Is European interconnectedness the blueprint for the future of trade?

I have been considering whether we can confidently say that we are moving toward economic development and cultural interchange. In other words, can we guarantee prosperity and performance yet?

The optimist in me would like to say yes, but the realist says no. However, as an industry we are making progress. There are signs that when we provide solutions to reduce the distance and time taken to reach new markets, cultures and resources, positive outcomes follow. The results from the World Bank’s latest Connecting to Compete: Logistics Performance Index (LPI) are testament to this, showing the value we can reap when we strive for streamlined ways of working.

As a representative of a leading supplier of end-to-end logistics, it is not lost on me what a pivotal role our business has in ensuring that these benefits can be achieved and felt by all. To quote Mona Haddad, Global Director for Trade, Investment, and Competitiveness at the World Bank, “Logistics are the lifeblood of international trade, and trade is a powerful force for economic growth.”

It is clear from this year’s LPI results that there is still work to be done to bridge the gap between those countries that have established reliable supply chain connections and those that are still working towards them. Yet it is also clear from LPI that Europe, as a continent, is on the right path.

Europe: The Model Student?

Among the top 20 performing countries in the LPI, 10 are in Europe, with six of those being members of the European Union (EU). So, what are the factors that make such noteworthy performance possible? And, most importantly, how can we maintain and improve this performance to secure Europe’s future as a hub for prosperous trade?

After some consideration, I conclude, aided in no small part by the contents of the LPI, that it boils down to two things:

1.??????The policy environment in Europe

2.??????How businesses take advantage of this policy environment

When I talk about the policy environment, I'm talking about the guiding principles that inform and direct one of the largest economic and political powerhouses in the world, the EU, in its approach to trade and logistics. The LPI scores suggest that with 50% of the top 20 spots dominated by European nations, and 60% of those top 10 being EU Member States, the EU’s policy environment must be undoubtedly playing a role in their performance.

More than two thirds of international trade involve transactions made possible by global supply chains, and this is even more pronounced in the EU. As the phenomenon of protectionism and near-shoring continue to become more commonplace, so too has the need for resilience across supply chains. Resilient supply chains have been front of mind for European policy makers for some time, predating the COVID-19 pandemic and the war in Ukraine. In fact, supply chains that can be relied on are a cornerstone of the EU’s marquee policies: the Green and Digital transitions. Without secure and stable access to what the EU calls ‘‘Critical Raw Materials,’’ (CRM), a list which combines raw materials of high importance to the EU economy and of high risk associated with their supply, both the transition policies will fail.

The EU Strategic Agenda 2019-2024?hinges on a dial turn towards the Digital and Green transitions, to secure a prosperous and sustainable future for all Member States. EU policy strategy therefore relies on resilience in its supply chains to increase readiness for future potential disruption and ensure the implementation of the twin transitions is buttressed by the safe and diverse supply of CRMs. This diverse resourcing relies on businesses providing multimodalities, secure service and reliable delivery on both an intra-Union and cross-continent basis.

How businesses can prosper on fertile policy ground

A favourable policy environment is where businesses can see the positive effects of interconnectedness between them and government. Actions taken by businesses that complement and enhance the EU's policy aims will contribute positively to the country scores outlined by the LPI. In fact, businesses that “play by the rules of the game’’ can see tangible commercial results.

Resilience is key to this – and this takes time and careful planning. In lockstep with the EU’s policy direction, we are providing resilient and sustainable transport services across the continent, shaping the stronger supply chains of tomorrow.

DP World Europe is investing heavily in rail and barge services, offering them at 95% of our terminals in the region. It has long been our belief that greater connectivity positively enhances our ability to deliver end-to-end logistics services. We can see this in our upgraded rail services in Rotterdam and Antwerp, where we’re moving huge business levels?throughout the hinterland region and linking customers to inland networks across Europe.

Our digitalisation efforts also support every investment we make. The LPI notes that ‘‘efficient, timely and accurate digitised data have been translated into knowledge that creates highly interconnected, transparent and flexible supply chain systems. The shift has improved operational efficiency and reduced costs across supply chains.’’ Across our European network, digitalisation and automation have increased service delivery for our customers. This can be seen from our cloud-based Terminal Operating System (TOS) in Limassol (Cyprus) to our investments in AI-driven automation and data-based software at our Yar?mca terminal in Turkey. Each investment drives better outcomes for our customers, to change what’s possible.

We’ve also shown how aligning our ambitions with the EU's policy priorities can have a positive, tangible effect on our business too. Just recently, we received a grant by the EU of €31.3 million to transform DP World's terminal in Constanta, Romania, into a global trade hub. Three large scale expansion projects are now underway at our facilities in Romania, which includes developing a new RO-RO terminal (roll on, roll off) that will greatly support the EU's ambitions for net-zero in the automotive industry by 2050 while enabling greater, seamless trade flows.

What’s next for the future of trade in Europe?

The impact the COVID-19 pandemic, the war in Ukraine and other geopolitical challenges have had on our supply chains is undeniable. These events have increased inflation, threatened food security and disrupted supply chains, leaving manufacturers and suppliers struggling to source critical components to keep their businesses functioning. More and more are finding that adhering to a policy mix like that in the EU, which increases domestic capacity, diversifies suppliers and supports a rules-based trade environment, builds resilience and protects businesses' bottom lines in the long-run.

Measurement exercises such as the LPI shed light on what makes such policies successful, highlighting quality logistics services, trade and transport-related infrastructure and border controls as fundamental. Yet we must remember that building resilience is not a new topic, nor a new challenge. Innovation and advancement through policy formation designed to foster prosperity and performance will, however, enable us all to produce the desired response from the business community.

The LPI, therefore, is a valuable piece of intelligence for business and policy communities alike, allowing both cohorts to assess and review what is working well and where, identifying the real-world solutions driving policy objectives forward.

And, as the LPI has shown, Europe’s performance could become the blueprint for how interconnectedness and integration produce positive outcomes on a global scale.