National
Development Agency

Logistics is prioritised within the framework of the New Hungary Development Plan, since the Hungarian economy is required to adapt to global requirements, and in particular to the dynamic growth and structural change of the sector. Most so-called operational programmes, which constitute an integral part of the development plan, either directly or indirectly set out major logistics developments; in particular, the transport and economy development programme and the rural development strategy ensure resources for this. This is why it is necessary to reconcile logistics developments set out within the framework of specific programmes. The so-called Logistics Flagship Programme has been developed to ensure this; the National Logistics Strategy defines the base, main objectives and system of instruments of this. Today’s conference ensured the opportunity for professional reconciliation amongst market players of the sector, the state institutional system and the representatives of the research sphere.

Attila Chikán, lecturer at the Budapest Corvinus University and first vice president and secretary general of the Hungarian Association of Logistics, Purchasing and Inventory Management held the first presentation, which focused on why the elaboration of the logistics strategy was needed. The strategy covers the entire area of transport, IT, logistics centres and the business environment, as the target areas of logistics development.
The sector has evolved into the most important component of the global economy during the past decade; moreover, according to all forecasts, further dynamic development is anticipated in the sector. The total volume of the logistics global market accounts for 13.8% of the global GDP, representing approximately 6700 billion dollars in value. Its share of the GDP of developed countries is generally 10-17%. The logistics performance of the European union is 1200 dollars. According to estimates, the economic weight of the sector in Hungary is currently under 10%. During the development process its share is anticipated to increase „on its own accord”. However, this growth not only underpins development, but also makes it a demanding necessity. The size and complexity of logistics services will continue to grow, due to the structural characteristics of global development.
Participants analysed where Hungary is positioned in the trans-European transport network, as well as the potentials of the country, as regards its economic structural characteristics, namely: the advantages offered by the TEN-T transport corridors, the role of multinational corporations with sites in Hungary, the rapid development of neighbouring countries, as well as rapid development of goods circulation between Asia and Europe. These ensure excellent grounds for Hungary to evolve into the logistics centre of Central-Eastern Europe.

Consequently, the GDP share of the logistic sector – one of the key elements of business development – can be increased from the current rate of approximately 6% to almost twice this rate, i.e. to 10-11%, as a result of the impact of the programme.
When outlining the connection between the flagship programme and the logistics strategy, Mr Gordon Bajnai, commissioner for development policy, highlighted how it is important to define major problem areas in the course of the implementation of NHDP, through the complex solution of which – beyond the scope of ministries and sectors – it will be possible to implement the main objectives of the plan in a comprehensive manner by reconciling several operational programmes.

He pointed out that logistics is one of the few areas in which the competitiveness of companies operating in Hungary – the competitiveness of small and medium-size enterprises in particular – can be increased on the short run. Moreover, the positive spin-off effects of the programme also support more balanced regional policy, company development, investment promotion, the added value of the agricultural sector and the development of poles. A further potential additional impact may be that less polluting railway or water transport may be used in the case of a part of the increasing volume of goods circulation, hence complying with the requirement of sustainable development. The modal split of the division of labour of the sub-sectors of the Hungarian transport system is currently deteriorating. It would be possible to slow down the impetus of this process by implementing the logistics strategy. The commissioner drew attention to how increasing circulation will financially benefit the neighbouring countries, if a complex logistics programme is not implemented quickly and efficiently. In such a situation, Hungary will by and large have to face the negative impacts of the increasing transit traffic, namely, air and noise pollution, heavy traffic and the further deterioration of its transport infrastructure. Without this programme, enterprises operating in Hungary will not be able to keep up with regional competition, may relocate to other countries and influx of working capital may also decrease.

The Transport Operational Programme and the Economic Development Operational Programme will play the most decisive role in funding developments, whilst other operational programmes will play a key role in the area of R+D. The NHDP and the NHRDP will jointly support the implementation of logistics investments both within and outside the boundaries of sites. Logistics related calls for applications are to be published from the end of summer 2007 through to the beginning of 2008.

Géza Egyed, State Secretary for Economic Development of the Ministry of Economy and Transport characterised Hungary as a natural logistics choice in his presentation. Hungary has the potential to assume a system integrator function in the Central Eastern European region by exploiting its advantageous geographic location, improving the standard and complexity of logistics services and attracting service and distribution centres. Structural changes – the increasing importance of the Asian region in particular - taking place in the global economy can contribute to this in a positive way.

Zoltán Doór, President of the Hungarian Association of Logistics, highlighted the role of cooperation in the Hungarian logistics profession, as regards the development of the strategy. The mission of the Logistics Reconciliation Forum is to unite specific logistics trends, as well as service providers and clients on the same platform. This ensures the potential for reaching consensus, which establishes the grounds of the success of investments in R+D, training and other financial instruments at global level and at the level of the national economy. The Forum is able to contribute to the implementation of the Flagship Programme by developing the concept and details – primarily target system and system of instruments - of the strategy.

Barnabás Forgács, head of department of the Ministry of Agriculture and Rural Development presented logistics potentials in agricultural and rural development. Agricultural logistics, as a part of general logistics, is therefore not an objective in the course of the development of the rural development strategy, but is instead treated as a complex system of tools. This is because the objective is to increase competitiveness, optimise agricultural revenue generation, ensure and exploit competitive advantages vis-à-vis the competition, in addition to improving the quality of life of the rural population, its income generation capacities, closing the development gap of rural regions and improving the development capacities of these regions by exploiting the comparative advantages of Hungarian agricultural land, production, processing and sales. The objective of the rural development programme continues to support structural transformation, storage capacities, local markets and agricultural roads not allocated with road numbers.

Tibor Bertók from the Energy Efficiency, Environment and Energy Information Agency Non-Profit Company talked about logistics energy issues, in addition to energy efficiency, when assessing logistics matters also influencing the use of alternative energy resources. Mr Bertók highlighted that establishing the framework for national and EU funding opportunities is equally a means for encouraging efficiency increase and the increasing use of alternative energy resources. When developing assistance schemes, it is also an objective for the beneficiaries to contribute to financing developments from savings generated as a result of efficiency increase. At the same time the transformation of the energy sector also engenders structural changes of markets for logistics service providers.
Pál Kiss, president of the Development Directorate of the Ministry for Environment and Water talked about inverse logistics related waste management and the key role of the public utilities infrastructure. Waste elimination and recycling is a fundamental logistics matter for all organisations. The role of logistics ties in with the optimisation of costs in this area as well, which can largely be influenced by investments supported and financed by the development programmes. The level of development of public utilities, and especially the water and wastewater network, is one of the key preconditions for selecting sites. In many cases, the lack of, or insufficient level of public utilities may override good transport access.
There was a one-hour long panel discussion following the presentations. The main issue discussed was whether it is worthwhile to primarily integrate the logistics strategy in global economic trends, or whether the strategy is only one of the many key components. Pursuant to panel discussions, the fact that the logistics strategy and the flagship programme building on this will have a decisive impact on the course of development of Hungarian society and the economy, which can be planned up to 2015, seems justified. Hungary has to make its choice of development objectives and prioritise the most important ones. In today’s environment, competitiveness, employment and sustainable development can only be interpreted in the context of the global economy; therefore, logistics must follow suit.