Rates have increased across Europe, both domestically and internationally, since Q1 2022. Inflation in the European market is widespread, driven mainly by exacerbated oil and gas prices, the war in Ukraine and supply chain and capacity disruptions.
Driver shortages exacerbated by the Russian invasion.
The lack of labour in the sector aggravates the situation. It is a structural problem that has been dragging on for years and worsened by the Russian invasion of Ukraine. Before February 2022, there were between 380,000 and 425,000 vacant positions for transport workers. But the conflict has meant the loss of an additional workforce in European transport.
Poland and Lithuania are the EU countries with the highest number of non-EU drivers employed. About 30% of international transport drivers in Poland are from non-EU countries. Most of these drivers were Ukrainian until the war started in February 2022. The Ukrainian government then decreed a state of military emergency and a ban on men between the ages of 18 and 60 from leaving the country.
Many Belarusian and Russian drivers also worked in the Polish and Lithuanian markets. However, due to the conflict, many of these workers have not continued transporting in Europe and returned to their origin countries. Therefore, an estimated 166,000 truck drivers from Ukraine, Russia and Belarus working in Europe may have left their jobs.
The mobility package may be helping in destabilising the situation.
The study points to the Mobility Package as one of the factors that will not help stabilise costs and rates. Measures such as the obligation for the truck to return to the member state of origin every 8 weeks may create capacity and profitability constraints. In addition, it is feared that the new regulation will put more vehicles on the road and disrupt the zero-emission targets.
The Mobility Package was adopted in August 2020 with the main objective of having a more efficient control over transport in Europe, focusing on improving the working conditions of truck drivers and aligning transport rules in the European Union.
All measures are already legally binding. Thus, new driving rules and rest times were implemented in August 2020. The movement of drivers' rules entered into force on 2 February 2022, and those on access to the profession and the road haulage market on 21 February 2022.
However, according to the study, countries are laging in implementation, and the European Commission has initiated infringement proceedings against 22 member states. So far, only 5 countries can be considered to comply, but sooner or later, they will have to take it seriously.
Transport companies must get down to work, if they have not already started, to restructure their teams this new restrictions. As well, they must keep better track of loading and unloading in each country and equip their truck fleets with second-generation intelligent tachographs.
Penalties for CO2 emissions are increasingly feasible from 2025 onwards.
Against this complex backdrop, it will be challenging to assume that lorries will be penalised for CO2 emissions from 2025. The measure, part of the Fit for 55 plan, was approved by MEPs on 23 June, as professional transport was initially excluded from the Emissions Trading Scheme.
The International Road Transport Organisation (IRU) is against this decision. The organisation defends the exclusion because the sector, with 35 million commercial vehicles, cannot cope with the ecological transition so quickly. Furthermore, the infrastructure needed for this is insufficient and does not seem on track to be ready in 3 years. However, after Parliament's approval, the European Council must also approve the plan. Then, it is up to the 27 members to agree so that the European Commission can give the final green light.
The future of the global economy is uncertain.
In our last article, we looked at the situation in the US, where the road freight sector seems to be faltering:
Spot and contract rates have fallen across the board in recent months. Imports fell by more than 30% in May.
Retailers are reducing their transport and logistics services due to high inventory backlogs. As a result, the JIT model has not been able to respond to the supply chain disruption after Covid19.
The Federal Reserve has already raised interest rates twice, with the May hike being the largest in 22 years, and the central bank confirms that two more hikes of half a point are on the horizon.
In line with the last point, European central banks are also likely to raise interest rates to contain inflation in the union. That would reduce consumer demand and thus road freight volume growth in 2022. Available capacity would compete for fewer loads, which could ease the pressure of high tariffs in Europe.
The industry landscape is complicated enough, so focus on what we can control.
Given this, it remains to be seen whether we will enter a stabilisation phase or if recessionary trends on both sides of the Atlantic will increase. Since globalisation, it would not be the first time an economic crisis has spread from one side to the other. So are we just seeing a prelude of what's to come?
No economist has a magic ball to see what will happen. Neither do we, which is why we believe that the most important thing to avoid the negative effects of this is to optimise resources. In other words, to eliminate the inefficiencies that are holding back the current freight sector from overcoming its challenges. And the most practical way is embrace digitalisation. Only with the right digital tools can a company operations be managed competitively. That's why at Tennders, we want to provide a platform that will help you manage this as efficient as possible in the face of market volatility and imminent legislative changes.
The tool we are developing helps transport companies and manufacturers manage their shipments and trucks with an easy and simple system. Our technology is useful and intuitive, allowing tasks to be performed in just a few clicks and with full visibility of the essential information. Because the industry landscape is complicated enough, we focus on what you can control.
And do you think digitalisation is helping to meet the challenges of transport and logistics?
Thanks to the great work done in his master's thesis, he started an innovative projectin the logistics and transport sector as a co-founder: Tennders Europe SL. Heis currently the company’s Executive Director, leading an international team ofmore than 50 people.