Digital start-ups grabbing market share in the European road freight market

In addition to shippers’ increased requests for more visibility and improved customer experience, tech-enabled start-ups also act as a catalyst for change in the European road freight market. The disruption coming from these digital challengers shows no sign of slowing down.

To provide a better understanding of the variety of digital start-ups and the pain points they are trying to solve, the new European Road Freight Transport Update 2019/2020 report classifies the new business models transforming the space and follows up with profiles of the main digital players operating under each model.

For the purpose of the report, Ti conducted interviews with the leading digital start-ups in the European road freight landscape and found that digital forwarders have become more widely accepted by large shippers, including large multinational retail and e-commerce companies, and are increasingly involved in more complex shipment operations. This points to a shift in the behaviour of shippers. In the past few years, a common refrain has been observed with regards to the use of digital forwarders by large shippers – digital forwarders were not considered to be a channel through which large shippers would manage their shipping needs. The reality seems to be different now, with some of the fastest growing digital forwarders in the European road freight market, such as sennder and InstaFreight, having managed to onboard large shippers into their networks.  

The report’s co-author, Viki Keckarovska, commented: “Four major start-up clusters dominate the road freight landscape: digital forwarders, marketplaces, tender platforms and visibility platforms/enablers. We see clear winners emerging among these digital start-ups which have grown significantly over the past few years on the back of substantial scale and large supply of capacity (carriers). Moving forward, we might see increased levels of cooperation between the various digital entrants, rather than cut-throat competition. For instance, many digital forwarders are already partnering with visibility platforms to enhance customer experiences and provide visibility into key transportation processes.”

The report’s co-author, Sergio Korchoff, added: “Traditional road freight forwarders are being pressured by the digital innovations occurring in the industry. Moving forward there are three main courses of action which traditional forwarders are likely to take. They might decide to digitise their core internal processes and upgrade their customer interfaces; establish or acquire digital start-ups; or cooperate with digital start-ups. The third strategy, a partnership with digital start-ups, would allow traditional forwarders to hand over the more basic and commoditised transport services to digital forwarders and focus on the value-added services and more complex transport requirements.”

The report also provides analysis of driver shortages which remain a key factor in the current risk landscape. According to Ti’s estimates, the European road freight industry has a shortage of at least 360,000 drivers. Poor monitoring and lack of enforcement of relevant legislation across Europe is one of the main reasons behind poor working conditions for drivers and consequently the driver shortage issue. As a response to this, trade unions have stepped in and are taking initiatives to enforce the existing regulations, basically doing the job of the police and enforcement agencies. Due diligence initiatives developed by trade unions for multinational customers to monitor and check standards within shippers’ supply chain are expected to bring about a positive change. The expectation is that as shippers get a clearer picture of the working conditions offered by their transportation partners, the latter will have to change rapidly or find themselves excluded from the market because evidence will show that their entire business model is based on exploitation of labour. 

Finally, the report also contains 2019 and 2023 market sizing figures. The European road freight market grew in real terms by 1.2% in the first half of 2019 year-on-year. Although growth so far this year has been weak, investments by logistics providers do demonstrate some confidence in the market. There are growth opportunities available and while right now they are few and far between, over the longer term there is still a sense of optimism.

Source: Transport Intelligence, December 3, 2019

Author: Transport Intelligence


About Ti’s European Road Freight Transport Update 2019/2020

The European Road Freight market is being forced to adapt to technology and visibility demands, whilst battling with ongoing driver shortages and EU policy. Ti’s European Road Freight Transport 2019/2020 Update explores these changes, analysing the effects they are having upon the market whilst evaluating market growth and opportunities.  

This report contains:

  • Ti’s market map and analysis of the Digital Road Freight landscape, including extensive interviews with digital forwarders
  • Market sizing including H1 growth rates for 2019, full year projections for 2019 and 5 year ahead forecasts
  • Detailed analysis of the present and future of the European road freight market 
  • Examination of the driver shortage crisis, including the causes and what governments and trade unions are doing to resolve the crisis

To find out more about the report, click here or contact Michael Clover by calling +44 (0) 1666 519907 or emailing [email protected]