The report, European Road Freight Outlook 2008, predicts growth in road freight will primarily be derived from an increase in trade between Western and Eastern Europe, as well as significant improvements in transport infrastructure across the continent. The results of the study's unique ‘Market Efficiency Rating' developed as a means of benchmarking individual countries reveals some major disparities as well as some surprises.
With strong contribution from consumer goods, electronics and machinery, automotive, retail and telecom industries, Europe's overall economy is estimated to grow at an average rate of 2.3% during 2008-13. This will in turn pave the way for growth of the road freight industry in the continent.
“The eastward expansion of the EU has provided a big boost to Europe's road freight industry which has benefited from increased trade flows between Western and Eastern Europe,” says Siddharth Gaur, logistics analyst at Datamonitor and author of the study.
“The inclusion of Eastern European countries has also opened up their industries for the free flow of foreign investment in individual sectors, thereby providing these countries with much needed capital to upgrade and expand existing infrastructure. Consumption levels have increased with better connectivity between urban and not-so-urban areas thereby increasing the overall demand for goods within the region.”
Insufficiency of motorways is a major bottleneck affecting the growth of road freight in the Eastern European countries. Countries such as Poland, one of the fastest developing road freight markets in Europe, have just over 600km of motorways compared to Germany's 12,000km of autobahns. The lack of motorways increases the cost of transportation due to road congestion, increased travel times and increased wear and tear. This reduces the overall efficiency of the supply chain.
However, countries in Eastern Europe, individually, and collectively with the European Union, are investing large sums of money to upgrade and expand road infrastructure in the region. For example, the upgrade and expansion of the road network from Warsaw to Gdansk in Poland and the building of the US$303 million bridge over the Danube linking the Bulgarian port of Vidin with the Romanian port of Calafat, both of which are expected to provide a boost to trade and road freight transport in the region.
Tax policies have also been eased to usher in more foreign direct investment within the sector besides allowing increasing opportunities for privatisation and foreign ownership of large assets.
On the other hand, road transport networks in Western Europe are well developed with an extensive network of motorways. The road networks are also well connected to other modes of transport, thus completing one of the primary requirements of transporting goods efficiently within the region.
One of the most salient features of the report is the unique “Datamonitor Market Efficiency Rating” for individual road freight markets within Europe.
The company developed the rating as a means of benchmarking individual countries according to eight major factors that affect the road freight industry. These include factors such as labour costs within a country, motorway density per capita, the average price of automotive fuel, energy consumption per ton kilometre, gas emission per ton kilometre as well as fleet transport performance per ton kilometre for each country. The rating also takes into account macroeconomic factors such as average consumer price index (CPI) inflation in a country.
Results from Datamonitor's market efficiency rating have revealed some major surprises. Lithuania unexpectedly topped the study overall, and it achieved the feat on the back of lowest labour costs among all countries benchmarked, second best fleet transport performance per tonne kilometre, and the lowest gas emissions and energy consumption per ton kilometre. The price of automotive fuel and CPI inflation were also lower than the European average, both of which further helped the country to achieve the highest points.
Luxembourg, which had the smallest mean transport performance over 2004-2006, was another surprise, as it had the best fleet transport performance per ton kilometre within Europe and also the highest motorway density per capita.
Governments in Western Europe have been acting quite proactively to expand the overall length of the network with major investments. Transport infrastructure is being expanded still further with the building of new motorways, whilst the existing motorways are being upgraded to reduce congestion and improve road safety and efficiency of the entire network. There are for example major investments being planned in the near future by Germany as well as France to upgrade and modernise their motorways.
Governments across Europe are also implementing environmental regulations such as a tax on the use of high polluting vehicles and setting up special low emission zones in urban areas in an effort to reduce the overall carbon emissions from the road transport sector. Prominent examples of such zones and emission norms can be seen in the central London area as well the German towns of Munich, Hannover and Berlin.
Gaur concludes: “With the eastward expansion of the European Union, the stage is set for steady and continuous growth in the European road freight market. The size and structure of the market is set to change as trade between the western and eastern parts of the continent rises.”
Datamonitor's European Road Freight Outlook 2008, provides an essential overview of the European road freight market, its performance, challenges and activities of the key stakeholders. The report incorporates top-level data, forecasts and insightful analysis of the main factors affecting the industry, both currently and in the future. Customer Industry Segments include Automotive, Electronics, Machinery and Retail industry verticals.
