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Home » Modest Profit Growth Predicted for European Road Freight Market

Modest Profit Growth Predicted for European Road Freight Market

November 3, 2015
Transport Intelligence

In addition, large corporations compete for the same customers against small "owner-driver" models creating a hugely competitive market with fierce pricing pressure. At the same time, visibility on profitability in the sector is minimal making it difficult to assess the success of varying business models.

These are among the findings of a market report from Transport Intelligence called Europe Road Freight Transport 2015.

According to the research, the European road freight market has been becalmed since the recession, but is now beginning to show some moderate growth, in conjunction with the pick-up in the European economy in 2014 and 2015.

However, a fundamental problem of the European market is that there is not really a complete European market to speak of. More than two dozen often quite different economies, from Greece to Norway, Germany to Bulgaria, display quite different characteristics. The Southern European economies are generally badly depressed, although Spain has seen some recovery, while Germany, the UK and some Central European economies are growing at respectable rates. However, it is not only on a geographical basis that the European market diverges.

Despite the slow growth that road freight has seen over the past decade or so, the supply side of the market has been quite innovative. The large “network-transport” providers have grabbed an increasing market share with services that are highly competitive due to an ability to move smaller batch loads comparatively cheaply, often on a continent-wide basis. This is ideal for both higher value manufacturers and retailers. Smaller pallet networks have the ability to do this on a generally more localised basis and at an even lower price point.

The road freight market has also shown an impressive ability to generate IT-based innovation such as the emergence of web based “freight exchanges”. Yet all this innovation has not mitigated the ferocious competition in the market. Many of the smaller truck owners who account for so much of the supply base probably make little more than the cost of capital. This feature has been accentuated by the increasing presence of drivers from Central Europe over the past 20 years.

Overall, the prospects for the road freight market are for a certain amount of innovation, very moderate growth and even less profit.

Source: Transport Intelligence

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KEYWORDS Europe European trucking Global Logistics Logistics Logistics Management: LTL/Truckload Services logistics services LTL/Truckload Services motor freight Pharmaceutical/Biotech Technology Transport Intelligence Transportation & Distribution Transportation Management trucking industry
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