.

In which scenario do we find sustainability?One of the scenarios has been named Worldwide Environmental Awareness. It lies in the corner bounded by International and Collective. Within this scenario we see a strong government that enforces environmental awareness. The central theme is the awareness that as a society you also depend on the wellbeing of others. Thus any polluting actions are restricted from outside. It is not about mobility per se, but about movements that cause pollution. If technology can prevent environmental impact, there will no longer be a restraint on mobility. International connections will remain important and in this scenario too, the Netherlands will remain a country of worldwide trade. In addition we will see more in-depth specialisation, because goods transport really takes place within chains, so a wide exchange of information and knowledge will be required.

When is collectivity more important than individuality?In the Local and Collective corner we find the Powerful Region scenario, in which people can rely less on the connections across the borders, and will focus on what they can achieve in their own environment. The concept of civil society, the social field of civilians and civil organisations, is important. There will also be a shift from owning something to using something. Examples of this are Greenwheels and Car2go, where you use a car only when you need it, and leave it free to be used by other people at other times. We will see the rise of re-use. Products will be mainly of local manufacture, even though the raw materials and semi-finished products may come from outside the region.

What is the most local and individualist scenario?Between the Local and Individual axes there is the Self-sufficient Unit, the phenomenon that people want to be as independent from others as possible. There will be shift towards self-sufficiency, but not like it was in the Middle Ages, because there will still be a need for worldwide social contacts. Also, the technological possibilities will not just simply cease to exist. Nevertheless, where physical movements are concerned, the emphasis will be on local transport. In addition there will be a focus on re-use and concern for the living environment.

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Do the scenarios have any predictive value?No, predicting the future is impossible, and STT would not want to claim otherwise. The four scenarios are nothing more than a simple tour of four possible views of the future. The intention of STT is to show us what might lie ahead of us, and to make people think about that, to make organisations, industries and governments aware the possible developments. The question is where the opportunities and the challenges are. There won’t be a single scenario coming true for the whole world either. Different scenarios may development simultaneously in different parts of the world, or in certain places it might not be just one of these scenarios, but a combination of different possibilities.A future view is always a product of the era in which it was conceived. It is inspired by the world in which we are living. In particular with regard to the transport industry certain forecasts and expectations based on the development of technology have failed to come true. Take the autonomous, self-navigating, driverless car for instance: is still hasn’t arrived in any numbers yet.In all four of the scenarios the logistics manager plays a major role. He will have to ponder the pros and cons of the different options regarding speed, price and sustainability. The balance of these is different in each of the four scenarios.

The Worldwide Environmental Awareness scenario has environmental legislation imposed from above, but at the same time a major part of the manufacturing industry will move to countries such as China. Isn’t there a contradiction in that?As long as transport remains associated with polluting emissions, and environmental regulations dictate that external costs such as environmental pollution must be integrated into the end product, the cost of transport will become an increasingly large component in the price of a product, keeping the price up. This is the reason why we are already seeing shifts of production from Asia to Eastern Europe. Today’s shift also appears to be prompted by a desire to be as close as possible to the sales market in order to facilitate fast delivery. A factor that has all but disappeared from the equation is the cost of labour. At the time that was the reason for many companies to move their production to the Far East, but the differences have become less marked.

On the other hand, isn’t full self-sufficiency impossible?That is correct. Some countries will never be able to meet their own demand through local production. A region’s physical environment also determines the level of self-sufficiency that will be possible. Urban agriculture is an example of increasing self-sufficiency. It allows you to grow certain produce and become self-sufficient in those, but other products will still have to be imported. The extent to which a community makes its own products and imports others determines the nature of logistics in the region.

Will local self-sufficiency reduce the scale?For the local market the scale of logistics will decrease if more products are produced locally. There will still be a demand for mass products, but their production will take closer to home. Perhaps they should no longer be called mass products. Some clothing brands are already moving their production to Europe.

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They look at what consumers consider to be important. Do customers want fast delivery or low cost, or do they mind about the impact of production and transport on the environment? This means there will always be market segmentation.

These days everything seems to be at short notice. Will lifestyles become more relaxed?The demand for fast delivery will continue to dominate for five years to come. In the long-term future, the best way to improve speed will be to improve connections within the chain. It may even be the case that slower transport modes can be used to get goods to their destination in less time. It will require a different logistics process, better information systems, and more trust between the parties in the chain.

We’re talking about goods flows, but won’t recycling flows be more important thirty years from now?That might well be the case. There are three main flows, the flow of raw materials and semi-finished products, the flow of finished products, and the flow of waste materials. The need to re-use waste will increase, if only because raw materials will become more difficult and more expensive to obtain. The shift is there, but to what extent the recycling flows will increase is still an open question. Re-use may become more attractive under pressure of raw material prices. There is a real possibility of this happening, because even if the government weren’t to enforce re-use, raw materials would continue to become more scarce. The possibility of abolishing deposits on PET bottles is currently being discussed in the Netherlands. If the deposit system is abolished, raw materials will end up in the waste bin. This will make the waste more valuable, and then market mechanisms may well cause the recycle flows to increase. As long as there is a way to make money, somebody will take up the challenge. Lots of raw materials can be recycled many times, glass for instance, which starts out clear and ends up brown.Another important question is whether products will be repaired or replaced. Products containing rare metals will certainly be recycled, so in that case we will see an increase of the recycling flow. Other products can for example be incinerated after use to produce energy, so that flow may also increase.

So re-use isn’t always caused by environmental awareness or government pressure?No, there have been many private initiatives for the re-use of goods on a purely commercial basis. Nike is an example of a company that intentionally makes products that are suitable for re-use. Through their Reuse-A-Shoe programme, used shoes are returned to re-use materials such as the soles. They have collection points everywhere so people can return old shoes, but getting all those discarded products back to a place where they can be processed is a major logistics challenge requiring a fine-meshed network. There must also be an incentive for consumers, because they have to go to the trouble of returning the products. Consumers will be more willing to take part if there is a financial stimulus. If a company makes money from the re-use of raw materials, consumers ought to be paying less for those products.

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Multinational giants make their own choices, such as Philips moving production to Asia. The consequences are far-reaching. Is that also contained in these scenarios?Yes and no. Decisions by multinationals can sometimes have more effect than the influence of national governments. There are other factors, too. The power of the consumer for example will grow, in Asia as elsewhere. Companies used to move to Asia because of cheap labour, today they go where the market is. The large producers will have to ask themselves how they can meet individual requirements and how this will relate to the worldwide logistics chain. Where will they set up shop, and how should the logistics chain be adapted to meet the demand as quickly as possible? Such decisions will no longer be taken on a company by company basis, but on the basis of products. The products will also vary per market region, taking into account the type of consumers and market segments to be served.

Have different transport mode developments been given any special attention?No, not explicitly. We have looked at the resulting world view. Much depends on the service level people require, speed in particular, and on the development of technology with low environmental impact. Transport by water is clean and fast enough, so its future role is certain. But when individual demand needs to be satisfied fast, air transport will be the preferred mode. As long as the ecological footprint of sea transport remains smaller than that of air transport, transport by sea will be the preferred mode. So the use of sea or air transport will differ according to the scenario.

What will the supply chain of the future look like?Customer-specific products will be marketed increasingly rapidly, as a result of which the supply chain will become increasingly local in order to respond quickly to consumer demands. This can already be seen in a number of large fashion chains that are returning from the Far East to local regions such as Europe.Lots of companies are trying to position themselves where they will be assured of the necessary basic materials to make their products. One example is a Chinese food producer buying land in Africa on a large scale to ensure that enough vegetables can be grown to meet the demand of the Chinese market. The result is a division in the supply chain. Quick response to market demand comes first, and in order to achieve that, producers position themselves where they can get the raw materials they need.

So what is the use of future scenarios?These scenarios can be used in a number of different ways. One way is to find out what your preferred future is and how you can get there. Another is ask yourself which developments you will be facing and which aspects you need to monitor. This is why there are different ways of setting up scenarios. Logistics services provider DHL has also developed a number of different future scenarios, but they look ahead to 2050 and use a slightly different focus. Even so, those scenarios look familiar in many respects.

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Authors

Jacqueline Bloemhof is Associate Professor of the Operations Research and Logistics group of Wageningen University, researching Sustainable Chains, including food chains. She previously worked at the Rotterdam School of Management, Erasmus University Rotterdam, Wageningen University and INSEAD (France). She has published articles in numerous international ISI journals on chain management, closed chains, logistics networks and sustainability.

Dick A. van Damme is a lecturer of Logistics at Amsterdam University and a Logistics Consultant at TNO Mobility & Logistics. He received his PhD from TU Eindhoven for his research on Distribution logistics & Financial information. Subjects in his work include logistics hubs, main ports and the innovative power of SMB enterprises within them, and event logistics. He is a member of the board of the Stichting Nederland is Logistiek (The Netherlands is Logistics Foundation), the Dinalog Advisory Committee Experimental Development, the EVO Raad van Logistieke Kennis (Logistics Knowledge Council) and the Platform Kennisakkoord Logistiek (Logistics Knowledge Agreement Platform).

Arjen van Diepen is manager Supply Chain Planning bij Heineken Brouwerij. His education has taken him to such places as Auckland, Groningen and Delft, where he completed his Master’s in Transport, Infrastructure and Logistics. In addition he has done research for DHV and MLD in Indonesia. For TNO he has researched the long-term effects of global developments on the container transit volumes at the port of Rotterdam.

Cor Gerritsen works as commercial director of Icova B.V. in Amsterdam, part of the British Shanks Group. He has spent thirty years in the Waste & Recycling industry and has also built up specific knowledge regarding sustainable urban distribution and multimodal transport. As the chairman of the Stichting Mokum Mariteam (Amsterdam Mariteam Foundation) he stood at the cradle of Vracht door de Gracht, providing freight transport by water within the city of Amsterdam. He is also active as the chairman of the EVO regional board of North Holland, and sits on the EVO general board.

Sandra Nap is logistics projects leader at the Ruimte & Mobiliteit (Space & Mobility) team of Natuur & Milieu (Nature & Environment), which includes the C,mm,n cargo project. Natuur & Milieu is an independent organisation dedicated to cleaner energy, smarter mobility and healthier food.

Enno Osinga has been Senior Vice President Cargo of Schiphol Group since September 2006. In his function, Osinga is responsible for the implementation of the long-term cargo strategy at Amsterdam Airport Schiphol. His previous employers included KLM and DHL Express.

Authors | 163

Robert Ossevoort is project manager of DaVinc³i and works at Wageningen University. His focus is on transferring the results of the project to the parties in the ornamental plant industry, and on developing business cases for those companies and organisations. After graduating as an economist from Erasmus University Rotterdam he worked as a consultant in the Netherlands and India and as a business development manager for Ecorys.

Frans-Peter Scheer is Sustainable Food Chains project leader at the Food & Biobased Research institute, a part of Wageningen UR. He researches both global and local food chains, food waste, quality-driven logistics, FEFO, chain optimisation, control and organisation in close collaboration with national and international industries and local and national authorities.

Hans Smits has been chairman of the board of the Port of Rotterdam Authority since 2005. In addition he sits on the supervisory board of KLM Nederland, on the supervisory board of Sohar Industrial Port Company (Oman), and chairs the supervisory board of the Jansen de Jong Groep. He is also a member of the Economic Development Board Rotterdam and a member of the supervisory board of Erasmus University Rotterdam.

Joost Snels is a senior research scientist at Wageningen UR Food & Biobased Research and an expertise leader of Supply Chain Management. His work focuses on the design and redesign of post-harvest chains, in which the progress of product quality is an essential factor within the total design. In addition his research increasingly focuses on reducing of food waste as a design parameter. He publishes regularly in professional journals and speaks at conferences.

Lóri Tavasszy is a principal scientist at TNO and a part-time Professor of Goods Transport and Logistics at TU Delft. He researches models, prognoses and scenarios, spatial economic effects and government goods transport policies. He leads the Sustainable Goods Transport Systems project of the NWO programme, Duurzame Bereikbaarheid Randstad (Sustainable Randstad Access) and is a member of the EVO Raad van Logistieke Kennis (Logistics Knowledge Council).

Jack A.A. van der Veen is Professor of Supply Chain Management at Nyenrode Business University and entrepreneur. He received his PhD from Groningen University for his research on combinatory optimisation. His work focuses on implementation issues in chain collaboration. He teaches in executive programmes and workshops and publishes in international research journals, management-oriented journals and on websites. He is a member of the EVO Raad van Logistieke Kennis (Logistics Knowledge Council).

Maxime Verhagen at the time of writing his contribution was vice-premier and minister of Economic Affairs, Agriculture and Innovation under premier Rutte (2010-2012). He graduated in Modern History from Leiden University and has previously been minister of Foreign Affairs under premier Balkenende (2007-2010).

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Wouter Vermijs is Director Supply Chain Chemicals Europe at SABIC SBU Chemicals. He graduated in business administration from TU Eindhoven and has gained over twenty years’ experience in the chemical industry, in particular in the commercial business to business environment. His focus has moved from sales to marketing and thence to general business, purchasing and supply chain management.

Kees Verweij is principal consultant at Buck Consultants International. He specialises in research and consultancy at the crossroads of goods transport and logistics. He often works for seaports and hinterland regions, and he has worked as a team leader at TNO Mobility and Logistics, a manager of Knowledge development at NDL, organisation consultant at K+V, and researcher at Ecorys. He publishes regularly and contributes a monthly column to Logistics magazine. Verweij designed the Logistics Sector House, which is widely used to calculate the overall job count and added value of the industry.

Marie-Pauline van Voorst tot Voorst is project leader of the Super Intelligent Transport future exploration at STT Netherlands Study Centre for Technology Trends (Stichting Toekomstbeeld der Techniek). She previously worked at Maatschappelijke Sectoren & ICT (Social sectors & ICT), a government action programme, responsible for stimulating the upscaling of small-scale, successful ICT initiatives in education and in mobility. She started her career at Accenture where she supervised a number of ICT teams at energy companies.

Jack van der Vorst has been Professor of Logistics and Decision Science at Wageningen University since January 2005. After graduating in Agrilogistics from Wageningen University, he took his PhD in 2000 for research on Efficient Replenishment in Food Chains. He worked as a senior consultant on chain logistics in the agrifood industry for Rijnconsult. He is a project leader of various projects, including DaVinc³i, publishes regularly in scientific journals, and speaks at international conferences.

Edwin Wenink has been Manager of Supply Chain Development at FloraHolland since January 2008, where he is responsible for the development of supply chain initiatives to reinforce the ornamental plant cluster. Initiatives developed and implemented under his supervision include Fresh Flower Solutions, GreenRail, Tradepark Bremen, HubWays and DaVinc³i. Wenink graduated in business administration from Erasmus University Rotterdam, with Logistics Management as his specialist subject.

Authors | 165

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About EVO | 167

About EVO

EVO promotes the interests of about 20,000 businesses that transport goods for their own account or outsourced to professional transport companies. They range from every industry sector, including wholesale, retail, construction, agriculture and business services.

Our members are users of all modes of goods transport: deep sea, short sea, air, road, rail and inland waterways. They operate both within Europe and abroad.EVO brings the viewpoints of its associated businesses to the attention of policy makers and authorities at regional, national and European levels. We also communicate our own visions and those of our members to carriers in all modes of transport, both directly and through their separate organisations.

EVO is a member of the European Shippers’ Council (ESC), International Road Transport Union (IRU), Union of Industrial and Employers Confederations in Europe (UNICE) and the International Chamber of Commerce (ICC).