Martin Felix

With increased traffic on the road, the government plans to introduce electronic tolling starting in 2006. The money should ostensibly help with infrastructure costs. It should also force truckers using Czech highways as throughways to open their wallets a little wider.

“It’s known throughout the industry that the Czech police don’t bother about overloaded trucks,“ admits DHL spokesman Jan Veselý. “So [truckers] route through [the country] and the damage to the highways is high.“ As a result, despite spending on road stamps, fuel and food on the way through, the effect on the economy is actually negative. Following a general EU trend, the government is planning to introduce electronic tolling for vehicles over 12 tons – and eventually for vehicles over 3.5 tons. “The electronic tolling system is a fairer system because road users pay for the factual distance that they use,“ argues Viktor Meca from the Ministry of Transportation. With the technical implementation still in the tender stage, electronic tolling will be done in three stages over three years and will cover around 3,000 kilometers by 2008.
While accepting something needs to be done to maintain and improve Czech motorways, reactions from the industry have been less than receptive. For one, some see 2006 as an unrealistic starting point. “We expect a later time,“ says Aleš Trnečka, Čechofracht’s marketing director, indicating that technical solutions are still “where we see the problem.“ Whenever tolling is put in place, the ministry is counting on an extra CZK 4 billion for road costs. Martin Felix from Česmad Bohemia, a road transporters’ association, wonders what impact that could really have. “I think road transport already covers infrastructure costs sufficiently,“ Felix says. He claims that from taxes connected to transport the state receives CZK 100 billion annually, but only returns CZK 20 billion to the state fund for transport infrastructure. “With our highways underfunded by around a trillion crowns,“ Felix argues, “it’s naive to think that three or four billion crowns will help.“ Furthermore, he reasons that the costs are eventually going to hurt consumers. “It’s obvious that transporters aren’t hiding four billion crowns under their pillows,“ he says, highlighting that 90% of goods are transported by road.

Jason Hovet, Tim Gosling

Ferdinand Hlobil

Connected to the debate over the new toll system is the lack of spending on infrastructure for maintaining current roads and building new ones. With these, the Czech Republic could better use its natural advantages – such as a close proximity to Germany, Europe’s biggest economy – to become more of a logistics hub. This problem also helps shine a brighter light on one region which is still not being fully utilized: Ostrava.“We hope the [planned] highway to Ostrava will be near the top of the government’s to-do list,“ says DHL spokesman Jan Veselý. “It’s a political problem.“ And one that has been ongoing for awhile with no clear action prepared yet. A new highway, says Veselý, would not only help transport but development, which would relieve the area’s high unemployment. “Ostrava is cut off from the rest of the country,“ he complains. “The main route from Austria to Poland crosses Ostrava so it could be a great hub.“ He says transport to the city is such a problem that DHL has started with flights from Prague to Přerov to achieve shorter cut-off times.
Ferdinand Hlobil, from Cushman & Wakefield Healey & Baker, also feels Ostrava is underutilized. “We see much more activity in logistics in Plzeň,“ he says, noting it’s half the size of Ostrava in terms of consumers. As far as hubs go, Visegrad is increasingly seen as one region for logistics. The question then becomes whether to include Poland or not. If it is included, then the area of Silesia is a strong contender for new projects because of its more central location. While Hlobil doesn’t specifically point to Ostrava, distribution centers in this region could spell potential for the city. However, Hlobil says, “some say Poland is so big and the roads are so underdeveloped that we’re going to keep it separate.“
If this is the case, then Brno looks best-positioned with its major road and rail connections to be a regional hub. But Brno will have competition from Bratislava in Slovakia and Györ in Hungary. According to Hlobil, “They are already in competition with each other [to be a main regional hub].“

Tim Gosling, Jason Hovet

Warehousing in the Czech Republic has been in short supply over the last few years, which has driven prices artificially high. Vacancy rates have hovered around 1-3% at most. The supply squeeze is because there are so few developers on the Czech market, says Richard Curran, head of agency & corporate services at CB Richard Ellis. “None of them has had to develop speculatively. Their prices are similar,“ he explains, “so anyone who wants to come has to talk to these developers and sign a pre-lease before they’ll put up the building“.
In Prague however, this is set to change. New developers are starting to arrive, forcing the hand of the old guard: “North Point have just started a 15,000 square-meter warehouse on spec. Without a doubt, we are going to be seeing speculative warehousing around Prague in 2005,“ continues Curran. Financing is also central to this change. A consistently under-supplied market over the years is enough to persuade the banks to cough up funds for on-spec development. However, this is not the case in a potential regional hub such as Brno.
Few companies considering a regional set-up – Curran mentions a number of international brands and logistics operators as possibilities – have made a move. Therefore, demand in south Moravia is not yet driving the developers in the same way as in central Bohemia. Curran compares the situation in Brno to Prague three years ago. He says that a select group of developers are now readying plots with zoning and permits, but will wait until they lease the space before starting to build. Although logistics operators want to have a facility inside three months, they’ll have to wait the six it takes to throw a warehouse together because they have no real alternatives.
And if speculative building were to begin in Slovakia or Hungary? Developers would have to keep an eye on this, admits Curran, but for now the issue isn’t significant. However, the developers are not having it entirely their way. With logistics operators winning shorter contracts these days, Curran says that developers are being forced to offer shorter, more flexible leases to bigger companies no longer willing to accept the risks alone.

Tim Gosling