While some factors are completely out of the control of the logistics sector, road transport providers are still able to manage the problems effectively, possibly even eliminating them.
Mobility package changes
Undoubtedly, one of the most pressing matters currently relevant to the European road freight market is the upcoming Mobility package changes, which are set to go into force at different dates. The most imminent one will come into effect on February 21, 2022, directly addressing driver rest rules, the return of trucks to their country of registration, and changes to cabotage rules.
According to the European Commission (EC), the change to return of transport rules is done «in such a way that they are able to return (‘home’) within each period of three or four consecutive weeks (depending whether the driver had two consecutive reduced weekly rests).» Furthermore, the EC pointed out that logistics companies are «obliged to offer to the driver a possibility of return to either his or her place of residence or to the employer’s operational centre where the driver is normally based, through an appropriate organisation of the work.»
As a result, the average working trips of drivers are reduced to a maximum of four weeks and the industry will need to hire more drivers to compensate for the difference. However, with the road freight transport sector already facing significant driver shortages, some carriers might struggle to deploy their trucks as drivers have to return every four weeks.
The new cabotage rules will also allow countries within the European Union (EU) to apply cabotage restrictions to road legs for international combined transport (CT), such as rail-to-road-to-warehouse if those road legs do not cross a border.
According to a study by the EC, the new rules should affect about 32% of total CT volumes, «meaning that for about a third of the CT activities CT operators should make different arrangements to comply with the new rules,» noted the report by the bloc’s Commission.
«A quarter of operations would use the new cabotage regime for CT road legs by rotating drivers between international road-only operations and CT road legs. In the remaining quarter of operations, either the road leg would be lengthened to a different terminal across a border (as cabotage restrictions do not apply to border-crossing operations), or the entire CT operation would shift to road-only transport,» continued the EC’s executive summary. The report also mentioned that «8% of rail-road CT operations could fully shift back to road-only transport,» which would only increase the strain on operator fleets and would require additional drivers.
Partnering with a company that not only has a large fleet of trucks and trailers, as well as a big driver pool, will be essential, as both trucks and drivers to drive them are in great shortage.
Critical supply issues
As COVID-19 affected economic activity across the globe, some industries re-adjusted according to the demand. One of those was the vehicle manufacturing industry, which is now facing a critical shortage of microchips due firstly, chip factories slowing down production, and secondly, automakers ordering less of them due to the economic downturn.
Now, as a result, truck makers were forced to slow down production. As recently as August 30, 2021, Scania has come out and said that it is slowing down production temporarily, as reported by Reuters. The company‘s South American plants will completely pause production the week starting September 1, 2021. In April 2021, when Volvo disclosed its financial results for Q1 2021, mentioned that Q2 2021 would include between two and four weeks of manufacturing downtime in its factories in the United States. As a result, prices even for second-hand trucks have grown, due to operators still expanding their fleets as goods continued to move across continents.
The perfect storm scenario was capped off with a driver shortage throughout Europe.
«While the COVID-19 pandemic has challenged supply chains and logistics in unprecedented ways, it has further exacerbated the already alarming issue of driver shortages,» commented a Transport Intelligence report on the driver shortage experienced in the continent. According to the company’s estimates, the European driver market was 400,000 drivers short.
The problem, as the market research firm pointed out, is not exactly new. However, as Europe‘s economy began to recover as lockdowns eased accordingly to vaccination rates in the continent, once again scaling up the road freight transport capacity was more difficult. After all, despite continuous growth for a decade starting in 2010 was stopped by the pandemic, as per Statista, the size of the road freight market in Europe declined from €350.5 billion in 2019 to €324.5 billion in 2020, with the forecast set for the market to recover to €340 billion by the end of 2021, still below its prie-COVD levels. The drop of 7.4% between 2019 and 2020 is similar to the drop in the General Domestic Product (GDP) the European Union (EU) saw in 2020 (-6% compared to 2019), according to Eurostat. In July 2021, the statistical office of the EU forecasted the growth of the bloc’s GDP to be 4.8% in 2021, while in 2022 it would grow by 4.5%.
Thus, scaling up capacity for road freight providers could be a struggle, as they not only lack the required equipment to continue growing but can also showcase issues hiring enough drivers to drive that equipment. Considering the fact that, as Transport Intelligence concluded that the shortage is «set to get worse, despite the many strategies that are being implemented,» and the economy is set to get a boost due to the continent opening up, scaling up will be crucial. In particular in the last few months of 2021, when the demand for road freight services reaches the yearly all-time high.
While all new truck orders are delayed, getting into the queue to receive a fresh vehicle out of the factory is still difficult. That is why such operators that made huge orders for HGVs prior to the pandemic will benefit from their orders if they have kept them, as they will be able to receive their trucks while delayed, but at least within a reasonable timeline.
Such operators as Girteka Logistics, which updates its fleet of vehicles constantly to operate the trucks with the latest available technology and owns all of its trucks, can have some leeway in keeping some of the older, around 3-year-old vehicles, to circumvent the current shortage in trucks. Furthermore, despite the difficult situation within the driver market, Girteka Logistics still plans to hire around 7,000 new drivers in 2021, to grow as well as to keep up with the current fleet requirements and the rotation of truck drivers.
A lingering threat?
While the continent has successfully continued to vaccinate its population against COVID-19, with the EC announcing that 70% of the EU‘s adult population was fully vaccinated on August 31, 2021, the risk is always present that with the Delta variant, as well as the threat of new viruses, the continent could once again enter either into a complete or a partial lockdown.
The EC’s President Ursula von der Leyen commented that the vaccination numbers are «a great achievement,» she warned that «the pandemic is not over.»
«Given the threat of new variants, it is important to continue ensuring the availability of sufficient vaccines, including adapted vaccines, also in the coming years. That is why the Commission signed a new contract with BioNTech-Pfizer on 20 May, which foresees the delivery of 1.8 billion doses of vaccines between the end of the year and 2023. For the same purpose, the Commission has also exercised the option of 150 million doses of the second Moderna contract,» further read the EC’s announcement about the fact that over 70% of the adult population is now fully vaccinated.
While for the past few weeks cases have stabilized, per the European Centre for Disease Prevention and Control (ECDC), they have begun to rise once again between Week 26 and Week 33, as the Delta variant took over the continent. «We are far from out of the woods in terms of the pandemic ending and sadly in many countries in our region, we’re seeing a significant rise in cases associated with the spread of the highly transmissible Delta variant,» commented the World Health Organization’s Regional Director for Europe Dr. Hans Henri P. Kluge on July 23, 2021.
The threat of new lockdowns can once again disrupt the supply chains across Europe. While the potential to do so is much lower due to the increased rates of vaccinations, the risk is still there. Hence, it is worth investing in a partnership with a road freight transport provider who ensures steadily available services, be it with additional safety measures (like continuously providing protective equipment to their drivers), or advocating drivers to get vaccinated. Such providers as Girteka Logistics continued to move goods in and out of certain regions during the peak of lockdowns, providing the much-needed know-how throughout times of uncertainty and instability.
