Road Freight Services Market Currently Estimated at $2.4 Trillion, Says Beroe Inc.
The global market size for road freight services is currently growing at a CAGR of 4 - 5 percent yearly, according to Beroe Inc., a procurement intelligence firm. With the impact of Brexit, trade volume with emerging economies would expand in the next 4 - 5 years, which would result in improved road freight activity.
Regions such as Western Europe, North America, and Australia have a high maturity for buyer and supplier verticals due to advanced technology adoption. Due to the increase in e-commerce and global trade, APAC and parts of Africa are expected to be the future growth-driving markets for road freight services.
Retail sales will increase by 5 - 6 percent, which will drive the demand for trucking and ultimately overall road freight services. Since retail e-commerce is growing at 14 - 15 percent per year, it will also create new demand for logistics, especially in metropolitan cities. However, the fuel prices are a major constraint in the road freight industry and hold nearly 30 - 35 percent of trucking freight rates.
The major cost components are labor and fuel costs, which comprise 55 - 60 percent of the total cost. The driver shortages in North America, Europe, and Australia with rising fuel costs would highly impact the overall costs and profit margins of the industry. The prevalent market wage rates for truck drivers and cleaners are expected to increase in the near future due to a shortage of skilled drivers and government regulations.
Key Findings:
Driver wages account for nearly 30 - 35 percent of carriers' operating costs, and driver wages are expected to increase due to the prevalent shortages in the industry.
Growth in GDP implies increased economic activity, which is a positive correlation between the development of freight transport and GDP. Thus, an increase in GDP is directly related to the increase in road freight services.
The threat from railways to road freight industry is high, but road transport players enjoy higher accessibility and provide customization so the threat remains between low to medium.
Global suppliers provide value-added services in addition to transportation such as warehousing, end-to-end supply chain solutions, and inventory management, which streamlines the supply chain.
With the new trucking service providers entering the market and suppliers increasing the service costs, shippers are moving and engaging with new providers for cheaper prices.
The introduction of digital identifiers for accurate tracking of consignments is the new trend on the technological front of logistics and road freight services industry.
(For more information visit http://www.beroeinc.com).
