Fuente: Kourtney Gundersen (/9814955 pexels.com)
Road Transportation in Europe has changed considerably this last few years. Geopolitical tension, new competitors and a degradation of the industries image are just some of the difficulties that logistic professionals are having. For this reason, today we will be analyzing the challenges the industry is facing:
Key Facts:
- Operative costs are increasing, reducing the industries margins.
- Foreign competition is taking over market shares.
- Drivers demand better job conditions that companies can’t pay for.
A loss of margins on road transportation in Europe
The industry is constantly facing socio-economic changes that make operative costs larger and larger. Drivers demand for better job condition, exemplified by the protests of the yellow vest movement in 2018, are a clear indicator of this situation. Rising salaries, along skyrocketing oil prices, environmental taxation, and other issues, are an ever-increasing threat to an industry with already low margins of benefit (just around 1% to 1.5%). Even if there has also been cost-efficiency improvements in some areas, their impact is not comparable to the greatly augmented costs.
Fuente: skitterphoto (/9796 pexels.com)
A competition increase on road transportation in Europe
As if the increase in costs wasn’t enough, the industry is also facing an increase on competition. The introduction of competing companies from Eastern Europe is making increasing market shares ever more difficult.
For example, international transport use to be around a 50% of the workload of French companies, which nowadays is just around 8% to 10%. Because of this, the trips truckers make are getting shorter, with just about 130 kilometers on average.
Along with the competition on international transport, foreign companies are also working on cabotage. This means that foreign truckers also make multiple national trips within their destinations, which increases competition for local companies as well.
A damaged image
Nowadays, truckers are not well seen by the public. A combination of work and environmental worries have caused a severe lack of interest on being part of this industry. Because of this, road transportation in Europe is getting old and desperate for new workers.
The Yellow Vest protests of 2018 make publicly obvious that job insecurities did not elude the transportation industry. As long as this damaged image isn’t repaired, it will be hard to find new professionals. Alongside this, current generations are very environmentally conscious. As one of the most contaminating industries, road transportation has a lot to improve in this regard too.
Summary
With its current tools, road transportation in Europe can’t do more than contain its fall. Profound changes will be required in order to properly faces these challenges.
If you want to know what these changes could look like and what oportunities may arise for the industry, check our article on the future of road transportation in Europe.