EUROPE LONG HAUL TRANSPORT MARKET - GROWTH, TRENDS, COVID-19 IMPACT, AND FORECASTS (2022 - 2027)

Due to COVID-19, road freight rates in June 2020 were down by 14.3% Y-o-Y. The rates were up by 3% compared to May 2020. Although rates were stable through Q1 2020, price levels declined sharply from April, as COVID-19 lockdowns dragged down demand and available capacity increased significantly. As a result of COVID-19, most demands eroded, but there were sector-by-sector variations. Production in the automotive sector largely came to a standstill in mid-March 2020, eradicating significant road freight volumes related to the sector. There were violent jumps in demand for grocery-related transport early on due to panic-buying, which later subsided. Chemical and pharmaceutical products saw sustained higher demand levels throughout the crisis, but the fashion retail and industrial sectors suffered. Meanwhile, haulers were fast to cut capacity from the market, which caused particular shocks on lanes open to cross-trade. Border controls designed to cut passenger transport had an adverse effect on road freight operations throughout the continent.

In long-haul transportation, it is estimated that the hybrid powertrain may allow the combustion engine to be shut off for up to 30% of driving time. This is likely to save between 5% and 10% in fuel consumption, depending on the vehicle and its drive cycle.

The COVID-19 pandemic has demonstrated the importance of a digitalized logistics industry. In January 2021, European digital road freight forwarder, Sennder, claimed that it raised USD 160 million from investors in its latest funding round, with some of the additional funding to be used to drive expansion into new European markets with a focus on strategic partnerships, such as its JV with Poste Italiane.

Key Market Trends

Growing Automotive Market in the Region

EU car sales saw the sharpest drop ever due to the COVID-19 pandemic. However, the European Automobile Manufacturers’ Association (ACEA) estimated that 2021 is likely to mark a first step on the path to recovery, with sales rising by about 10% compared to 2020. The fallout of COVID-19 is expected to persist into Q1 2021, but the car market should pick up in the second half of the year as vaccination programs progress.

Due to the global business model of European auto manufacturers and international demand for EU-made vehicles, production facilities in Europe were able to benefit from more swiftly recovering markets of 2020, notably those in Asia.

In the fast-growing (new-energy vehicles) NEV market in Europe, Chinese electric vehicle manufacturers are ramping up their efforts to take a share of the growing market.

According to industry reports, the total sales volume of Chinese electric vehicle (EV) brands in 18 major European automobile markets recorded 23,836 units in 2020, an increase of more than 13 times compared with the same period in 2019, and their market share reached 3.3%, signaling a fast development phase that Chinese EV makers are embracing on the European continent. Chinese EV makers, including state-owned firms and a rising force of pure EV players, are eager to tap into the diversified European market where growth potential is highly expected. The business environment is under a favorable condition driven by local governments' push for a low-carbon society.

Growing E-commerce in the Region

The United Kingdom is dominating the European market, followed by Germany and France for the e-commerce logistics market, as several companies are promoting the e-commerce logistics business. In addition, there is a growing chance of preferences among people in making the lifestyle better through e-commerce platforms, which is also driving the growth of this market. This includes cross-border selling along with the growth in the e-commerce market.

Consumers are increasingly turning to online shopping due to the pandemic. E-commerce has become a very significant source of traffic flow between Europe and Asia in both directions.

Consumers are increasingly turning to online shopping in the face of the pandemic. Major shopping events, such as China’s Singles Day and America’s Black Friday, which take place in November 2020, have an increasingly global presence. Cross-border e-commerce proves to be an important means of injecting traffic flow onto the Europe-Asia trade lane in both directions amid the second wave in Europe.

However, the congestion and container shortage on the Asia-Europe corridor remains an outstanding issue for railway freight. This provides an opportunity for the newly emerged road freight service between China and Europe. The flexibility of Europe-Asia road freight can be an attractive service for time-sensitive cross-border B2C e-commerce. Particularly, shipping facilitation measures have also been implemented for cross-border e-commerce via the TIR road transportation at some of China's border points.

Competitive Landscape

The market is fragmented and is undergoing transformative changes, with digitization promising to revolutionize traditional practices. Additionally, initiatives by tech start-ups and the biggest players in the market reinforce the need to constantly innovate to remain competitive.

Smaller and medium-sized logistics companies must take advantage of technology and other opportunities to innovate services for shippers and compete successfully with the bigger players.

Additional Benefits:

• The market estimate (ME) sheet in Excel format
• 3 months of analyst support