Archive:Competitiveness in EU road freight transport

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Data from July 2010. Most recent data: Further Eurostat information, Main tables and Database.

This article analyses the competitiveness in European Union (EU) road goods transport by looking into Member States' performance in international road freight, their respective shares in total EU cross-trade and cabotage markets as well as their average annual turnover per employee in transport sector in the light of differences between countries' personnel costs, investment efforts and the age structure of their vehicle fleets.

At the same time, the article also examines the impact of the current global economic crisis on both national and international EU road freight transport in terms of fluctuations in total tonne-kilometres (tkm) and output prices.

Figure 1: Evolution of hire or reward road freight transport (in tkm) and output prices for freight transport by road and removal services (NACE H494) in the EU-27 , base index 2006 = 100

Main statistical findings

Is the crisis over in the road freight transport sector?

Highlights

  • European road freight’s decline is levelling off. However, in the fourth quarter of 2009, it remained 3 % below its level in the corresponding quarter in 2008 for national transport and 2 % down for international transport.
  • Road freight prices have been under pressure since peaking in the third quarter of 2008. In the fourth quarter of 2009, they were 2 % below their level in the corresponding quarter of 2008.
Figure 2: Share of national and international Share of national and international transport in hire or reward road freight transport, 2008 - % in tkm
Table 1: Structural business statistics for road freight transport enterprises (NACE I6024), 2007
Figure 3: Evolution of turnover, number of persons employed and tkm performed in the EU-27 road freight transport (NACE I6024), base index 2003=100
Figure 4: Personnel costs and investment in road freight transport enterprises (NACE I6024),average values for the period 2005 to 2007 - thousand euro
Figure 5: Share of age categories in road freight transport vehicle fleet, 2008 - % of total vkm
Figure 6: Cross-trade transport performed for hire or reward - million tkm
  • A number of new Member States invested heavily in road freight transport in 2005-2007.
  • Turnover and employment continued their growth in 2008.
  • New Member States tightened their grip on the European cross-trade market in 2008. Poland accounted for 23 % of the EU total cross-trade,followed by the Czech Republic and Slovakia with 9 % each.
  • Hauliers in Germany, Luxembourg and the Netherlands were the cabotage leaders. However, hauliers in the new Member States increased their share of the cabotage market.
  • Cabotage also began to creep into the transport markets of some of the new Member States.

International traffic: Luxembourg's speciality

Figure 2 illustrates the relative importance of international and national road freight transport for the hauliers of the reporting countries. For some countries, international freight is of little importance to its road freight sector. This is particularly true for those on the periphery, such as the UK and Cyprus, where 98 % of hire and reward work is national traffic in both cases, as well as for Sweden and Finland where 90 % or more of hire and reward is national traffic. For Italy, the geography of the country, a long peninsula contributing to the importance of national road freight movements, is part of the explanation. In contrast, the position of France as a main transit link between important countries makes it harder to explain why international traffic is such a small element within its total. The low share may possibly reflect the competitiveness of the French road freight sector.

However, there are other countries where the situation is reversed and international hire and reward work accounts for 80 % or more of the total, including Latvia, Lithuania, Luxembourg, Slovakia and Slovenia. For the Baltic States, their role as gateways to the important Russian market helps to explain the importance of international traffic. For Luxembourg, its position at the crossroads of Europe and also its small size meam that its road freight industry is dependent on international hire and reward work. Similar arguments may apply to Slovenia and Slovakia. The competitiveness of their road freight companies is likely to be an additional factor.

Among the other major economies, for Germany and Spain, national transport accounts for about three quarters of the total. In contrast, national transport represents a little over a third of Polish hire and reward transport. As with Slovenia and Slovakia, this may be a reflection of the competitiveness of the Polish transport sector.

Heavy investment by some of the new Member States

The European road freight transport industry was dominated by the major economies - Spain, France, Italy, the UK and Germany, in terms of the number of companies, turnover, employment and investment. However, the share of German road freight is less than expected, given Germany’s weight in the overall European economy. Major German non-transport companies tend to undertake more transport on “own account” than their counterparts in other larger Member States. This leaves scope for expansion in the German road freight industry. A second issue is the continuing divide between the EU-15 and the 12 new members making up the EU-27. Generally, for the key indicators, turnover per person employed and average personnel costs, the new Member States are below those of the EU-15 members.

Slovenia’s turnover per employee, however, as well as Cyprus’ average personnel costs provide some challenge to this broad assumption.Many of the new Member States invested more per employee than some EU-15 countries. Bulgaria, Latvia, Romania, Slovenia and Slovakia were investing at levels comparable to or above the EU-15 figures.

Looking at developments over time, turnover and employment in the European road freight industry have shown a sustained rise between 2003 and 2008, with turnover growing the fastest. Its growth resulted from the increase of both volume and prices (see Figure 1). Up to 2007, tonne-kilometres (tkm) followed a similar stable growth path, but suffered a downturn in 2008 as the impact of the wider economic crisis began to be felt.

The earlier discussion of investment performance is taken further in Figure 4. Here, investment is shown against personnel costs for each of the countries over the period from 2005 to 2007. A wide spectrum of outcomes can be seen. For example, Sweden has high investment and high personnel costs, while Greece has low investment and fairly low personnel costs. It seems intuitively reasonable to assume that this pairing of high personnel costs and high investment is sensible and may reflect willingness to invest in order to achieve some labour savings. In the Figure, the countries have been divided into three main groups. The pattern described above would apply very clearly to the main group of countries (labelled 1) where a strong correlation between the levels of personnel costs and investment is apparent. This group covers the EU-15 members, Cyprus and Norway.

The second group is clearly detached from the first one and comprises countries with very low personnel costs and low investment. This is perhaps an even more explicit illustration of the intuitive pattern outlined above. Included here are Estonia, Lithuania, Hungary and Poland.

The third group is more surprising, since it combines low personnel costs with high levels of investment, which are exceptionally high in the case of Slovenia. Other countries in this group are Bulgaria, Latvia, Portugal, Romania and Slovakia. As Figure 5 illustrates, all of these countries, except for Slovenia and Latvia, had relatively old vehicle fleets in 2008. It may therefore be that they are all making a major effort to upgrade their vehicle fleet and the associated equipment to make up some ground on the more advanced countries. It may also reflect an awareness that more modern vehicles may be necessary to compete in some specialised markets which have opened up with membership of the EU. This may apply particularly to the two newest members - Bulgaria and Romania. The investment effort apparent here may be intended to remedy this situation and it has already paid off for Latvia and Slovenia. However, in Group 2, Poland, for example, shares the problem of a relatively old vehicle fleet but this did not translate into higher investment over the period 2005 to 2007.

Figure 5 shows the age of the road transport vehicle fleet in each country as percentage of the total vehicle-kilometres (vkm) travelled in 2008. One key indicator to summarise the graph is the percentage of vkm undertaken by vehicles 5-year-old or newer. For the EU-27, this indicator is 65 %. Eight countries achieved a score of 75 % or more: Luxembourg, Germany, Denmark, Ireland, the UK, Austria, France and Norway. Of these, the percentage of vkm undertaken by vehicles 5-year-old or newer was 86 % in Luxembourg and 79 % in Germany and Denmark, representing a very intensive use of very modern vehicles. At the other extreme, in eight countries less than half the vkm were undertaken by vehicles 5-year-old or newer. Indeed, in three countries, Portugal, Bulgaria and Greece, less than 40 % of total vkm used such “young” vehicles.

New Member States tighten their grip on the cross-trade market

Figure 6 shows the cross-trade performed by hauliers in each country in 2008 compared to 2006. The pattern which emerges illustrates clearly that the new Member States, following accession, have experienced a substantial increase in their shares of the cross-trade transport market. Poland has become the dominant player in this market with a 23 % share of the EU total. The Czech Republic and Slovakia are also strong players with 9 % and Lithuania has 8 % - just a fraction more than Germany, the largest established country. Leaving aside Cyprus and Malta, all new Member States have been gaining ground in this market since 2006, as they become a more established and better known option.

Increasing competition in the cabotage market

Table 2: Cabotage transport - million tkm

Table 2 shows the amount of cabotage undertaken by the hauliers of each country and the amount that takes place in each country for 2004, 2006 and 2008. The hauliers of three countries, Germany, Luxembourg and the Netherlands took nearly half of this market, but the newer Member States all saw significant growth between 2004 and 2008. Poland especially took a substantial share, though it remains well short of the levels the three leaders achieved. Among the other new Member States, Slovenia and Slovakia both increased their performance nearly threefold between 2004 and 2008 with the Czech Republic matching them in 2008 after recovering from a very low level in 2004. Estonia more than tripled its performance over the same four years. In terms of the cabotage performed within each country, France had by far and away the largest amount, followed by Germany at some distance with the UK further behind. However, while France has seen the level of cabotage increase since 2004, Germany and the UK have seen falls. The general tendency has been for cabotage to increase, with substantial rises since 2004 for Finland, the Czech Republic, Greece, Sweden and Denmark. As the table shows, even the newer Member States saw rises in cabotage performed in their country. Overall, this is a healthy sign of growing competition in an important and newly opened market area.

Data sources and availability

Many of the data presented in this article were collected in the framework of Regulation 1172/98 on statistical returns in respect of the carriage of goods by road. These data are based on sample surveys carried out in the reporting countries, i.e. EU Member States and Norway, and record the road goods transport undertaken by vehicles registered in these countries.

  • Italy: As road transport data for 2008 have not yet been reported, 2007 data have been used.
  • Malta: Since 2004, Malta has not reported any road transport data.
  • United Kingdom: As road transport data for 2008 have not yet been reported, 2007 data have been used. Provisional data was used for 2008 in Table 2.
  • EU-27 totals calculated in this publication refer to the transport or SBS data reported by the 27 Member States excluding Malta which is not reporting road freight statistics and SBS data.

Structural business statistics

Data for Table 1, Figure 3 and Figure 4 have been extracted from the Eurostat dissemination database, Domain ‘Industry, trade and services/SBS’, table ‘Annual detailed enterprise statistics on services (Annex 1) - (Nace: H, I, J and K)’ and table ‘Preliminary results on services, main indicators (NACE Rev.2)’.

Short-term statistics

Output price data for Figure 1 have been extracted from Eurostat dissemination database, Domain ‘Industry, trade and services/STS’, table ‘Service producer prices index - quarterly data - (2006=100)’.

Context

Economic activity

The economic activity considered here is the main economic activity of the business. Since 2008, it is reported according to NACE rev. 2, and road freight transport corresponds, in this publication, to the group H494 ‘Freight transport by road and removal services’. Previous reference years are reported according to NACE rev 1.1 and correspond to the class I6024 ‘Freight transport by road’.

Cabotage

Cabotage performed by each country sums up the cabotage performed by the hauliers of that reporting country on the territory of all other countries. Cabotage performed in each country sums up the cabotage performed on the territory of that country by hauliers from all other reporting countries.

Age of vehicle

Length of time after the first registration of a goods road vehicle, irrespective of the registering country. If the year of first registration is not known, the year of manufacture is used as a proxy. Some countries might apply age thresholds for their sampling frame and thus exclude oldest vehicles (e.g. over 20 years old) from the survey.

Number of enterprises

Is a count of the number of enterprises registered in the business register. Dormant units are excluded. This statistic should include all units active during at least a part of the reference period.

Number of persons employed

is defined as the total number of persons who work in the observation unit (inclusive of working owners, partners working regularly in the unit and unpaid family workers), as well as persons who work outside the unit who belong to it and are paid by it (e.g. sales representatives, delivery personnel, repair and maintenance teams).

Average personnel costs

represent personnel costs per employees. The number of employees is defined as those persons who work for an employer and who have a contract of employment and receive compensation in the form of wages, salaries, fees, gratuities, piecework pay or remuneration in kind (it is part of the number of persons employed).

Output prices (producer prices)

Total output price index for an economic activity measures the average price development of all goods and related services resulting from that activity and sold inside and outside of the domestic market.

Country codes used in this article.

Signs used in tables.

  • '-' = not applicable
  • ':' = not available
  • 'c' = confidential

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