A free port is a logistics zone that enjoys a special extra-territorial customs status. Most often granted to seaports, these days airports and, increasingly, river and dry ports may enjoy this status as well.
High-quality logistics zones
These types of logistics zones are under customs control, meaning that the goods stored there are not subject to customs duties so long as they have not definitively been put on the market. The business can then process them or ship them elsewhere either without paying customs duties or only paying duties for those goods sold within the country.
In addition to customs considerations, free economic zones can offer tax advantages to those who operate within them. These tax benefits are not a mandatory part of free economic zones, but they are often cited as an argument against establishing such zones. In Europe, nearly every country has at least one free logistics zone with tax benefits. Albania, Sweden, France and Belgium are the only exceptions.
The British threat
The United Kingdom is planning to create six free ports post-Brexit. England is hoping to attract trade that would normally go to Europe and provide a site for value-added processing close to the market. These free ports pose a threat to European ports in general and French ports in particular.
Possible solutions for French free ports
The future of logistics relies on three factors:
- Networks: In the 21st century, French free ports must establish partnerships with free economic zones that depend on the shipping routes associated with the existing host ports in France. The goal is to facilitate transit for international shipping operators and reduce administrative red tape as much as possible.
- Operational excellence: free ports in France must be models of global logistics excellence, the Silicon Valley of logistics. This means providing optimisation services for all types of flows: physical (cutting-edge warehouses, flexible factories, industry 4.0), organisational (seamlessness, digitisation, single window, safety and security, audits), digital (blockchain, traceability, cybersecurity, data production, hackathons), human resources (attracting the best managers and the best operational teams, training elite logistics workers, developing cutting-edge R&D, sharing expertise) and financial (funding innovative projects)
- Sustainable development: To attract investment and talent, you must offer a sustainable, economically viable and equitable solution that has a positive impact on the environment.
- If French ports wish to avoid being relegated to second-rate status as globalisation advances, they must adapt to this new reality.
Alexandre Lavissière is at your disposal should you have any requests for an interview or coverage on this topical subject.