Czech Republic - Freight Services Benefit From Export Driven EconomyCzech Republic - Freight Services Benefit From Export Driven Economy

The Czech Republic is one of the rising stars in the European economy at present. Most of the growth currently to be seen in Europe is in the East of the continent and they are one of the most stellar economies. According to the National Bank´s (CNB) forecast, the Republic´s GDP will grow 1.2 % in 2011. Growth is estimated to continue at 2.5 % for 2012.The freight services industry is also seeing considerable development as a result as well as there being an increasing volume of international freight to and from the Czech Republic.

Exports were worth 209 Billion CZK in December of 2010 and, with its position in the centre of Europe the Republic is heavily involved in international trade and international freight. Theyc export a wide range of manufactured goods that are used in the production of cars, furniture, and electrical appliances. Electrical wiring is a particularly significant export and makes up a significant propotion of all freight forwarding. Most of these products are exported to European countries through road or rail freight transport. About half of exports were machinery and transport equipment while other exports include raw materials, fuels and chemicals. Based on 2008 statistics, top export markets for the Czech Republic are Germany (30.6%), Slovakia (9.2%), Poland (6.5%), France (5.3%), the United Kingdom (4.8%), Austria (4.7%) and Italy (4.6%). Freight companies compete to serve these markets.

Since its formation out of the ashes of the former Czechoslavakia, the country has shifted it focus from east to west and most of its export activity is now geared towards the Eurpean markets, with freight transport patterns reflecting this. Part of this internation focus on the West is reciprocal, with other European countries also exporting to the Czech Republic. For example, UK exports of goods and services to the Czech Republic were worth £1.4 billion in 2009, making the Czech Republic the UK's 30th largest export market worldwide, according to UK Trade and Investment.

It is relatively easy to arrange freight forwarding to and from the Czech Republic as it is an open economy where English is widely spoken. In addition and very importantly for freight companies and shipping companies, the Czech republic has the best transport infrastructure in Central Europe and attracts more investment per capita than any other country in the region.

The country has abolished border controls, completely opening its borders with all of its neighbours, Germany, Austria, Poland and Slovakia. This makes freight transport more cost effective and streamlined, with significant time savings for the freight company or shipping company.

Overall, the Czech Republic may well be the most stable and prosperous of the post-Communist states of Central and Eastern Europe. Its open investment climate has stood it in good stead and helped its tranformation from a communist, centrally planned economy to a market economy that is growing and has a well developed freight services sector.

Prior to its EU accession in 2004, the Czech government brought its laws and regulations into line with those of the European Union. The small, open, export-driven Czech economy grew by over 6% annually from 2005-2007 and by 2.5% in 2008. Nevertheless, the real economy contracted by 4.1% in 2009, mainly due to a significant drop in external demand as the Czech Republic's main export markets fell into recession. However, the future is now looking bright again, with current buoyant forecasts and positive reports about order levels from freight companies operating in the Czech Republic.

Most of the economy in the Czech Republic has been privatised, including the banks and telecommunications. The current centre-right government plans to continue with privatisation, including the energy industry and the Prague airport. This is likely to lead to greater efficiencies from which the freight sevices sector can benefit. The government has recently agreed to the sale of a 7% stake in the energy producer, CEZ Group, with the sale of the Budejovický Budvar brewery also under discussion. A 2009 survey by the Czech Economic Association found that the majority of Czech economists back continued liberalization in most sectors of the economy. As this trend continues, there is likley to be continued development and expansion of the freight forwarding sector in the Czech Republic.

The last Czech government led by social democrats had expressed a desire to adopt the euro in 2010, but the current centre-right government suspended that plan in 2007. An exact date has not been set up and change is not now expected before 2013. It is likely to happen within the not too distant future, however, and this will further boost the ease with which the freight transport sector can operate between the Czech Republic and its European customers.
by Stephen Willis
References and Bibliography
Stephen Willis is Managing Director of RW Freight Services a UK based freight transport company, established in 1971 and operating worldwide freight forwarding services including specialist freight services to and from the Czech-Republic
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