Covid-19 volatility and fears impact European road freight sector

As previously reported in Ti’s Logistics Briefing EU faces COVID-19 road freight crunch (March 18th 2020), the European trucking industry is facing severe pressure from a combination of demand/supply side factors and government regulation.

On the demand side, many manufacturers – not least in the automotive sector – have reduced production or shut factories completely, which has resulted in a significant fall in volumes for many carriers. However, other sectors, often connected to the grocery retail or medical and pharmaceutical, have experienced a surge in demand as consumers stockpile supplies. The latter has led to short term peaks in demand for transport services.

On the supply side, there have been some structural changes to the market. The number of Eastern European-based operators willing to work in Western Europe has reduced, significantly lowering available international capacity. Coronavirus has not spread to that region as quickly as it has to other parts of Europe and many drivers are wary of travelling to infected areas.

To add to this, many countries are putting in place border controls which are increasing crossing times, further tying up capacity in queues. According to shipment visibility provider, Sixfold, up to 40 miles of queues have been reported on the Lithuanian-Polish border, while similar traffic jams have disrupted travel between Germany and Poland and Hungary and Austria travel.  Overall the international road transport sector has experienced an increase in prices and a tightening of capacity.

Tim Phillips, Chief Growth Officer for digital FTL provider, Sennder, commented, ‘On domestic so far our markets appear to be holding up as many small firms continue to drive (no driving, no income) and a reduction of capacity from some factories allows a reasonable balance of supply and demand.’

However, he went on to add that this may change as infection rates rise and people become more cautious.  It is unclear whether demand or supply will weaken first in domestic markets.

Source: Transport Intelligence, March 19, 2020

Author: Transport Intelligence