In 2021 France recorded an increase of 37% in logistics projects financed by foreign investors, compared to 2019's figures, as indicated by the latest barometer of the attractiveness of France published by the firm EY.
For the third consecutive year, France is placed first in the European ranking in terms of the number of foreign investments announced, "far ahead of its historical rivals, the United Kingdom and Germany", says the consulting firm EY in its latest barometer of the attractiveness of France. In 2021, Europe welcomed a total of 5,877 foreign investor greenfield and extension projects in 44 countries, representing a 5% increase over 2020. A rather modest rebound, compared to a reference period marked by the Covid-19 pandemic. The level of foreign investment remains 12% lower than the record registered in 2017, reminds EY.
France is in the lead with 1,222 greenfield or extension projects, an increase of 24% compared to 2020. In second position, the United Kingdom had to settle for a 2% increase, penalised by Brexit which concerned investors, notably by its potential impact on trade but also on labour shortages. As for Germany, 3rd on the podium, it shows a decline of 10%. "While investors praise its robust and export economy, they are impacted by recruitment challenges and the difficulty for new entrants in penetrating local supply chains, particularly in the automotive, chemicals and pharmaceutical sectors" says EY.
The EY Barometer highlights, at the European level, a significant flow of manufacturing projects (1,769 in total in 2021, +34% compared to 2020), but also logistics platforms. According to the consulting firm, this double dynamic is explained by the launch of many projects postponed during the health crisis, but also by the re-configuring of supply chains at the global and European level. "Companies have begun to adapt to the most critical challenges of the crisis: to protect themselves from supply risks, to give agility to their production cycles, to promote technological or sectoral sovereignty," says EY.
The desire to relocate would seem to have benefited the countries of southern Europe in particular, with good results observed notably in Italy (+83%), Portugal (+30%), or Turkey (+27%), mainly thanks to investments in manufacturing projects. If we perceive some hint of a movement through these statistics, we cannot speak, however, at this stage, of a heavy trend in favour of relocations. There are many major reflections on the re-configuring of global supply chains, accelerated by the succession of major crises, but localisation strategies are far from converging unanimously towards the nearshoring.
A favourable context for logistics
The increase in industrial projects is good news for the logistics sector, which also benefited from the sustained growth of e-commerce during the health crisis. According to the EY barometer, 655 projects for new logistics centres in 34 different countries were announced in 2021 in Europe, 10% of which were carried out by Amazon alone.
In France, 119 logistics platform projects were announced in 2021 compared to 89 in 2020 (+34%), benefiting in particular from the rise in e-commerce reinforced by the pandemic. These platforms can be projects initiated by service providers or by shippers. If we consider only the investments of operators in the transport and logistics sector, the number of projects stands at 80, returning almost to its 2019 level after a drop of 41% in 2020. These projects do not necessarily concern logistics platforms but more generally to any type of investment made by operators in the sector. And so, in 2021, transport and logistics came fourth in the Top 10 sectors in terms of number of FDI in France.
Source : EY European Investment Monitor, 2022
In industry, the French balance sheet is generally more mixed. Admittedly, 482 foreign manufacturers chose France in 2021. "With this record result, France continues to lead the European ranking of foreign manufacturing investments ahead of Turkey (230 projects), the United Kingdom (145 projects), and Germany (106 projects)," points out EY. Investors justify their choice in particular by the presence of a qualified workforce and by the availability of decarbonised energy, particularly from nuclear power.
But despite this rebound, France is still lagging behind in terms of the weight of industry in its GDP. The ratio was 13.5% in 2019, compared to 24.2% in Germany or 19.5% in Italy. This weakness is obviously detrimental to the trade balance, with a record deficit of 84.7 billion euros in 2021, this deficit is still widening at the beginning of 2022. A stronger industry sector would also provide a fertile ground for the development of logistics activities. This still requires a favourable political and regulatory ecosystem.
Several issues were highlighted by the association France Logistique in its White Paper 2022 entitled "Freight transport and logistics at the service of a high-performance France". Through proposal n°9 of this report, France Logistique invites the public authorities to "better integrate logistics issues into global and innovative economic approaches". This involves, for example, including logistics partners in the strategic committees of industrial sectors where logistics make up a significant part of the costs and/or environmental footprint (agri-food, chemicals, construction, waste, mining and metallurgy, etc.), but also in public initiatives such as "industrial territories" for the relocation of industrial sectors. France Logistique also draws attention to a crucial issue in terms of attractiveness: ensuring that land is available for logistical activities. The market is currently very tight, which encourages rent inflation. "This increase primarily penalises small and medium-sized enterprises, particularly industrial ones. In the end, due to the lack of available land for storage, installation of warehouses, or even manufacturing sites are already being carried out in neighbouring countries, and this could increase," suggests France Logistique.
France has made undeniable progress in terms of attractiveness, as shown by its first place on the podium of the EY Barometer, but competition remains fierce. The transport and logistics sector is a key element of this attractiveness, which is still underestimated or insufficiently integrated into public policies.