Romania is possibly best known for its castles, medieval towns and traditions. Perhaps, when you think of Romania, you think of Transylvania and its history steeped in mystery and fantasy. Or maybe you think of the country’s rich, warming cuisine full of salty meats, broths, creamy cheeses and abundant starches. Or their traditional ceremonial sheepskin vests in rich jewel colours, elaborately and painstakingly embroidered with stories of the regions the wearer comes from.

It would be forgivable if you didn’t immediately think of freight.

But Romania has the potential to become an important player in the freight transportation sector in Eastern Europe. The country is currently hanging in the balance, between the strength of recent business growth and the weakness of its dilapidated, struggling infrastructure.

The combined revenue of Romanian freight and logistics companies increased by 8% in 2017, to RON 53.8 billion (EUR 11.78 billion), with a total combined profit of RON 2.9 billion (EUR 635 million) – an increase of 14.2% compared to 2016. So, market trends are certainly heading in the right direction. But poor infrastructure in the country remains damaging to business in this sector.

In response, the European Union have allocated €9.5bn for large infrastructure projects, including Rail, Maritime and Port developments in the former Soviet country, which has recently seen the largest economic growth in the EU. Market analytics group Transport Intelligence (TI) recently produced the ‘Leading European Transport and Logistics Markets report’ (2018), which has shown particularly strong contract logistics activity in Romania. Sea freight operations also fared well, with Romania up 9.4% growing almost twice as fast as the west’s strongest market, Belgium (up 5.7%).

It’s a much-needed boost to an economy which has been struggling. Romania is one of three EU member states of which more than a third of the population is at risk of poverty, alongside Greece and Bulgaria. Amidst these unfavourable statistics, any growth is significant. 

But there’s room for improvement. In particular, the Romanian railway market is the third largest in Eastern Europe
– this, despite rail freight’s drop in market share over the last 25–30 years. This decline is reflected in the dramatic drop in market share, which currently accounts for only 21.9% of total land freight transport and 17.81% of total freight transport.

TI says countries in Eastern Europe need to address poor infrastructure, political corruption, lack of competitiveness, staff shortages and – in Romania’s case – low productivity.

On Romania specifically, the report claims,   Shortage of staff is a significant issue for the logistics sector, with increasing emigration exacerbating the situation in the labour market. Alongside further investment in roads, which remains of the highest importance for the logistics industry, the port of Constanta and the country’s railway network are also of strategic importance. 

Despite these concerns, Transport Intelligence also stated they expect strong annual growth rates across Romania’s logistics industry, with the value of its road freight sector anticipated to grow by almost €1bn by 2020: a welcome boost for a country that could be caught up in turbulent economic conditions expected to face wider Europe over the next five years.

Sarah O’Connell, Senior Editor, FORWARDER magazine   

Romania is possibly best known for its castles, medieval towns and traditions. Perhaps, when you think of Romania, you think of Transylvania and its history steeped in mystery and fantasy. Or maybe you think of the country’s rich, warming cuisine full of salty meats, broths, creamy cheeses and abundant starches. Or their traditional ceremonial sheepskin vests in rich jewel colours, elaborately and painstakingly embroidered with stories of the regions the wearer comes from.

It would be forgivable if you didn’t immediately think of freight.

But Romania has the potential to become an important player in the freight transportation sector in Eastern Europe. The country is currently hanging in the balance, between the strength of recent business growth and the weakness of its dilapidated, struggling infrastructure.

The combined revenue of Romanian freight and logistics companies increased by 8% in 2017, to RON 53.8 billion (EUR 11.78 billion), with a total combined profit of RON 2.9 billion (EUR 635 million) – an increase of 14.2% compared to 2016. So, market trends are certainly heading in the right direction. But poor infrastructure in the country remains damaging to business in this sector.

In response, the European Union have allocated €9.5bn for large infrastructure projects, including Rail, Maritime and Port developments in the former Soviet country, which has recently seen the largest economic growth in the EU. Market analytics group Transport Intelligence (TI) recently produced the ‘Leading European Transport and Logistics Markets report’ (2018), which has shown particularly strong contract logistics activity in Romania. Sea freight operations also fared well, with Romania up 9.4% growing almost twice as fast as the west’s strongest market, Belgium (up 5.7%).

It’s a much-needed boost to an economy which has been struggling. Romania is one of three EU member states of which more than a third of the population is at risk of poverty, alongside Greece and Bulgaria. Amidst these unfavourable statistics, any growth is significant. 

But there’s room for improvement. In particular, the Romanian railway market is the third largest in Eastern Europe
– this, despite rail freight’s drop in market share over the last 25–30 years. This decline is reflected in the dramatic drop in market share, which currently accounts for only 21.9% of total land freight transport and 17.81% of total freight transport.

TI says countries in Eastern Europe need to address poor infrastructure, political corruption, lack of competitiveness, staff shortages and – in Romania’s case – low productivity.

On Romania specifically, the report claims,   Shortage of staff is a significant issue for the logistics sector, with increasing emigration exacerbating the situation in the labour market. Alongside further investment in roads, which remains of the highest importance for the logistics industry, the port of Constanta and the country’s railway network are also of strategic importance. 

Despite these concerns, Transport Intelligence also stated they expect strong annual growth rates across Romania’s logistics industry, with the value of its road freight sector anticipated to grow by almost €1bn by 2020: a welcome boost for a country that could be caught up in turbulent economic conditions expected to face wider Europe over the next five years.

Sarah O’Connell, Senior Editor, FORWARDER magazine