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19-03-2021

Warehousing business results stand out in the logistics sector

While Lithuania’s logistics sector reported a decrease in revenue and profits last year, for some of its segments, notably the warehousing services, the last twelve months turned out to be relatively positive, according to Verslo Žinios business daily.

Based on preliminary data from the Department of Statistics, the total revenue of the transport and storage sector fell by 3.5% last year, with pre-tax income decreasing by 25.7%.

One exception is the warehousing segment, which shows improvement of around 10%  in both indicators over the last year.

Apart from the shipping companies, which experienced a huge boost through the increased e-retail volumes during the pandemic, warehousing businesses were the only part of the logistics sector showing all-round improvement compared to 2019. The income of the warehousing segment in Lithuania rose by 10.5%, reaching 5.1 billion euro, while profits increased by 9.9%.

Algimantas Bluškis, director of Vingės Logistika, a warehousing company operating out of Klaipėda Free Economic Zone (FEZ), says that there was a definite sense of upheaval on the market last year. According to Bluškis, the company received more inquiries from potential clients than usual.

However, Vingės Logistika was unable to make use of this situation because almost all of the 20,000 square metres of warehousing space it manages was allocated to two clients – Philip Morris Lietuva and Neo Group, both being manufacturing companies operating in the FEZ.

These companies did not suspend their manufacturing activities during the pandemic. Therefore, the results of Vingės Logistika remained very similar to the levels seen in 2019 when the company received 3.44 million euro in income.

Vingės Logistika has recently started implementing a 12 million euro investment project to double the firm’s warehousing space.

A. Bluškis concludes that, based on the number of inquiries received last year, the whole of the additional warehousing space could have been rented out, had the expansion been completed earlier. However, “it is hard to tell for how long and how consistently.”

“We did not record growth last year because we simply did not have the capacities for it. We are therefore expanding our limits so we would have room for growth. Some of the new space will be dedicated to our existing clients. The rest will be allocated to new customers,” said A. Bluškis.

The head of Vingės Logistika also notes the emerging trend that manufacturers are becoming increasingly more inclined to focus on their main operations and leave any side activities, such as warehousing, to specialised and professional service providers. This tendency in turn provides expansion opportunities to not only increase the warehousing space but to also widen the spectrum of services offered, e.g. solutions such as specialised marking of transit goods.

Source: Klaipėda Free Economic Zone

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