Economic recovery is doing the Dutch transport sector a world of good, with 2014 expected to bring moderate growth of sales in money and volume terms. To sustain this growth trend, the sector needs to make innovation, cooperation and flexibility a part of its makeup.
Early adaption to technological and digital trends is becoming increasingly important. At the same time, transport must improve supply chain transparency in order to make the sector more future-ready. These are the conclusions presented in ABN AMRO’s 2014 sector update 'Visie op Transport en Logistiek' which appeared today.
Domestic road transport volumes set to expand for the first time in six years
In 2013 goods transport companies turned over slightly less, with volumes marginally down and average prices lower. The uptick in international transport volumes – which account for 20 per cent of total volumes – was insufficient to make up for the decline of domestic transport volumes. ABN AMRO expects domestic road transport volumes to start expanding again in 2014 after six years of decline. Large companies with more than 50 trucks will be the first to feel the difference. These companies own around 40 per cent of the country’s overall road transport capacity, but because they outsource work on quite a large scale, they actually control between 60 and 70 per cent of total volumes. This means it will take longer for recovery to feed through to the rest of the carriers. ABN AMRO projects continued pressure on the market share of domestic road transport in the years ahead. To enable much-needed investments in vehicles and IT, however, profitability must improve. This could be achieved through cooperation with other road transport players and providers of other transport modes.
In a competitive market, carriers need to gear up
In 2013, Dutch road transport companies saw their sales decline by almost one per cent. Goods transhipment volumes in Rotterdam declined and imports also disappointed. In 2014, ABN AMRO foresees modest recovery of sales in money and volume terms. The general perception is that carriers control the transport supply chain, but in ABN AMRO’s view their dominance is on the wane. Because carriers increasingly possess assets of their own such as warehouses, they have become more sensitive to cyclical trends, with low rates potentially increasing pressure on margins. Moreover, they face fierce competition. In this competitive market, good relationships with customers are indispensable. Arrangements where various parties each bear responsibility for a part of the goods flows are not always workable. ABN AMRO sees potential for carriers to make goods flows more efficient for shippers and ease their burden by taking care of everything to do with logistics.
Transparency and innovation key to sustained growth
The return to modest growth is a bit of good news for the Dutch transport sector. Profitability does remain an issue, however. Rates are still too low, except among larger players at one end of the scale, and small, highly specialised carriers at the other. To improve their collective market share and market position, transport companies need to keep innovating and responding to new developments. 3D-printing, for instance, will in the future enable localised, on-demand production, and that means lower inventory levels and shorter hauls. Another, more topical trend involves companies moving their production facilities in distant low-wage countries closer to their home market: in other words, nearshoring. "Large fashion chains are shifting their production from China to Europe – to Turkey or Portugal, for example – to be able to respond more swiftly to demand," says Bart Banning, Sector Banker Transport and Logistics at ABN AMRO. "Companies that position themselves early on to benefit from this trend and offer flexibility in their organisation can gain an edge over their competitors. Responding to changing logistical needs and investing in transparency across the supply chain will lift cooperation between all parties in the transport market to a higher strategic level."