Supply Chain Transformation Blog

Supply Chain Transformation Blog

Opinions expressed on this blog reflect the writer’s views and not the position of the Capgemini Group

High capacity and all-time low diesel prices further decrease European transport price index

Category : Supply Chain

All statements are based on information taken from the logistics platform TRANSPOREON. The platform connects shippers from industry & trading companies with carriers, drivers & consignees – and optimizes and accelerates logistics processes. Currently more than 1.000 industry and trading companies, more than 55,000 carriers and more than 150,000 users from 100 countries are connected via the platform. Data is anonymously exported from the platform and aggregately analyzed by Capgemini Consulting. Based on this data, the Transport Market Monitor is published. The full report can be downloaded here.

The bombshell of the twenty-seventh edition of the Transport Market Monitor, was the lowest ever captured diesel price index (the Transport Market Monitor started in 2008) with a current diesel price level of 59.1 index points. Correspondingly it was not surprising that the price index continued to decrease, reaching a level of 91.5 or 3.2% less than Q1 2015. But the diesel price was not the only aspect influencing the price index, as the Transport Market Monitor further indicated an all-time high for capacity. 

In the last entry of this blog, I argued that the cost benefits of the current diesel prices are not equally shared between forwarders and consignees. The latest Transport Market Monitor supports this argument further. The current price index/capacity ratio hasn’t be reached since Q1 2014. The diesel price index at that time was 102.8. One could therefore argue that the current price drop was mainly influenced by the available capacity and not by the reduced diesel costs for forwarders. I would argue, that the forwarding companies are still benefiting the most from the current cost advantages and that further price adjustments are necessary. I will continue to monitor this development in the upcoming issue of the Transport Market Monitor.

Another interesting aspect from the latest Transport Market Monitor is the economical outlook for Europe. The trade flow index has dropped by 4.3% indicating a rather worrying future for the European logistics industry. The current trade flow level nearly matches the one from Q4 2013. The “TOP100 in European Transport and Logistics Services” study, conducted by the Fraunhofer Institut, (http://www.scs.fraunhofer.de/de/studien/logistikmarkt/top100_1516.html) found that the total logistical revenue in 2013 was €20bn less than the revenue achieved in 2015. If the trade flow index stays on the same level, or even drops in the upcoming months, 2016 will be a challenging year for the logistics industry. We are currently recognizing a certain cut-throat competition in the industry as companies will fight for market shares. Additionally, the situation might lead to hostile takeovers that possibly change competitive structures.

Personally, I think, the outlook for the logistic industry is currently kind of unpredictable and the upcoming Transport Market Monitors will therefore be very interesting. Decreasing revenues will challenge all companies involved to either reduce costs or define new (digital) services. I am looking forward to hear your opinion regarding these interesting topics. Feel free to contact me!   

About the author

Ralph Schneider-Maul
Ralph Schneider-Maul
Ralph Schneider-Maul leads Capgemini Consulting's Supply Chain practice in DACH (Germany, Austria, and Switzerland) and has experience across several industry sectors including industrials, automotive, aviation, and manufacturing.

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