The world trade map will change. Self-sufficiency in energy and transport will help European industry

The impact of the US President's executive orders regarding tariffs on domestic industry and the related industrial space market cannot yet be predicted - not least because they have been postponed for the EU until early July. Donald Trump's and his administration's regulations continue to evolve, affect still different sectors and - most importantly - are unlikely to be definitive. However, according to real estate consultancy 108 REAL ESTATE, several more significant changes are on the horizon. Europe will start to focus more on new trading partners for sales and imports, including closer cooperation between European countries.

Europe's competitiveness in the global market will also be affected by a higher degree of energy self-sufficiency. This includes the increased use of solar panels or heat pumps to meet the energy needs of industry, whether for manufacturing or warehousing. The trend towards BREEAM certification of buildings has been clearly visible in the Czech Republic for several years. This is one of the reasons why 108 REAL ESTATE has decided to review the building classification methodology and reflect this trend more closely.

"One can identify with the statement of one of the world's leading economists that the era of the global economy as we knew it is over. If the situation does not escalate and countries do not go down the path of isolation, there is a great opportunity for Europe to become stronger on the world map of production and trade,"

Jakub Holec, CEO of 108 REAL ESTATE, believes. The fulfilment of this scenario is conditioned by a number of factors. These include securing the supply of strategic minerals and other raw materials, the aforementioned greater energy self-sufficiency, or a common approach to developing trade agreements around the world. A process that the European Commission is already working on.

Another way is to make greater use of long-distance rail transport for supply chains. The reasons are both economic and strategic - connectivity via high-speed lines is important for the overall cooperation of European economies, but also for a common defence strategy. It is precisely this new type of goods that could replace coal and other conventional commodities, which are increasingly scarce by rail. Data for 2024 confirms the declining volume of rail transport in the Czech Republic.

If there is any aspect of the industrial space market that seems hardly sustainable in the future, it is trucking. It consistently requires new investment in building and repairing transport structures. It is dependent on the price and availability of fossil fuels. In addition, the sector, which in 2023 will account for nearly 6 million trucks in Europe, is plagued by a shortage of drivers. According to a recalculation published by the European Commission in its study "On Track for Europe 2024-2029", one driver can replace up to 40 truck drivers. Moreover, lorry traffic is viewed negatively by the population and is a stress factor for ordinary drivers.

"Of course, logistics in particular will not be without this type of transport of goods for a long time to come. But at the same time, we need to keep in mind the commitment to a 30% share of logistics by rail by 2030. Although there is a high probability that this target will be postponed in time, we are already seeing across the European continent the intention to invest in this type of transport,"

says Michal Bílý, Head of Research, 108 REAL ESTATE, according to whom the volume of goods and commodities transported by rail in the Czech Republic in 2024 has probably reached its minimum and will start to grow.

Some major logistics companies have already responded to the challenge. DHL, for example, has signed up to this industry-wide transformation, pointing out that transporting goods by rail produces only a fifth of the greenhouse gases of trucking. This is in line with the EU's new Clean Industrial Deal strategy of February this year.

A problem that the Czech Republic will have to solve very quickly is the lack of capacity at the level of electrified and especially (high) speed rail lines. According to data from the end of 2023, the share of electrified lines in the Czech Republic was only 34%. However, in Slovakia it was 44% and in Poland even 62%! High-speed lines, except for two sections in Poland, are completely missing in Central Europe. However, the Nezamyslice-Kojetín and Kojetín-Přerov sections are due to start construction this year. This will help to connect, for example, the Panattoni Amazon complex and other A+ class buildings. However, the Railway Administration and the Ministry of Transport have announced a change: instead of 320-350 km/h, the new lines, including the section from Přerov towards Brno, are to reach a lower speed of 200 km per hour.

In terms of logistics, Poland is again best prepared for the gradual transition of goods transport to rail, with more than forty cargo terminals. In the Czech Republic, according to available studies, this logistics hub is not yet being developed in the necessary detail. This is despite the fact that the ambition of, for example, the forthcoming Prague East high-speed terminal in Nehvizdy is to partially replace air transport.

"This is of course a challenge for freight forwarding services as well. But this factor is rather neglected in the available studies. We see an emphasis on passenger transport, freight transport is not yet present in the presentations. However, thanks to the proximity of the D11 motorway, it is also directly offered. This is an impulse for developers, logistics operators and rail transport companies to promote their requirements and needs more actively with the investor, which is the Railway Administration."

adds Michal Bílý from 108 REAL ESTATE.

According to 108 REAL ESTATE, the composition and especially the volume of goods and commodities transported by rail will change. Among other things, the European Union's logical desire for greater self-sufficiency in strategic raw materials - whether extracted on EU territory or imported from other countries - will have a major impact.

"If the new rail connections are accompanied by an acceptable financial offer, many logistics companies will be motivated to change their models thanks to speed and reliability. The environmental aspect will also remain important, which is the best aspect of rail transport with its connection to more affordable and cleaner energy. Not to mention the important impulses for regional development, employment and international cooperation in general,"

Jakub Holec, CEO of 108 REAL ESTATE, which has put the available information and predictions into the latest study Developers Report 2024/2025 for the Czech Republic and Slovakia.