Titled “Transport and logistics: acceleration is still not possible in turbulent waters”, the report states that following the peak during the pandemic and the subsequent fall in demand triggered by economic downturns, 2024 is expected to be “a more moderate year” for transport and logistics companies.
The document nonetheless adds that several factors are making business difficult, namely supply restrictions, trade headwinds, and a tepid economic recovery.
The outlook for the year ahead
The authors of the report stress that challenges such as price pressure, weakening demand, and geopolitical uncertainties, remain an issue. The situation is thus leading to a more cautious outlook among entrepreneurs in the sector.
“As of the beginning of 2024, companies facing persistent geopolitical uncertainty are still slightly negative about the near future overall, with this sentiment being somewhat more pronounced in road transport compared to general logistics services,” says the report.
On a more positive note, the report found that despite the challenges presented by the economic downturn, capacity shortages could help the Dutch road transport sector negotiate better rates:
“However, sentiment is still less negative than during other periods of economic downturns. Initially, the decline alleviated some pressure on personnel shortages, allowing companies to build up some margin in a competitive market. The outlook for demand in freight transport following inventory reductions and expenditure normalisation is not entirely negative. Price negotiations for 2024 are more challenging given the current market conditions, but the negotiating position may benefit from the potential for capacity shortages to reemerge fairly quickly in an improving market.”
The report also forecasts that road transport is anticipated to grow slightly by 0.5%, while parcel transport and logistics services are forecasted to increase by 1%.
In addition to port activity, the report anticipates that cross-border transport via inland shipping and railways will be affected by Germany’s economic struggles. Even so, the report adds that this downward trend has halted this year.
In addition, the authors of the report conclude that inland shipping has been negatively impacted by the energy transition (due to declines in coal transportation) and reduced reliability (caused by a move to rail transport due to low river levels).
Financial resilience
According to the report, a number of companies have seen their financial resilience weaken, though the sector as a whole remains stable.
The report also notes a rise in bankruptcies in 2023, particularly in road transport. However, it does underline the fact the percentage remains lower than a decade ago:
“The number of bankruptcies among companies in transport and logistics (excluding sole proprietorships) saw a sharp increase from 110 to 189 in 2023. However, when expressed as a percentage, this remained lower at 1.5% compared to 2019 (1.9%), and significantly lower than ten years ago (2013). This trend is also attributed to the sharp growth in the number of companies in recent years, indicating a positive dynamic.”
On the flip side, the report stresses that cost pressures are expected to rise, particularly in road transport and logistics, where the wage share is relatively high, and demand may fluctuate depending on the market.
Schiphol Airport air freight maintains a pivotal role
Regarding air freight, ING notes that it is “crucial” to safeguard the air freight sector at Schiphol Airport, as it generates the most revenue.
Despite accounting for just under 4% of flights at the global air hub, the air freight sector makes a “substantially greater” contribution to the economy, claims ING.
Moreover, the report adds that the uptake seen in the air freight sector last autumn serves as a positive trend that growth may be on the way this year.
The impact of geopolitical events on shipping and warehousing
When it comes to freight transport as a whole, the report indicates that while road transport and logistics services show slight growth, challenges persist in other segments, including shipping.
This is in part due to geopolitical tensions and disruptions in overseas logistics contributing to a volatile landscape for international trade.
“Geopolitical tensions manifest in international logistics, shipping, and ports. Overseas freight logistics encountered disruptions at the beginning of the year due to the forced avoidance of the Red Sea, resulting in significant arrival delays in European ports and cancellations of connecting sailings. This has led to a sluggish start in the port of Rotterdam and a recalibration in supply chains. Dutch shipping companies are also steering clear of the region, leading to longer routes in various segments following trade shifts due to sanctions on Russia. This has implications for bulk and general cargo transport with smaller ships, while few new ships are entering service. After a decline in 2023, this may result in a more favourable first half of the year for Dutch maritime companies.”
Moreover, the report states that as a result of increasing protectionism in global trade, the landscape and dynamics for the Dutch transport and logistics sector are evolving. For example, ING says that companies are reassessing supply chains to mitigate dependency risks and enhance resilience.
The warehousing sector in the Netherlands could benefit from this too, argues the report. It states that increased uncertainty and the need for supply chain resilience underscore the importance of heightened logistics expertise and potentially storage facilities, which Dutch companies can then leverage.
The influence of labour shortages
Finally, the report also highlights ongoing challenges in recruitment and staffing, exacerbated by an ageing population among other things.
“There are still 46 vacancies for every 1,000 jobs. Overall, the availability of staff remains the most significant limitation for most companies, which differs from previous downturns. This shortage doesn’t just involve logistics personnel like drivers and conductors but also extends to technical personnel responsible for equipment maintenance. This is largely attributed to an ageing population and reduced influx into the industry, coupled with evolving employee preferences.”
Absenteeism was also emphasised as a problem:
“Absenteeism due to illness in the transport and logistics sector during the third quarter of 2023 was 1.4 percentage points higher than in 2019 and nearly 1 percentage point higher than the average of the past decade. In practical terms, this equates to several thousand employees being temporarily absent,” writes ING.