Road Freight Services

Global Road Freight Industry Outlook

• The global road freight market was estimated to value ~$3.0 Tn in FY 2019, with the forecasted CAGR adjusted to 2-3% in FY 2020 due to the impacts of the COVID-19 pandemic.
• Western Europe, North America, and Australia have a high shipper and supplier maturity given high advanced technology adoption.
• Owing to the increase in e-commerce and global trade, Asia Pacific (APAC) and parts of Africa are expected to be the future growth-driving markets for road freight services.
• Countries including China and India are home to major automotive manufacturers.
• Moreover, the rising internet in developing regions in APAC is further auguring well for the road freight transport industry.

Global Road Freight Industry Trends

• Buyers are increasingly looking for end-to-end supply chain solutions from service providers.
• Suppliers are enhancing themselves to meet the demands of the buyers by offering them value-added services in addition to transportation services.
• Rising urban traffic is pushing the demand for intermodal transportation.
• The aim of zero-emissions and the sharing economy need cooperation on a new scale; road freight transport companies are likely to own the towing vehicle only, with semi-trailers and trailers becoming part of general-usage equipment available at different locations.
• Further, given stringent environmental norms, players in the road freight market are turning to alternative fuels such as biofuels and electromobility.

Global Road Freight Drivers and Constraints

Drivers

Retail Sales:

•  Retail sales will increase by 5–6 percent, which will in turn drive the demand for trucking
• Retail e-commerce is growing at 14–15 percent per annum, which will create new demand for logistics, particularly in metropolitan areas

Increasing Cross-border Trade:

• Cross-border trade activities involve the sales and purchase of services and goods across overseas land borders. 

• It enables companies to expand their geographical and demographic footprint. This has encouraged various countries across the globe to boost their trans-border trade.

• The presence of several landlocked countries, increasing trade activities, liberalization of cabotage, and better discrete income will drive cross-border road freight transportation.

Rising Tech Adoption

• Market players are equipping their road freight services with innovative technologies such as hybrid powertrains, RFID tracking, and predictive monitoring to improve the efficiency of intercity transport.

• They are leveraging algorithm-driven pricing structures and a digital broker application to match freight supply with demand, allowing consumers to find available freight capacity at competitive rates.

Transport Infrastructure:

• An efficient transport sector with advanced infrastructure is an important element of any economy, helping to stimulate development, thus cutting the lead time and costs of trucking

Global Trade Activity:

• During the last decade, increased production of high-value and light-weight goods and expanded trade among the member countries results in increased road freight transportation

GDP: 

• Because growth in GDP implies increased economic activity, there is a positive correlation between the development of freight transport and GDP, where any increase in GDP is directly related to the increase in road freight services in that region

Constraints

Fuel Rate

• Fuel prices account for nearly 30–35 percent of trucking freight rates, thus having a major impact on pricing. Fuel prices, which have been low, are forecasted to increase in the second half of the year

Shortage of Drivers:

• Driver wages account for nearly 30–35 percent of carriers' operating costs. Driver wages are expected to increase due to the prevalent shortages in the industry, coupled with a strong demand for qualified drivers and the same trend is expected to continue in countries such as the US,UK and Western Europe.

Road Freight Market Overview

The market report on the road freight transport industry reveals that large buyers have strong buyer power owing to volumes. Suppliers’ bargaining power mainly lies in their customization and value-added services in developed markets. In developing markets, large and medium buyers have strong buyer power owing to a highly fragmented industry.

Suppliers catering to foreign companies by providing sophisticated and customized services have better profit margins than other road freight services providers.

The latest business trends include hyper-customization of road transport services, on-demand delivery and smart energy logistics that cater to buyers with high market maturity.

The major cost components of the road freight transportation market include labor and fuel costs, which comprise 55–60% of the total cost. The different sourcing models in the road freight transportation market include international service providers, regional service providers, engaging with third-party logistics, hybrid sourcing model, and in-house sourcing model.

Why You Should Buy This Report

• This business intelligence report on the road freight industry provides details about the best procurement practices, pricing models and SLAs and KPIs of the road freight market.
• The report details the trucking industry regulations, cost structure and payment terms in countries such as the USA, Switzerland, the UK, Germany and India.
• It provides an overview and SWOT analysis of key companies providing road transport services such as UPS Freight, FedEx Freight, and Schneider National, to name a few.
• It offers the industry constraints and drivers, regional market outlook and Porter’s five forces analysis across various regions.
• Further, this research study contains extensive insights into factors that will impact the growth of vendors of the road freight transportation market across continents.