You have 58 locations in the Czech Republic in your portfolio. The second country, in terms of the number of sites, is Romania with 15. Why is this? Is the Czech Republic so attractive for business in logistics?
Stefan de Goeij: Every developer or real estate guide will tell you that the three most important success factors are location, location and location. The Czech Republic speaks primarily of a truly unique location within Europe. It is close to Germany, where we have long-term ties to the automotive industry. Therefore, one of the largest projects is in Pilsen-Bory, near the border with Bavaria. From here you can get relatively quickly to Prague and Brno, which acts as a crossroads to Ostrava and Poland and south to Austria. However, other factors also play a role for the Czech Republic, mainly skilled and intelligent workers and the still relatively low cost of labor.
Who decides about the location and form of logistics centres? You, or is it tailored to clients?
With a few exceptions, our business is driven by client demand. We operate by having about 1.4 million square meters of land for industrial development. We have all necessary permits negotiated on them, so when a client comes to us with a request for a certain location, we can start building almost immediately and hand over the finished warehouse within 6-8 months. That is one big advantage we have. The next is our ability to build customized warehouse and logistics space. We have a special design team that travels the world, constantly collecting knowledge and inspiration from a wide variety of industries and business. We are therefore able to build both a high-capacity warehouse for Amazon and highly specialized premises for companies operating in nanotechnology or a centre where Lufthansa prepares food served on board its aircraft.
So you don’t sell your premises as ready-made?
This also happens, but rather rarely. It happens that we will add to the project additional premises equipped with a basic standard, which we call the “envelope and core”. We then offer them to clients who do business in that location.
Logistics used to be a peripheral and more or less supportive industry. Today, on the contrary, companies have it at the centre of their interests and often decide on their success or failure. What did the shift bring?
There are many reasons for this and you could talk about it for a long time. But the main one is the pressure under which retailers find themselves. When you walk from our offices in the Quadrio centre to its commercial part, you will see how much commercial space is empty in such an attractive location. Even those occupied change tenants very quickly. The situation is caused by an increase in online retailers, who operate on the principle of almost immediate delivery of goods. The usual standard today is delivery the next day and if the company does not offer it, customers can easily find the competition, which is. Perfect logistics is absolutely crucial for them.
What does the distribution centre look like today?
It must be as close as possible to large cities, storage systems must operate without the slightest delay, and companies must also deal with flows of goods that did not exist before. Especially in online clothing sales today, distributors must have stores not only for new goods, but also for goods that customers return. It is no exception that warehouses for returned goods are larger than for new goods. That’s just retail. However, a similar situation exists in virtually all large sectors. For example, the automakers today produce 24 hours a day with minimal inventory, and all parts and components are constantly being charged by suppliers. The slightest failure in logistics processes means major problems, millions of damages and penalties.
How does logistics cope with such demands?
For us, it is essential that the client has perfectly secure all networks. The slightest failure of electricity or data distribution is a huge problem for them. On this base, our clients install their own warehousing and logistics solutions. Often these are incredibly sophisticated systems. For example, in the DHL and PPL warehouses, which are one of our largest clients, robots pick up shipments from robots. They read the package code and take it to the proper place in the warehouse. The only people you meet here are the operators who oversee everything.
Is there any breakthrough technology in logistics? Will we finally see the delivery drones that have been talked about for so long?
Delivery drones are a big topic in Asia where there are not so strict airspace protection rules. Amazon is also experimenting with them, who wants to use them as robotic warehousers in warehouses that can thus grow in height. In the Czech Republic, the transition to the fifth generation of mobile networks is much larger in the next five years or so. It will bring big changes literally everywhere, and we will face the crucial task of providing the infrastructure for the operation of huge data flows.
What developments in logistics do you expect in relation to energy?
In addition to the transmission system, reliable energy sources will be a major challenge, as the current grid is under great pressure. We will not be able to rely on diesel engines, they will probably be banned, as we are currently banning smoking. That is why we are already turning to alternative energy sources. We install photovoltaic systems on the roofs of our warehouses and store the energy they produce in battery stores. In the Czech Republic alone, we already produce around 6.1 MW of energy.
Is the transition to renewables primarily a question of security of energy supply to clients, or even a corporate environmental strategy?
Both. Ensuring uninterrupted supply to clients is of course essential, but the sustainability of our business and its impact on the environment is equally important. We are probably the “greenest” developer in the Czech Republic. We work with BREEAM certification both for the construction of new buildings and for existing buildings and the entire chain of suppliers and contractors. In our office buildings that we build and operate, we are the first companies outside the UK to hold the highest level of certification since 2012. Currently, 17% of our buildings meet the requirements of the BREEAM standard, next year we want to have all of them certified.
What does this mean in practice?
The measures we take are numerous. Buildings have very efficient thermal insulation that saves energy in heating and cooling. Our heating and cooling systems are also connected to a weather station system that works with 10 years of weather data to calculate the most economical air conditioning and heating solutions. We install green roofs and build apiaries and insect homes there. The use and recycling of materials is strictly controlled. We are keeping a so-called White Paper of Materials, in which we are constantly adding all the news that appears on the market and looking for ways to implement them in our projects. We are also watching the news in the field of intelligent building management. By continuously collecting data from control systems, we can accurately inform our clients about their energy management and propose cost-effective solutions. For example, we can identify parts of the consumption that can be covered by cheaper off-peak electricity. Warn them of faulty devices before they stop working altogether. All luminaires are equipped with LED lamps and connected to a system that lights up only parts of the buildings where workers are moving. So I could go on. It is a lot of small measures, but they are a big savings for us and clients.
Are ecology and sustainability big topics in logistics?
Should be. We have the advantage that our CEO, Remon Vos, considers the environmental impact of our activities a crucial issue and is very committed to this. CTP is a private company with a very flat organizational structure, so its decision is immediately put into practice. Together with the Institute of Circular Economics in Prague, we follow the entire life cycle of everything our company consumes and see to it to minimize the impact on the environment. In addition, many of our large clients have sustainability and environmental responsibility built into our corporate philosophy, and without adhering to the highest standards we could not even work with them.
Certainly, such measures will help sustain your industry and your clients. But at some point we have to come across the physical boundaries of the environment. The capacity of roads, railways, the supply of land. Do you take them into account in the future?
Yes, we have to take them into account, because the limits are very real and not just the future. We are struggling with the condition and capacity of the road and motorway network today. We cannot ignore the fact that, despite the promises of the Czech governments, we still do not have a motorway connection to Vienna. How will we take this into account? One of the areas where ever more attention is focused is railways or air transport. Local players such as Alza and Mall also use public transport. They build automatic dispensing centres near the main stations, where customers pick up the goods themselves. There are many scenarios. What we will use in practice, however, is difficult to estimate, because we do not know exactly what our customers’ business will look like. For example, we know that the switch-over of electric cars to electric cars will have a big impact on us. But we don’t know what their production will look like, what will be the buildings, what will be the logistical demands. We simply have to be flexible and ready to deal with everything as quickly as possible.
Will such claims come in the future, or have you had to deal with them?
Our client, Moneta Bank in Ostrava, has purchased a fleet of one hundred and fifty E-Golf cars. We immediately had to react to it and provide them with power stations. We are currently completing the installation of solar panels and battery storage.
Can you guess what the perfect warehouse of the future will look like?
We are already working on it. It’s called a circular building. Thanks to perfect insulation, it almost does not need heating or air conditioning. It works independently of public networks, which it uses only as a backup. It generates energy from solar panels, capturing rainwater, which it can then 100% recycle. Even flush toilet water is cleaned on filters and re-circulated. Likewise, unused food will be recycled to produce biofuel. The advantage of such a building is that it can be built anywhere and used without any environmental requirements. Once it is over, the supplier will disassemble it and take all the material for recycling and reuse.
When can we see her?
The problem is that such a perfect building would still be very expensive today, and we as a developer must also guard the financial side of our business. We are currently working on individual parts. For example, we test the food recycling system at our Eatology restaurant in the Spielberk Centre in Brno. We also test other technologies, perform measurements and audits, and put everything together. It is the direction we are heading and I believe it will become a reality. I just wish it could go as fast as possible.
Translated from the Czech original: Byznys & Energie, 3.9.2019, Stefan de Goeij (CTP): Ekologie je v logistice zásadním tématem https://www.byznys-energie.cz/clanek/stefan-de-goeij-ctp-ekologie-je-v-logistice-zasadnim-tematem
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