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The haulage sector should expect excellent results for their autumn operations.  And they really need to have a few strong months to do, as the economic downturn caused by the spring Covid wave has led to an average 30% drop in demand for road services in the EU market.

The drastic collapse happening in just a few weeks shocked hauliers, who were forced to adapt to the new situation with immediate cost and capacity reductions. However, the drastic reduction in the number of lorries was slower than the disappearance of orders, so the temporarily fierce competition in the market resulted in a fall in prices, which could be hardly balanced by the lower fuel costs. Hauliers across Europe have thus suffered serious losses not only in size but also in their profitability.

The autumn period may bring some remedy for this. It will definitely start with a lack of capacity and may even lead to a lasting rise in prices. However, I warn hauliers!! This relative lack of capacity may be temporary, as the European economic performance still falls short of the same period of last year. Presumably, the fortunate constellation of the reduced lorry park and the slightly rising seasonal industrial production cause a beneficial situation. It is also worth noting that one-off effects such as pre-Brexit stockpiling and the stockpiling wave of the resumption of industrial production may also induce current oversupply.

You should wait wisely to reset your trucks! While this capacity shortage situation may persist through the year, a tough first quarter may come in 2021, when the road market may even struggle with surpluses again.

In my opinion, the autumn period should be used by hauliers to raise prices and use their recoverable profitability to replenish their emptied budget in anticipation of any further difficult periods. If I were in their shoes, I would only think of increasing the fleet if the spring of 2021 also brings good demand and the profitable price level can be maintained for a long time.

10/12/2020

Strategic consultant Ferenc Lajkó, founder of  DigiLog Consulting has more than 20 years experience in the T&L industry. He worked for Waberer’s International for more than 16 years, from 2016 to 2019 as its CEO.

Photo credit @ Anilsyal/ Wikimedia Commons

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