Thursday, February 16, 2012

The Evolution of the Road Freight Industry

A Guest Article by Adam Veitch a representative of Freight Forwarding Group First European Logistics Ltd.
Shipping News Feature

UK - With the onset of the recession in the UK and the need for businesses to consolidate their outgoings, it was no surprise to see that the freight industry took a huge blow during these times. However in the wake of the downturn and the recovery stages of the recession, it may be surprising to hear that the sector is changing and adapting to in an attempt to future proof against any further unexpected economic crises. Is this perhaps the industry's way of evolving with the times and as result becoming more of a niche market?

Findings from the Department for Transport (DfT) have shown that freight transport by road is on the increase proving a larger demand for road freight services whilst at the same time illustrating that the number of operator licences being issued has decreased. This all equates to a smaller number of operators taking on larger demands of work.

Evidence to suggest this comes from the same document and includes figures showing that the average operator fleet size has increased along with the increase in the number of individuals employed within road freight enterprises, as well as findings to show that articulated lorries are growing in size.

In today's busy market, we all know the importance of customer service and delivery deadlines regarding goods being shipped in and around the UK as well as further afield; like crossing the channel and offering solutions to mainland Europe for instance. Delivery time is of the essence and a huge amount of praise needs to be sent in the direction of the dedicated teams of freight forwarders throughout the country and beyond who are coping with the increase in demand yet are failing to allow the pressure influence their excellent service.

The increase in road freight transport could be due to the advance of the internet. With online sales soaring throughout the world, the need to transport this cargo becomes more evident. According to the findings from the DfT, road freight transport has increased by 27 percent during the ten year spell between 2000 and 2010 (latest data available).

Alongside the increase of road freight transport however there has been a decrease in operator licences issued. This means that the increase in workload is growing faster than the increase in new freight enterprises to cater for the work. There were 110,000 operator licences issued in the year 2000 with only 90,000 issued in 2010, a decrease of 18 percent over a decade. The need to cater for this work has seen the average operator fleet size increase from 3.6 vehicles to 4.2 in the decade 2000-2010.

The increase in fleet size might seem as though it is paling in comparison to the increase of the workload, however when you consider that each vehicle within that fleet is managing to carry heavier loads due to advances in technology, it is no surprise to find that the growth of the freight forwarding companies is managing to keep up with the increase in freight forwarding needs - for the moment at least. The statistical release from the DfT includes figures showing that in the year 2000, 26% of articulated vehicles on the road associated with road freight distribution carried over 40 tonnes of cargo, whereas ten years later, such is the improvements in the industry, 72% of articulated vehicles carried over 40 tonnes of cargo.

All this proves the theory that the road freight industry is becoming more of a specialised trade and the competition for places in and around the top of the market is becoming more manageable as the companies involved see that the workload is becoming increasingly available. This shows that the need to compete for custom is becoming less of a problem. The industry is changing and we need to adapt to this modern way of problem solving if we are to progress as an industry and offer customers and clientele an excellent service which will see the freight companies develop repeated custom as a result.

In order to adapt to the industry shift, companies to need to learn to work together as opposed to competing for custom. We have already seen signs of once competitive rivals working as a team to offer a service in the favour of the customer. One such case study could be the merging of NFC plc and Ocean Group plc to form the supply chain giant that is Excel in 2000 (now part of Deutsche Post) and, more recently, the cooperation between five UK road haulage operators which has formed the Harlequin Logistics Group.

In order to take on the challenges that the road freight transport industry may throw at us in the future, maybe we need to set our rivalries to one side, swallow our pride and collaborate together in order to perfect our distribution efficiency rather than competing with each other.

Adam Veitch writes on behalf of First European Logistics Ltd., a UK based freight forwarding company from Burnley, Lancashire which specialises in European Road Freight Services. 

The Handy Shipping Guide is always pleased to publish suitable pieces relevant to the Freight and Logistics sector from anyone who declares their interests. Views expressed in these items reflect the author’s own standpoint, not necessarily those of HSG.