Summary

The Europe Freight and Logistics market is anticpated to register a growth rate of more than 3% during the period (2021-2026).

The COVID-19 crisis fundamentally disrupted the demand and supply in the European road freight market. While virtually all of Europe was affected, the impact had distinct phases. The effects of lockdowns and border crossing restrictions evolved not only as time passed but also as the market adjusted to the new rules laid down by the government. In the European Union, trucks formed 37-mile-long lines on the A4 highway after Poland closed its border with Germany in mid-March 2020, compared to pre-crisis times, truck traffic fell by more than 50% in Spain, 46% in France, and 37% in Italy during a single week in mid-April 2020 as lockdowns took effect across Europe.

Logistics investments in Europe went up to 38.64 billion euros in 2020. This is driven by the massive growth of e-commerce in Europe. Key parameters promoting the market growth include economic growth, growing population, and growing industrialization. However, Lack of the government’s commitment to the development of seaports or road networks and reconfigured supply chains, with the growing local production and consumption units are thereby hampering the market growth.

Over the last few years, digitization has become more prominent in the air industry. As in most industries, big data obtained in real time, from real events, combined with flexible management, is helping air carriers take a more efficient approach to traffic planning and infrastructure. Airlines routinely use their data and technology to balance available air capacity against customer demands.

Freight rates on European roads rose in October 2020 and passed pre-crisis levels. the European road freight spot rates price index in October 2020 was 1.2% higher than October 2019. It was also 3.6% higher than in September 2020. Interestingly, rising freight rates have taken place against a background of falling fuel costs; normally the two move in concert. According to industry reports, pan-European diesel prices in the third quarter of 2020 was 4.8% lower than they were in the second quarter, and 14.8% lower than in the third quarter 2019, which also points to an improving demand picture.

Different verticals experienced varying increases in November 2020 compared with October: the automotive sector saw 12.8% increase in road freight capacity, while rates, which had been on the rise since May 2020, declined by 2.3%. The chemicals and life science sector saw capacity jump 18.6%, while prices rose slightly, by 0.6%; and the FMCG sector saw capacity rise sharply, by 16.8%, while prices fell by 2.9%.

Key Market Trends

Growing Demand for Air Freight

The growth of the e-commerce sector in Europe and increased focus on adoption of the temperature-sensitive product are the key driver that is propelling the growth of the air cargo market. Moreover, the rapid growth of the consumer electronics industry and the deployment of software solutions are expected to boost the air cargo market growth in the forecast period.

Moreover, the importers continue to spend a huge amount on electronics to keep up with the demand of global consumers and businesses. The consumer electronics manufacturers and distributors are adopting air freight services that ensure them to deliver their products to their consumers in a timely manner. Thus, the growing demand for consumer electronics is anticipated to create significant opportunities for the air cargo market to grow in the forecast period. The air cargo market players are focusing on various initiatives to enhance its reach to rural areas and boost its position in the market.

In addition to this, various initiatives are undertaken by governmental bodies to accelerate the air cargo market further. For instance, with the increase in industrialization and growth in customer demand, air cargo services are significantly gaining momentum.

Impact of Brexit on the Logistics Market

The UK left the European Union (EU) after years of negotiations. This could have a significant effect on the supply chain and logistics sector across Europe, according to many experts. It will have a negative impact on European trade.

Prior to Brexit, goods, and supplies moved across Europe without much interruption, resulting in a smooth transition, which is essential for the functioning of a supply chain. Post-Brexit, there will be economic, customs, and administrative changes, and additional charges and duties will be imposed on shipments. This will greatly affect the functioning of the supply chain.

The EU is the world’s second-largest trading bloc, and Brexit will result in incremental cost in the supply chain. It will not only impact intra-Europe trade but also hugely affect the logistics industry in the region.

Road haulage is the dominant mode of freight transport within the UK. The majority of goods imported to and exported from the UK by road are handled by overseas haulers (with vehicles mostly registered in Poland, Ireland and Romania). Conversely, the UK haulers account for 8% of the total haulage activity in the EU.

Those UK haulers could face several hurdles post Brexit. Also, additional tariffs and customs clearance procedures cause delays in supply chains and increase costs for all modes of transport. The UK logistics companies operating through European ports will also lose the benefits they received while being a member of the EU. Similarly, other European maritime transport companies will have to adhere to new UK rules and regulations while shipping in ports in the country.

Competitive Landscape

The European freight and logistics market is fragmented in nature, with a mix of global and regional players. Some of the logistics players are establishing logistics hubs in Central Europe and serve the Eastern European countries as well. The market is expected to grow during the forecast period due to several factors such as ecommerce, technology integration, and growing economies

Additional Benefits:

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

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