Freight market to grow, but analysts warn of unpredictable factors creating uncertainty – including rising cost pressures and the war in Ukraine – in Transport Intelligence latest report: European Road Freight Transport 2022.
The European Road Freight Transport 2022 Report from Transport Intelligence – the leading provider of market research to the global logistics industry – shows a picture of a strong recovery, with some unpredictable factors creating an uncertain, challenging and complex market environment.
The European Road Freight Transport 2022 – written by industry researchers, analysts and utilising data from Ti’s GSCi knowledge portal, a data powerhouse with over 1million pieces of data and analysis.
Viki Keckarovska, Ti’s Senior Research Analyst, says: “A strong demand from the retail sector and a rebounding manufacturing sector fuelled the recovery of the European road freight market. However, the market continues to be plagued by several supply and demand-side shocks, which will drag on overall growth, including rising cost pressures, supply and capacity disruptions, regulatory changes, acute driver shortage and the war in Ukraine.”
Ti’s latest market forecasts show that the European road freight market will expand by 4.9% in real terms to reach €390,754m. According to Ti’s COVID-19 Recovery Tracker 2022 (CRT22), the European road freight market is expected to reach a CRT22 of 6.3%, representing a full recovery, with an additional 6.3% growth compared to 2019 levels. All European markets are forecasted to recover from the pandemic in 2022, however the major European road freight markets are set to have some of the slowest recoveries.
Ti’s latest market projections for 2026 show that the European road freight market will reach a real CAGR of 3.0% from 2021 to 2026. The COVID Recovery Tracker for 2026 (CRT26) shows that the region’s total road freight market will be 23.1% larger in 2026 than it was in 2019 in real terms. On the back of solid trade forecasts, the international road freight market is expected to grow faster than domestic during the 5-year period, although it will remain the smaller of the two markets.
Behind this underlying picture of a significant recovery there are a number of factors that are reducing optimism for forecasts, including the length and result of the conflict in Ukraine, the response to increasing inflation, and the rising cost base for road freight services, all of which heavily impact growth in the market.
The effects of inflation on the supply side of the European road freight market, especially on diesel prices, have led to substantial increases in road freight rates. It is reasonable to surmise that smaller road freight providers are likely to suffer disproportionately from the increase in operating costs, whilst larger providers are likely to increase their presence in the market due to their ability to pass on higher fuel prices.
Fuel costs are only one of the challenges currently shaping the road freight market in Europe, and only one factor pushing rates up. The shortage of HGV drivers has long been an issue in the European road freight market and continues to push rates up. At the end of 2021, before the Russia- Ukraine conflict, over 380,000-425,000 truck driver positions were unfilled in Europe according to IRU estimates. Driver shortages are expected to jump by 40% in Europe in 2022, according to the IRU. Despite companies introducing various initiatives to alleviate the problem, including wage increases and funding HGV training, the industry still struggles to attract more professionals.
The full report – available here – also analyses the impact of the Mobility Package on European road freight operations and offers in-depth market projections and trade forecasts: an essential tool for business leaders making critical decisions.
Source: Transport Intelligence, 28th July 2022
Author: Transport Intelligence
GLOBAL SUPPLY CHAIN INTELLIGENCE (GSCi)