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Strategic Analysis of the European Freight Transportation Markets
Frost & Sullivan, Dec 2005
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Emergence of Novel Freight Concepts to Provide Impetus for Growth of Freight Operations in Europe
The expansion of the European Union (EU) has spurred regional freight operations. In keeping with structural and operational changes in freight (at the regional and local levels), global sourcing and regional distribution in various countries have grown in significance. Presently, the market is witnessing a re-organisation of the European freight networks. In addition, new EU legislative measures are also being taken to drive the acceptability of various modes of freight transport. In this context, the growing importance of new freight concepts such as transshipment, intermodal and multimodal transport and the enhanced focus on end-to-end services are expected to further assist in the growth of the European freight transportation market.
Flexibility to handle small consignments and provide point-to-point services, cargo tracking and monitoring, guaranteed delivery times, as well as accessibility to terminals that allow door-to-door services are some of the factors essential for market growth. "Currently, the trend is towards consolidation of established market participants that provide end-to-end services", says the analyst of this research service. "At the same time, eastern European countries are emerging as a manufacturing hub due to the lower cost of operations, thereby offering greater opportunities for increased market growth."
Structural Reforms to Boost the Acceptability of Diverse Transportation Modes
Heightened production and inventory activity caused by EU expansion are necessitating pliability in routing, which is creating a surge in road freight operations – the largest revenue generating segment in the market. At the same time, the advantages of long-distance routes and intensifying demand from the manufacturing sector are fuelling the uptake of rail freight operations. Another segment exhibiting growth potential is the sea freight market, which is currently witnessing mergers and acquisitions. In addition, overall market growth is being supported by air freight operations, which are also enjoying a spurt in demand due to the advent of ‘low cost operation’ carriers.
Despite the market growth potential, crucial factors threatening to affect market growth include the cost of operation (particularly related to new freight concepts), security and reliability of freight deliveries. In addition, there exists the need to reduce the dominance of road freight, which has created imbalances in the market, through the introduction of effective structural reforms that can boost the acceptability of other transportation modes. "Hence, it will become essential to meet the growing demand for information and communication in freight services during the transit of goods to enable effective end-to-end services", remarks the analyst. "Freight service providers will need to concentrate on guaranteed delivery times, accessibility of intermodal terminals and also ensure competitive pricing, to accelerate their market presence."
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