The world’s population is increasingly urban with an estimated 51% of the population, or 3.5 billion people, living in or around cities. A report by Arthur D Little predicts that by 2050 the urban population will increase to 6.3 billion people or 70% of the global population. Consequently, urban mobility and city logistics have become increasingly important, and in order to support this urban influx, governments must make substantial investments in infrastructure. Failure to do so results in congestion and therefore, from a business perspective, a loss in productivity.
Arthur D Little predicts that by 2050 the average time spent stuck in traffic could amount to 106 hours per year, which is twice the current global average. However, Inrix’s 2013 traffic scorecard indicates that Belgium already exceeds the global average with an estimated 59.5 hours wasted in congestion a year. Moreover, when one looks at Brussels and Antwerp, this figure rises to 84.8 and 76.4 hours respectively. It is clear that Belgium must act now to ensure its current, and future, reputation as a logistics hub.
On top for logistics
The country’s reputation as a logistics hub is longstanding and widespread, reconfirmed by the World Bank’s 2014 Logistics Performance Index, which ranked Belgium third worldwide, and the 2013 Colliers International report, which placed both Antwerp and Brussels in the top five best cities for logistics operations in Europe.
Located in the center of the ‘Blue Banana’, a discontinuous corridor of cities that are strategically located at the economic heart of Europe, Belgium offers the second highest density of railways in the world, in addition to its numerous seaports, pipelines and an extensive inland waterway system. According to Cushman & Wakefield, Belgium offers access to 80% of European purchasing power within a 500 mile radius, granting quick and easy access to Europe’s consumers. All of the above make it unsurprising that many European distribution centers are located in Belgium. Furthermore, important industrial activities have developed around Belgium’s ports, creating the second largest chemical cluster in the world.
With such high appraisal from international reports, it is clear that Belgium’s infrastructure is still in good shape. But, the question arises, for how long? Significant investment in the country’s infrastructure has been lacking in recent years, and as a result, Belgium’s transportation networks are reaching the point of saturation.
In May 2013, the EU’s country specific recommendations estimated that 2% of GDP is lost every year to congestion. These losses are a result of decreased productivity when employees are late or when freight deliveries are delayed, simply due to the fact that they are stuck in traffic. Additionally, severe congestion leads to unhappy employees with little work-life balance, as they have to leave their home earlier in order to get to work on time and get stuck in bumper-to-bumper traffic on their way back too.
The consistent problems have driven several companies to move from the city center to the edge of Brussels, in the hope that it will decrease the amount of time spent commuting. However, several business leaders are not convinced. Although mobility has become a hot topic in Belgian politics, the lack of cooperation means that little action has been taken.
To tackle traffic problems, Brussels has looked to best practices across Europe, including London and Gothenburg. For both cities, their traffic troubles were dramatically reduced through the introduction of a congestion charge. In early 2014, Brussels launched a pilot project kilometer tax, which essentially means motorists pay based on their usage instead of the annual general road tax. In the city center at rush hour, the tax will amount to 9 cents per kilometer.
A study by Stratec, a research company, has estimated that a kilometer tax of 7 cents in the Brussels-Capital Region, could reduce traffic by 10%. Additionally, it would reduce CO2 emissions by 9% and bring in €227.7 million for the Brussels Government. These funds could then be dedicated to improving existing infrastructure and transportation networks. The charge would also contribute to changing mentalities, hopefully reducing the amount of journeys made by car. With the Brussels region expected to reach 1.3 million inhabitants by 2025, the city would need to add 60,000 additional parking spaces if transport habits do not change, Bruno De Lille, Brussels Minister for Mobility, said in July 2013.
In a country already heavily burdened by taxes, the prospect of yet another one is hardly welcome. In January 2014, an online petition against the kilometer tax gathered over 118,000 signatures in just a few days.
For the moment, it appears that the political parties are leaning towards a congestion charge simply for trucks and freight to limit their impact during rush hour and hopefully improve mobility. Recent reports reveal that this charge could raise up to €700 million a year. However, this does not appear to be a long-term solution as the Federal Planning Bureau believes this charge could have a minimal impact.
Mobility infrastructure requires long-term strategic planning and significant regional cooperation. As more powers will be passed to the regions in the Sixth State Reform, many wonder if Belgium will be able to provide a long-term, cooperative plan for the future of Belgium’s logistics.