Polish Container Ports: Adding Depth to the Logistics Market

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1 Polish Container Ports: Adding Depth to the Logistics Market Expanding Polish port-oriented infrastructure is creating opportunities for supply chain optimisation for companies active in Poland and the wider Baltic and CEE region.

2 Advance 2 Key Takeaways Y Changing patterns of maritime trade are leading to the rise of new port locations. Global sea trade is becoming more and more containerised. Traditional sea gateways to Europe are located within the Le Havre Hamburg range. This pattern looks set to change, with direct deepwater calls by the largest vessels to Gdańsk. Shipping lines operate increasingly large vessels which require additional investment in the infrastructures of ports. The ports at Gdańsk and Gdynia are entering the European port landscape. Due to differing infrastructure, capacities and shipping directions, each of the Gdańsk and Gdynia container terminals offers a different market proposition. The ports are well positioned to become main players in the Baltic. However, tax, customs and sanitary procedures still constrain the increase of throughput. Hinterland will remain the driver of Polish ports. The Polish seaports are favourably located to become gateways for much of the growing economies of the CEE, Baltic Russia and the CIS countries. Improvements in hinterland infrastructure will help them compete for clients from the industrial hubs of southern Poland and parts of the Czech Republic and Slovakia. Emerging demand for Polish port-centric logistics on the horizon. Poland s ports have not yet reached the critical mass needed to attract freight forwarding companies which would increase demand for warehouses in or near port locations. With the on-going investments in port capacities and hinterland infrastructure, awareness will be raised and demand for space will edge up. Port-centric warehousing will benefit supply chain costs. Warehouses located near ports can help optimise supply chains, reduce shipping costs and enable companies to undertake a number of other value added logistics services.

3 Advance 3 The Growing Containerisation of International Trade The increase of container volumes has been one of the key trends observed in world trade since 1990s. According to the OECD, containerised goods now account for one quarter of global traffic volume. Although about half of all containers are loaded and discharged in the Far East, European container ports are still an important link in the international trading routes and the main European gateways for goods manufactured in other continents. World Container shipments growth (TEU millions) Source: World Bank 2012 The largest European ports have historically been located in the coastal strip of Northern Europe, which is traditionally referred to as the Le Havre Hamburg range. This area accounts for the vast majority of shipped cargo and includes significant concentrations of warehousing, including many that serve as European distribution centres for manufacturers, retailers and logistics companies. Largest ports, such as Rotterdam, Hamburg and Antwerp are also hubs for smaller ones, including those in the Baltic Sea basin. Going forward, the importance of the growing economies of the CEE region, the Baltic States and Baltic Russia is not to be underestimated. Polish GDP alone has experienced growth of 72% since the country s entry to the EU in Increasing import and export volumes, along with the growing containerisation of goods, will be key drivers of demand for port services. Top European Container Ports in 2012 (TEU millions) Additional factors shaping the geography of containerised trade are port infrastructures and nautical accessibility. The Baltic sea features a number of natural constraints which have long prevented largest oceanic vessels from entering it. Feeder ships remain the main mean of transport for containers shipped into this region. However, with Maersk Line establishing its first direct oceanic service in Gdańsk s DCT, we see the first green shoots of what may be experienced with the further development of port infrastructures. Today, Gdańsk remains the only port in the Baltic Sea, east of the Danish straits, to handle oceanic vessels. This move by Maersk has encouraged other operators to look at the possibilities of bringing their direct services to the Baltic Sea. One critical improvement that the ports need to make is adding sufficient draft to handle these vessels. Polish foreign trade and containerization rate in Polish ports millions Source: Central Statistical Office 20,0% 15,0% 10,0% 5,0% 0,0% Export Import Containarization Rate An additional tendency seen on the global container shipment market is the entrance of increasingly larger vessels, which allow the reduction of the unit cost for container freight. This applies not only to the largest oceanic liners but also to feeders, which still dominate shipments in the Baltic basin. This new fleet sets challenge for Baltic ports and requires additional investments in port infrastructures. Source: Port authorities websites * TEU stands for Twenty-Foot Equivalent Unit and is used to measure a ship's cargo carrying capacity The planned improvements in the ports of Gdańsk and Gdynia will increase their annual capacity to 4 million and 2.2 million respectively

4 Advance 4 Polish Container Ports: A Dynamic Landscape Currently, six major container terminals operate within Poland s three main port complexes (the ports of Gdańsk, Gdynia and Szczecin-Świnoujście). In 2012, their throughput totaled 1.66 million TEU, double the total seen in The terminals feature various draft, capacities, shipping directions, infrastructures and development opportunities and are, in fact, often competing for different clients. Throughputs in Polish container ports (TEU) Deepwater Container Terminal Gdańsk Baltic Container Terminal Gdynia Gdynia Containter Terminal Gdańsk Container Terminal DB Port Szczecin Other Source: Port authorities Only DCT Gdańsk features the technical parameters needed to be called by largest existing container vessels, including those able to carry 18,000 TEU. With a secured operator, Maersk Line, who established Gdańsk its last and port of call for the AE10 service, this terminal primarily focuses on trade with Asia and the Pacific and trans-shipments to other Baltic ports. The terminals in Gdynia, on the other hand, do not handle any direct oceanic services but only smaller feeder vessels, which are loaded in the major northern European hubs. Therefore the cargo discharged in Gdynia often originates from other parts of the world, including Europe and the Americas. Importantly, smaller feeders (up to 2,500 TEU) are often routed through the Kiel Canal, which shortens shipping times by almost two days compared to the route through the Danish straits. Finally, the port of Szczecin, which is least accessible nautically and has infrastructure which cannot handle vessels carrying more than 1,400 TEU, can be attractive for both local clients and those which operate in eastern Germany. This port is also supplied by feeders loaded in one of the major European hubs. Given these differentiating factors, it is reasonable to say that although some competition exists, each of the terminals offers a slightly different market proposition, and they are somewhat complementary. Moreover, the increased capacity of Polish ports can help to recapture cargo previously trans-shipped through northern European ports, which have long been hubs for Polish sea trade.

5 Advance 5 Currently, with the largest vessels able to berth at its harbour, the DCT is becoming the deepwater hub of the Baltic Sea, with trans-shipments to Russia, Sweden, Finland and the Baltic States. Furthermore, the DCT s natural features, such as the nautical accessibility, tide and ice-free access and extension potential, suggest room for further growth and leveraging its strengths in the Baltic. Hinterland road infrastructure has been significantly improved during last few years, providing a good connection between the port and the A1 motorway, which enables the port to compete for clients from southern Poland and neighbouring countries. Further investments in infrastructure is also the case with the other terminals. In order to attract deepsea calls, the port of Gdynia, which is home for two terminals (BCT and GCT), plans to deepen its waterways and develop a larger turning circle. Plans for the Szczecin-Świnoujście port complex include a number of improvements such as deepening of waterways, modernisation of road and rail access and, last but not least, the restarting of regular operations in the container terminal in Świnoujście (the first vessel called at that port in April 2013). A great advantage of Polish seaports is their ability to expand. The largest ports in Europe already face congestion and their spatial reserves are limited, whereas the supply of land on the Polish coast seems inexhaustible. Wood, metal and chemical and plastic products dominate the structure of cargo imported and exported through container ports. This could suggest that commodities, which were traditionally loaded on bulk carriers are now increasingly containerised. Aggregated structure of cargo in the container ports of the Tri-City* (weight of cargo) Chemical & Plastic Products Food products, beverages and tobacco Furniture and other manufactured goods Machinery and equipment Metal Products Other goods Textiles and leather products Transport equipment Wood and Paper Source: Customs service, JLL own calculations, excluding transhipments Poland s sea ports still face a number of challenges, which hamper potential throughput increases. At the moment, importers must settle VAT within ten days, which requires a certain working capital freeze. This, however, looks set to change in the near future, following recent announcements from the government. An additional limitation is custom clearance, which often takes an unreasonably long time. One of the latest proposals is to clear customs still onboard a ship, which would shorten the time needed to exit the terminal gate. According to estimations by Investment Partners, 670,000 TEU directed from or to Poland are handled outside Polish ports. Adapting similar customs/ tax regulations to those used in Northern Europe could result in 70% of that cargo being redirected to Poland s ports. Finally, hinterland infrastructure, such as rail and road connections from the Polish ports southwards, although improving, remains an obstacle which is easily avoided by having cargo delivered to Hamburg or Rotterdam, and then, by road or rail to Poland. *Tri-City refers to the agglomeration of Gdańsk, Gdynia and Sopot

6 Advance 6 The Port of Gdańsk 1. Deepwater Container Terminal Location: Port of Gdańsk TEUs in 2012: 896,962 Annual Capacity: 1,250,000 TEU (4 million TEU after extension) Draft: 16.5 m Quay length: 650 m (deepwater 400 m) Reefer plugs: 336 Shipping liners: Maersk Line, SeaGo Line Shipping directions: Aarhus, Algeciras, Bremerhaven, Gothenburg, Helsinki, Hong Kong, Kaliningrad, Klaipeda, Kotka, Kwangyang, Ningbo, Pelepas, Rotterdam, Shanghai, St. Petersburg, Suez Canal, Tallinn, Tanjung, Ust Luga, Yantian Planned improvements: - A new quay with an additional capacity of 2,500,000 TEU perpendicular to the existing one, scheduled for 2015/ The extension of the railway siding and the doubling of the current rail capacity in Q The purchase of new terminal equipment - The construction of a road straight from the terminal to the Pomeranian Logistics Centre Photo: Kacper Kowalski / aeromedia.pl 2. Gdańsk Container Terminal (GTK) Location: Port of Gdańsk TEUs in 2012: 31,729 Annual Capacity: Draft: Quay length: 100,000 TEU 9.8 m 367 m Reefer plugs: 95 Shipping liners: Unifeeder, CMA-CGM, Shipping directions: Bremerhaven, Hamburg, Klaipeda, Riga, Rotterdam, Szczecin, Tallinn Planned improvements: - Hardening of the storage yard of 14,000 m 2 - Improving transportation within the terminal Photo: Darek Dulian

7 Advance 7 The Port of Gdynia 1. Baltic Container Terminal Location: Port of Gdynia TEUs in 2012: 408,722 Annual Capacity: 750,000 TEU (1.2 million TEU by 2015) Draft: 12.7 m Quay length: 800 m Reefer plugs: 280 Shipping liners: MSC, Team Lines, APL, Unifeeder, OOCL, UECC/Burger, Wallenus/MAG, Mann Lines Shipping directions: Antwerp, Baltijsk, Bremerhaven, Cuxhaven, Gdańsk, Grangemouth, Hamburg, Helskinki, Immingham, Kaliningrad, Klaipeda, Kotka, Riga, Rotterdam, Southampton, South Shields, St. Petersburg, Szczecin, Wallhamn, Zeebrugge Planned improvements: - Deepening of port channel to 16.0 m, which would enable 15,000+ TEU vessels to use the port - Enlargement of the turning basin to 480 m - New gantry cranes Gdynia Container Terminal Location: Port of Gdynia TEUs in 2012: 263,586 Annual Capacity: 430,000 TEU (1 million TEU after planned improvements) Draft: Quay length: 11 m 450 m Reefer plugs: 384 Shipping liners: Aliança, ANL, APL, China Shipping, CMA CGM, CSAV NORASIA, DAL, Delmas, Delphis Logistics, EUCON, EuroAfrica, Evergreen, Hamburg Süd, Hanjin Shipping, Hapag-Lloyd, HMM, K-Line, MacAndrews, MACS, MOL, NYK Line, OPDR, SCI, Teamlines, UASC, Unifeeder, W.E.C. Lines, Yang Ming, ZIM Shipping directions: Bilbao, Bremerhaven, Gothenburg, Hamburg, Helsinki, Hull, Klaipeda, Riga, Rotterdam, St. Petersburg, Tallinn, Thamesport, Tilbury Planned improvements: - Deepening of port channel to 16.0 m - Construction of new deepwater berth with a 15.5 m depth alongside - Enlargement of the turning basin to 480 m - Expansion of the rail terminal - Purchase of new equipment, including super-post- Panamax quay cranes Photo: Kacper Kowalski/aeromedia.pl

8 Advance 8 The Port of Szczecin- Świnoujście 1. DB Port Szczecin Location: Port of Szczecin TEUs in 2012: 52,157 Annual Capacity: 120,000 TEU Draft: Quay length: 9.15 m 249 m Reefer plugs: 157 Shipping liners: Unifeeder, CMA-CGM, Transatlantic, OOCL Shipping directions: Aarhus, Amsterdam, Bremerhaven, Copenhagen, Fredericia, Gdańsk, Gdynia, Halmstadt, Hamburg, Hull, Klaipeda, Oxelosund, Riga, Rotterdam, St. Petersburg, Vasteras Planned improvements: - Modernisation of road access - Electrification of the rail line to the port 2. Commercial Port Świnoujście Location: TEUs in 2012: Planned Capacity: Draft: Port of Świnoujście n.a. 200,000 TEU 13.2 m Quay length: 330 m m Reefer plugs: 80 Shipping liners: Eimskip Shipping directions: Aarhus, Grundartangi, Helsingborg, Reykjavík, Reydarfjordur, Rotterdam, Tórshavn Planned improvements: - Deepening of waterways

9 Advance 9 Hinterland will Remain the Driver of Container Ports The world container trade landscape is a dynamic one and factors which are shaping it today can be outmoded in the near future. With larger vessels now operating, the number of ports those ships are able to call at will be restricted. This will channel those ships towards the ports that can offer a deepwater, 24-hour unrestricted approach. This could provide a benefit to those ports which offer such access and thus capture a large part of European-bound containers on large vessels. Apart from the number of the largest ports, which are to a high degree driven by trans-shipments, most other ports (Polish ports included) depend on domestic economies. The coastal regions of Poland are neither highly industrialised nor densely populated, therefore their contribution to ports throughput is not large. The largest Polish industrial regions and manufacturing hubs are situated to the south, by the main East-West corridors, which already provide convenient road and rail access to most of the ports of Northern Europe. As much as sufficient port infrastructure is a condition for a thriving container port, so is hinterland infrastructure, which should provide cheap, safe and fast transport with Poland s main logistics hubs. The safest, but not necessarily the fastest or cheapest means of transport for containers is rail. A number of hinterland intermodal container terminals operate in Poland, with a few others in the pipeline. They are located in most significant industrial regions including Upper Silesia, Warsaw, Central Poland and Poznań, but also in border areas and near the significant road corridors. Poland s road network, although it has been experiencing a giant leap since accession to the EU, is still sparser than those of western countries. The North-South corridors, which are crucial for ports, still have a few bottlenecks. The good news is that the A1 motorway, part of the European TEN-T VI corridor and essential for the ports of Gdańsk and Gdynia, will be fully connected to Łódź in Central Poland in The financing of the missing sections of the S3 express road, which will connect Szczecin with the Czech border, has recently been secured and construction is scheduled within the next EU budget perspective. Three of the seven nations bordering Poland are landlocked and some border regions of those countries naturally fall into the catchment area of Poland s ports. Belarus, the Czech Republic and Slovakia, with a joint population of approximately 25 million people, are a big potential market for containerised goods. The latter two countries are also large hubs for automotive production and manufacturing. In addition, the ports of Ukraine, which are potentially well located to serve much of CEE, face reputational problems. Capturing a portion of containers originating from the above-mentioned countries could further increase the importance of Poland s ports. To do that, the most crucial step is improving rail and motorway connections with neighbouring countries and providing excellent and competitive cargo handling in the ports. The location of Poland is not to be underestimated. Situated on the EU eastern frontier, Poland has a set of advantages, such as proximity to the large Russian consumer market and direct broadgauge rail connections with the Far East. North-South trade between Scandinavia and Southern Europe, which is currently most often routed through Germany, is also a market Poland s ports and hinterland facilities could reap the benefits of. Intermodal Terminals in Poland Existing Intermodal Terminals Planned Intermodal Terminals

10 Advance 10 The Impact on Logistics Real Estate According to Jones Lang LaSalle s outlook, the industrial warehousing market in Poland will experience further development over the next ten to twelve years. However, this growth will not be evenly distributed. Established submarkets, such as Upper Silesia, will feature a gradual increase of stock and take-up. We expect that the markets of Warsaw and Central Poland will further integrate, due to improvements of the transport infrastructure connecting those areas. The region around Wrocław is expected to further catch up with the largest industrial regions. In the case of the so far under-developed Northern Poland, it would be appropriate to consider each of its subregions, namely the Tri-City and Szczecin, as separate locations with distinct features. Today, the entire stock of A-class warehouse and production space in the Tri-City region totals a modest 184,000 m 2, which is scattered among six existing parks. As of Q2 2013, vacant units accounted for 13.8% of the regional supply. The largest group of tenants are logistics operators, whose share in new demand in 2012 stood at 46%, followed by food chains (26%) and retailers (14%). The relatively peripheral location of the Tri-City, far from Central Poland and its distribution centres, may be considered as disadvantageous for companies who distribute their products in the whole of Poland and CEE. However, the Tri-City, with its sizeable and affluent local market, is an attractive market for retail chains. Furthermore, the expected increases in the capacity of the DCT and growing container volumes may naturally stimulate the logistics market. Finally, improved connectivity with Central Poland can generate a logistics market in the North of Poland and stimulate demand for warehouse space. In the region of Szczecin, the modern industrial market is still at an embryonic stage of development. The entire stock totals less than 50,000 m 2 and comprises only two parks. In Q2 2013, no vacancy was registered on this market. As is in the case of the Tri-City, logistics operators account for the largest share of occupied space. Major market players are not much eager to expand in this area, and the port throughput does not yet provide the critical mass needed to sustain large logistics developments in the region. The influence of growing throughputs in Poland s ports is not yet clearly reflected by increased demand for warehouse space in the areas near them. However, the anticipated increases in cargo volumes arriving at the Polish ports are expected to translate into growing demand for warehouse / production space. And vice versa, new port-centric developments are also expected to stimulate ports. Available warehouse stock near a port is a great asset which can make a difference in shipping decisions. This is particularly of value today, when many ports struggle to find new land for expansion. The largest increases in demand are expected near those ports which upgrade their infrastructure in order to attract oceanic lines who operate on increasingly larger vessels that carry thousands of containers. This positions Gdańsk and Gdynia as potential hot spots for occupier demand. The growth of volumes shipped by sea is expected to draw attention from logistics operators, freight forwarders and manufacturers. Polish warehouse and industrial stock in 2013 and 2025 Source: Jones Lang LaSalle, September 2013

11 Advance 11 Logistic Occupiers Demand to edge up in Northern Poland In order to assess the potential of the logistics markets around Poland s ports, we have questioned a number of representatives of companies operating in Poland. They included people responsible for supply chains, working mainly for logistics operators, freight forwarders and retailers. The majority of the respondents to the Jones Lang LaSalle Polish Ports Logistics Survey said that container ports are present in their supply chains. This involved mainly logistics operators, while some retailers explained that sea transport was too slow for their requirements. Are container ports present in your company s supply chain Source: JLL s Polish Ports Logistics Survey 2013 Although container ports are key links in supply chains, currently that does not necessarily translate into increased demand for warehouse space in coastal regions. Only 24% of the respondents perceive those locations as crucial for their businesses, with more than 38% saying that presence near a port has no significance for their operations. Most often we were told that neither of the Polish container ports are locations which would be beneficial in terms of the further distribution of goods on the Polish and CEE markets. How important is a location near a port 40% 20% YES NO 0% Not at all Somewhat Important Very Important Source: JLL s Polish Ports Logistics Survey 2013 Tenant demand for logistics space near ports, currently at relatively low levels, is expected to edge up over the next five years. Growing throughput in container ports seems to be the main driver of this new demand. 48% of respondents to the survey said that they were expanding their presence in warehouses in coastal regions. They confirmed that growing spatial requirements will be to a large extent driven by the increased container volumes shipped to ports. On the other hand, the remaining 52% of surveyed tenants expressed little interest in Northern Poland, saying that their demand for space will remain at the same levels as present. However, the fact that the entire A-Class warehouse stock in Northern Poland (the Tri-City and Szczecin) accounts for barely over 3% of Poland s entire supply, and only a handful of companies have so far established a presence on these markets, this survey result could be as well understood as showing a lack of interest in the coastal regions altogether. Interestingly, none of the respondents said that they planned a reduction of space requirements. This could indicate that companies already present in Northern Poland have confidence in the region. Within the next three to five years, your spatial requirements in the coastal regions will be: 60% 40% 20% 0% Source: JLL s Polish Ports Logistics Survey 2013 Given the fact that almost 97% of the container throughput of Poland s ports is attributable to the ports of the Tri-City (Gdańsk and Gdynia), most respondents identify the market with that particular region. From companies already present in this area we learned that they find the current availability of space somewhat limited. The growing volumes of containers shipped to Poland are not only affecting the industrial warehousing landscape in coastal regions. Higher port throughputs will translate into more containers being forwarded to the hinterland. In 2012, intermodal freight transport which involved rail amounted to over 1 million TEU, 31% up on Intermodal freight in Poland (TEU) Expanded Same Reduced Q Source: The Office of Rail Transportation The growing number of intermodal terminals located throughout Poland s industrial hubs is likely to generate new logistics locations. Potential hot spots include terminals which have managed to establish international rail services, such as Łódź Olechów Chengdu (China) and Swarzędz (near Poznań) Rotterdam. Another location may be generated with the completion of the dry port near Tczew (30km south of Gdańsk). PCC Intermodal plans to start the construction of this development to act as hinterland facility for the ports of the Tri-City in Shuttle cargo trains from sea terminals will reach the dry port several times a day and then full trains will be formed to serve particular shipping directions. A large logistics centre can potentially be constructed on the adjacent 40 ha plot.

12 Advance 12 Port-Centric Warehousing The concept of bringing modern logistics warehouses to the immediate vicinity of a container port is relatively new in Poland. Although some older facilities have long been present in ports, their function is limited mostly to storage or consolidation. Therefore, the arrival of the first A-class buildings which could be of use to multiple types of activities to the direct proximity to harbours is a quite new warehouse format on the Polish market. The basic rationale behind port-centric logistics is to reduce the costs of fuel and container rental, lower the risk of damage, limit empty hauls and less than full loads, and, finally, to make imported stock available faster. It also draws from the economy of scale, as usually terminal facilities already include railway sidings and sufficient road infrastructure which can also be utilised by tenants of a port-centric warehouse. And one should not forget the consequent reduction of CO2 emissions reducing Poland s carbon footprint. Both imported and exported cargo often requires sorting, consolidation or deconsolidation, palletisation, packaging, labelling, refinement or ripening. By performing these activities on the spot right after discharge from the ship, products can reach endusers sooner. Port-centric warehouses are an option for manufacturers who import semi-finished products or can establish an assembly facility for export. Companies who operate on multiple markets can set up an international distribution centre that combine various forms of transport, be they sea, road or rail. We also found that this type of facility is particularly convenient for freight forwarders who handle food or heavy / oversized goods. In addition, examples from Northern Europe show that port-centric facilities are often used for the storage of commodities traded on futures markets, such as metals, coffee or cocoa. In order to maintain the unified standard of particular wares, such warehouses usually require additional credentials from listing authorities. The Pomeranian Logistics Centre The first port-centric A-class warehouse in Poland, the Pomeranian Logistics Centre, was built near Gdańsk s DCT. So far the project has one building, but the pipeline assumes floorspace of 500,000 m 2, more than two and a half times more than the existing A-class warehouse stock in the Tri-City region. The complementary functions of the DCT and the Pomeranian Logistics Centre will result in further co-operation. Both facilities will soon be connected with a direct road enabling the manoeuvring of containers on site, and the establishment of a duty free zone is planned in the near future. The latter s impact cannot be underestimated, as customs allowances can strongly influence location decisions of companies currently operating elsewhere. A second port-centric warehouse is currently under construction at the port of Gdynia. This facility is built entirely speculatively, is scheduled for April 2014 and will offer leasable space of 16,500 m 2. Due to its location and size, the Pomeranian Logistics Centre in Gdańsk is Goodman s flagship development project in Poland. The Centre has excellent access to national and international road and rail links and to the Gdańsk Deepwater Container Terminal (DCT). It provides the opportunity to develop up to 500,000 m 2 of logistics warehousing and production facilities with integrated office space. Warehouses starting from 3,500 m 2 will be developed for specific clients and tailor-made to individual needs. The location of the Pomeranian Logistics Centre allows customers to combine their logistics and production activities with the services offered by the largest deepwater container terminal in the Baltic Sea. The centre s close proximity to the DCT provides financial benefits for customers, as it reduces transshipment, storage and transport costs. The centre may be turned into a duty-free area and special economic zone in the future, which would additionally boost the financial appeal of doing business there. Due to its location, the centre is targeted at clients taking advantage of multimodal transport, which is a combination of different modes of transport road, rail, air and sea. Various types of business operations can be run at the centre, and warehouses are tailor-made to individual customer requirements. Błażej Ciesielczak, Regional Director, Goodman Poland

13 Advance 13 A-Class Warehouses in the Tri-City & Szczecin Regions Tri-City Region 1. Pomeranian Logistics Centre 2. Panattoni Park Gdańsk 3. ProLogis Park Gdańsk 4. Diamond Business Park Gdańsk (planned) 5. 7R Logistic Center Gdańsk 6. SEGRO Logistic Park Gdańsk 7. Logistic Center Pruszcz Gdański 8. Warehouse in the Port of Gdynia (under construction) Szczecin Region 1. ProLogis Park Szczecin 2. North West Logistic Park

14 Advance 14 Conclusions Increasing capacity of Poland s ports Expanding container ports will play an increasingly important role in the Polish economy and logistics. Higher throughputs will be seen, along with infrastructural improvements. Improving infrastructure expands the hinterland The development of efficient hinterland infrastructure can expand the catchment areas of Poland s ports into the border regions of neighbouring countries. The important role of Poland in the Baltic region The international position of Polish ports will strengthen further as they increase capacity, attract more direct shipping connections and more trans-shipments to the countries of the Baltic sea. Some bottlenecks to overcome Sanitary, custom and tax regulations, once amended by the state administration, can help recapture a portion of cargo hitherto handled by the hubs of Northern Europe. New large logistics hubs Today, Northern Poland features a moderate level of demand for warehouse space. Take up is expected to edge up over the next five years and further increase once the ports reach the critical mass of container volume. Implications for companies: supply chain optimisation The increasing capacity of Polish ports, together with their new abilities to handle large container vessels and the further expansion possibilities of the ports, offers an opportunity for companies to optimise their supply chains by using Polish ports. Implications for investors: more investment products The development of industrial warehousing market in Northern Poland will be much driven by the increased throughputs of Poland s ports. Deepwater ports are the potential hot spots for demand for such facilities. Implications for developers: a new logistics format With the development of the first port-centric warehouses, developers are testing the waters for such a format in Poland. With the increased supply and port capacities we might see a shift of tenant demand for near- or in-port locations.

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16 Jones Lang LaSalle ul. Królewska Warsaw, Poland Tomasz Olszewski Head of Industrial Department CEE Patricia Lannoije Head of Research & Consulting Poland Mateusz Iłowiecki Industrial Department Jan Jakub Zombirt Senior Research Analyst Polish Container Ports: Adding Depth to the Logistics Market September 2013 Advance publications are topic-driven white papers from Jones Lang LaSalle that focus on key real estate and business issues. COPYRIGHT JONES LANG LASALLE IP, INC All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without prior written consent of Jones Lang LaSalle. It is based on material that we believe to be reliable. Whilst every effort has been made to ensure its accuracy, we cannot offer any warranty that it contains no factual errors. We would like to be told of any such errors in order to correct them.