Home / News and Updates / Global freight overview - road freight

Global freight overview - road freight

Source: Freight Waves


March 27, 2019 Todd Maiden

On a call with freight procurement intelligence company, Beroe, Inc., Senior Analyst of Freight & Transportation Shijith Ajithkumar provided insights on the firm’s outlook for the global airfreight and road freight markets.

Beroe provides freight market research and procurement intelligence for more than 10,000 shippers worldwide.

In part one, the company’s global road freight market report is featured. “Category Intelligence on Road Freight Services” provides a demand outlook for global road freight by region along with insight on cost inflation, capacity and pricing.

The firm expects to see global road freight grow at a compound annual growth rate, or CAGR, of 4 to 5 percent, but notes that fuel prices, trade tensions and other headwinds could have an impact to its forecasted demand.

“With the increase in e-commerce and global trade, the Asia-Pacific region and parts of Africa are expected to be the future growth-driving markets for road freight service, but the impact of Brexit and U.S.-China trade sanctions, as well as surging fuel and labor costs, means that market volatility is expected over the next several years,” according to the report.

The expectation is for the Asia-Pacific road freight market (which serves the retail, agricultural products, oil and gas and automotive industries) to grow at a 6 to 8 percent CAGR and for the Middle East-Africa market to experience a 4 to 5 percent CAGR. This is better than the firm’s forecasted growth rates of 2 to 3 percent in Europe, 3 to 4 percent in North America and 4 to 5 percent in Latin America.

The report explained further, “With retail sales projected to increase by 5 to 6 percent in 2019, freight transport volume and demand will experience rapid growth.”

“Shipping demand is increasing worldwide as global gross domestic product continues its solid growth trajectory,” said Beroe’s Vice President, Research and Indirect Services Valekumar Krishnan. “We expect to see a dramatic expansion of the air and road freight markets over the next few years, particularly in Asia and Africa. With retail e-commerce growing at 14 to 15 percent every year, we’ll also see new demand for logistics in this market, and digital innovation will be more important than ever for air and road freight suppliers looking for a competitive edge.”

In short, the regions with less mature markets are likely to see the outsized growth rates. These markets are becoming more developed, but are less likely to see headwinds from driver shortages and regulation.

However, the freight carriers in the Asia-Pacific and Middle East-Africa markets face several difficulties. The cost structure is more favorable for shippers. Large- and medium-capacity buyers have buying power as trucking in these two markets remains a highly fragmented industry and a fewer number of shippers control a large portion of the available freight.

Further, additional cost concerns are mostly centered around fuel prices (new taxes on diesel in Asia, for example) and there is a growing concern that higher fuel prices will drive increased competition from the freight railroads.

Get Ahead with AI-Enabled Market Insights Schedule a Demo Now

Schedule a Demo Now