Report finds many German transport firms unable to cover costs

In its latest market report, the European Freight Association of International Freight Forwarders (ELVIS) AG warns that many companies are struggling to cover their costs.

ELVIS AG’s analysis of the freight forwarding industry for the second half of the year highlights the critical situation. Companies are finding it difficult to meet their own costs, leading to a reduction in fleet sizes.

However, the association advises against further cuts, warning that this could lead to a shortage of available capacity when the seasonal autumn recovery begins, which may cause freight prices to surge.

“The German economy has yet to gain the expected momentum. Although the first signs of recovery were noticeable in the spring, they have since lost steam,” says Nikolja Grabowski, CEO of ELVIS AG.

Due to the tense situation, companies remain cautious about the future, despite a slight increase in total mileage and a marginal excess of cargo space.

“Given that the current profits and losses are largely balanced, we remain cautious about the second half of the year,” says Grabowski.

The association refers to the ifo Institute’s official indicators for the “Freight transport by road” sector, which all worsened in July compared to the previous month: the ifo business climate rose by 3.1 percent, the ifo business situation by 1.8 percent, while the ifo business expectations dropped by 4.1 percent.

“These declines are a clear signal that transport and logistics service providers continue to face significant challenges,” Grabowski adds.

High material costs and wages remain major concerns. While diesel costs have decreased, ELVIS views this as a temporary trend, and personnel costs have also fallen slightly.

“The reduced costs are primarily due to special payments, such as year-end bonuses, which distort the overall picture,” explains Grabowski.

When will sales improve?

Despite the challenges, the association expects an increase in sales this autumn. Sales expectations in the freight transport sector have risen sharply compared to the previous month (+12.8 percent in July 2024) and the same month last year (+17.9 percent in July 2023).

However, one in three transport companies is still not covering their costs.

“Many companies have already sensibly reduced their fleets to cut costs. However, further reductions would be risky, as capacity in the market is already tight. With the expected economic upswing in the autumn, we could see bottlenecks that drive up freight prices. At that point, we will need our own vehicles again,” says Grabowski.