The European Union's expansion has sparked rapid growth in the logistics and transport sector in central and eastern Europe, says Automotive News Europe.

The growth is driven mostly by automakers and electronic manufacturers bringing new production to the region, according to a report by the market analysts Frost & Sullivan. The addition of Poland, Hungary and eight other countries to the EU in May 2004, reinforced the trend for companies to open factories in the region, the consultancy says.

"The main driver for growth of logistics is the expansion of manufacturing.

[Logistics operators] are following their customers into eastern Europe," Cecilia Cabodi, Frost & Sullivan's project manager for logistics and supply chain management, told Automotive News Europe.

Logistics companies expanding into the new EU countries include Gefco of France and Schneider Logistics of the Netherlands. Last month Gefco, which is owned by PSA/Peugeot-Citroen, opened a new office in Kolin, Czech Republic. The office will be its automotive hub for the region. PSA has a joint car assembly plant with Toyota in Kolin.

Gefco says its three strategic growth areas are central and eastern Europe, Asia and South America. The company aims to increase its sales in central and eastern Europe to €300 million by 2008, up from €70 million last year.

In March, Schneider Logistics opened its first central European office. It is in Olomouc, 175 miles (280km) east of Prague. Schneider Logistics' business development manager, Jason Denne, said the company expects the company to grow rapidly in the region.

Schneider currently has 25 employees at the Olocouc centre. "We project that we'll generate about 100-plus jobs by end of next year," Denne told Automotive News Europe. "Within three years we'll have 300 people working in our Czech office."

Frost & Sullivan forecasts an annual growth rate of 5% in central and eastern Europe's logistics sector. That growth will bring the total logistics market for the region to €124.3 billion by 2012, up from €69.7 billion in 2004.  Automotive logistics will account for 21% of that market.

Potential obstacles to growth in the region are the poor transport infrastructure and the fragmented nature of the logistics market, which is served by thousands of small transport operations. Cabodi said the region's governments will have to improve their rail networks to accommodate increased traffic and move goods more efficiently. Goods currently are mostly transported by road, but rail is seen as a more efficient way of transporting large numbers of finished vehicles from assembly plants to distributors. Cabodi said logistics providers will have to come up with new strategies to adapt to the region and to create networks that link up across Europe.

"They try to adapt their western European template for logistics in the east," she said, "but it does not always work."