Economic crisis in the US may give logistics companies a competitive advantage.

The economic slowdown in the US and other parts of the world is creating new opportunities and challenges for logistic companies, says a leading industry figure.

Major manufacturers that intended to shift their operations from the US to low-cost locations are now reconsidering their plans particularly as costs in some of these areas are beginning to increase due to high prices for land and rising inflation.

"The economic crisis in the US will give companies there a competitive advantage," Gianfranco Sgro, President, South Europe, Middle East and Africa, of CEVA Logistics told Emirates Business.

"The slowdown has caused a decline in operating costs in the US and many companies, specially in the automobile industry, are rethinking their plans to relocate to cheaper destinations," he said.

"Many automobile companies which were planning to relocate to China or other cheaper locations may now rethink their plans. US companies want to be closer to the customer and production costs in the US will become competitive.

"As a logistics provider the company has been participating in many debates about the relocation plans of US companies."

Sgro said there had been a slowdown in cargo movements in the US and other countries including Turkey, Spain and Brazil. "But the growth rate in the Middle East is double-digit and some markets in the region are yet to mature," he added.

"The US financial problems have started to affect the real economy but our capital structure is strong enough to withstand any crisis. There is a consumer and volume crisis in all the areas where we operate - industrial products, automobiles, oil and gas and aerospace. There is an economic slowdown in the US and other countries. However, we maintain a flexible cost structure."

Dutch-based CEVA, formerly known as TNT Logistics, is one of the leading integrated supply chain logistics operators. It is the world's largest logistics provider for car companies and its major clients include Fiat, General Motors, Ford and Renault.

The company is the world leader in serving the logistics needs of all major automotive original equipment manufacturers (OEMs) and suppliers. Nine out of 10 leading OEMs rely on its logistics solutions and many tier-one suppliers around the world use its services.

Sgro said the automobile sector accounted for 30 per cent of CEVA's total revenues of €6.3bn (Dh31.4bn) last year and the domestic car markets in India, China and Russia were still growing.

"There is a worldwide slowdown in the movement of automobile units and in Europe alone this is down by between five and 10 per cent in 2008 compared to the corresponding figure last year.

"However, there is growth in East Europe, Russia, South America, India and China. The South American car market, especially in Brazil, is growing by double digits and the introduction of hybrid cars will boost car sales again. The US economy will revive after the presidential election."

CEVA recently launched a new car division in Thailand.

"CEVA Vehicle Logistics (Thailand) is targeting car dealers, automotive manufacturers, auction houses and finance companies," said Sgro. "The new division can move up to 880 cars at one time and has a storage capability of up to 20,000 cars. And the company is looking at the Middle East vehicle market.