The state of Europe’s road freight market – 4 key insights from Sixfold’s Covid-19 map


As the havoc Covid-19 was creating in the market escalated, Sixfold determined that underlying data in its business could provide clarity and a fact-based understanding of what was happening to its clients and the wider industry. Its engineers set about finding a solution to deliver it. The map, the result of a weekend hackathon, launched on March 16th and was used by 500,000 logistics professionals in the month that followed.

Sixfold’s Covid-19 map became something of a standard in the European freight market as the crisis took hold. Its monitoring of delays and congestion at borders as lockdowns and restrictions were implemented provided a visual, real-time indication of the situation as it unfolded.

Even at a surface level, the insights are significant. Data shows, for example, that when compared to pre-crisis times, truck traffic fell by more than 50% in Spain, 46% in France and 37% in Italy during a single week in mid-April as lockdowns took effect across Europe. Ti spoke with Wolfgang Worner, CEO at Sixfold, to get his views on what the underlying data powering the company’s Covid-19 border crossing map and its wider experience of the crisis can tell us about the state of the market.

The timeframe of disruption

The demand for and supply of capacity in the European road freight market was fundamentally disrupted by the Covid-19 crisis. Whilst virtually all of Europe was affected, the impact had distinct phases and the effects of lockdowns and border crossing restrictions evolved not only as time passed but also as the market adjusted to the new rules of the game. When measured in congestion and border crossing times, the impact was most acute in the early stages of lockdowns and restrictions, but over time the effects regionalised, with problems varying in degree and intensity in different parts of Europe. Sixfold’s data helped carriers manoeuvre around the worst of these delays.

Supply and demand disruption – cause and effect

Within a matter of weeks, all non-essential retail and manufacturing across Europe shutdown. This removed a sizable chunk of demand from Europe’s road freight market, with some sectors and sub-sectors going offline virtually overnight. Conversely, of the sectors that stayed open, some experienced spikes in demand that threatened to overwhelm supply chains. Both the imbalance and the speed of its onset, though, made it difficult to initially distinguish between cause and effect.

One example is the issue of driver repatriation which, early in the initial period of border restrictions, seemed to be removing supply from the market. On the surface, the appearance was of drivers returning home to avoid becoming trapped by restrictions they couldn’t get around. However, Sixfold’s dataset points to a different reality – that the drop in demand was so rapid and so acute that many drivers simply had no volume and returned home while, in aggregate, the market reoriented capacity.

The reorienting of capacity

As with supply and demand’s causes and effects, it’s in Sixfold’s data that some of the more nuanced insights of carriers reorienting their capacity can be found. Data underpinning Sixfold’s map shows that as lockdowns came into force in mid-to-late March, there was a sharp decline in available capacity. Within two weeks, however, capacity had reoriented from sectors and locations where demand had fallen to those in which demand had spiked, and so capacity was again available.

However, there was a marked difference in the experiences of smaller and larger carriers during this two week period. As smaller carriers tend to be reliant on fewer clients, perhaps only two or three, any disruption to those clients can have a profound effect which is further compounded by the lack of resources smaller carriers can deploy to quickly find and secure alternative volumes. The challenges for larger providers come from their mix of clients and the starkly contrasting effects of lockdowns on various sectors of the economy. Carriers that had, for example, matched a headhaul consignment from an automotive client with a backhaul from an FMCG client suddenly found themselves with a significant imbalance of volume and demand on such an operation when automotive production lines halted. Similarly, operations that relied on trade through one of Europe’s major air or sea gateways for one leg were suddenly unprofitable. For both large and small carriers, it took time to rebalance volumes and capacity.

Rates

Data from across Sixfold’s business shows “quite a dip” in spot market FTL rates at points throughout the Covid-19 crisis. Amongst Sixfold’s shipper clients, though, the reactions to changing rates have been varied. Some have taken the opportunity to play the spot market and secure savings of as much as 15-20% compared with pre-Coronavirus rates. In the vast majority of cases, this has also meant utilising different carriers than those which such shippers were before the crisis. Other shippers, however, have chosen to stick with established partners even if that means paying more than they could by using alternative carriers – carriers in this group cite the value they place in their established carrier partnerships and a motivation to respect them in tough times for carriers.

As we enter May, the Sixfold map shows a European market still feeling the impact of Covid-19. What the data and insights from Sixfold show is the importance of basing decisions on facts and rigour, and that the market is better placed than ever before to do that. As more lessons are learned over the coming months, the opportunity they afford is for a stronger, more efficient and more resilient market to emerge.  

Source: Transport Intelligence, 05 May 2020

Author: Transport Intelligence

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