How the logistics helped The Netherlands to be the largest economy

It’s known by almost everyone that the Netherlands was the first world economy from the start of the XVII century to the end of the XVIII century, and a big cause of that was their logistics.

The country was situated in a place where it was very easy to connect to almost every other part of Europe by sea, so its merchant fleet (which was also the biggest of the world by that time) could do travels all around Europe to sell products where they were scarce and to buy them where they were abundant . Also, since the Netherlands was also in the river mouth of the Rhine it was very well connected with the inside the continent.

The country also was flooded with canals that the Dutch people used as a natural way of transport. The ground transport of that time was very slow so having their vast network of canals reduced by a large amount the cost and time of the transportation of products and people inside the country. And the natural bays of the country formed natural docks.

This combination of situations helped that the country could have the first market economy of the history, since they could import the agricultural and other raw products from the outside at a much cheaper price then they could specialize at the transformation of this raw materials in to manufactured products and sell them again to the outside at a much higher price.

This logistic conditions was also determinant for the formation of the first multinational company ever, the Dutch East India Company. The big size of the Dutch merchant fleet and also the characteristics of their ships, that were adapted to spend a large amount of time to the sea and also to defend themselves from attacks, could import large amounts of spices from Asia that by the time were a luxury product that sold at a very high price. Once these products where in the Netherlands was very easy to transport them all around Europe.

At the XVIII the competition of Asian Products in Europe started to be fiercer and the Dutch needed to diversify their stock, so they started to import more types of products. Since these products had a much lower margin of benefices they adapted the ships of their fleet increasing their cargo limit and they increased the benefices that the company had with every travel, so they adapted their logistics strategy in order to stay competitive. Until the time the products that they imported had such a high margin that they could use small ships to import them and still had huge benefices.

At the end we can conclude that the logistics are some of the most important aspects of a economy if you want it to develop. As the Netherlands were in such a privileged logistic situation could develop its economy earlier and faster than any other country of the world. Their firms where able to be much more competitive that the firms of other countries, andestablished themselves in a dominant position during almost 200 years.

Article written by: Daniel Puerto

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