The thirty-fourth edition of the Transport Market Monitor has been published. The TMM is a quarterly publication by Capgemini Consulting in collaboration with TRANSPOREON, a logistics platform that connects shippers from industry & trading companies with carriers, drivers & consignees. This edition shows that, even though the available capacity is growing slightly, road transport prices still remain at a very high level.
The Transport Price Index continued its successive increase in Q4 by another 6.0% compared to the third quarter of 2017. In relation to last year (Q4 2016) the price index increased by 14.0%. The current price index is the highest observed since the start of the Transport Market Monitor measurements. And although the Capacity Index in Q4 2017 displayed an increase of 6.4% compared to last quarter, in comparison to the previous year it shows an index level that is 23.3% lower than in Q4 2016. Over the last years, a recurring development of price and capacity index was observed, with a year-high price index in Q2 and a continuous decrease until Q1 of the following year. At the same time, the capacity index was at a year-low at Q2 and increased until Q1 of the following year.
In 2017, the trend of a declining price index and an increasing capacity index was broken. While the price index reached the usual year-low at Q1, the index had a normal increase in Q2, but afterwards continued to increase even further until Q4. In contrast, the capacity index started with a year-high in Q1, followed by a massive drop in Q2 and afterwards only a very slight but steady increase until Q4, ending the year with the lowest capacity index and the highest price index observed at this time of the year. These developments could be the result of the highest number of mergers and acquisitions in a year in the transport and logistics industry. With the ongoing scarcity of truck drivers, the industry is forced to offer available capacities at a very low price level.
With an increasing Diesel Index by 10.0% and a European Trade Flow Index (ETFI) slightly decreasing by 0.8% to €2032 billion, the Q4 the demand for trade volumes is consistently high. Simultaneously, the declining capacities led to a decrease of supplied volumes, which in turn leads to an increasing price index. Overall the observed index developments support the hypothesis from our last TMM blog of a continuously increasing price index and a decreasing capacity index for Q4 2017.
Besides decreasing capacities and increasing prices, the transport industry faces a disruption in the market offering services. An increasing number of digital forwarding companies enter the market, offering a service portfolio with the advantages of classical freight forwarders and cargo exchanges. The advantages of insured freights, low transport costs, as well as the digitalization offering via digital work flows, document handling and track-and-trace will lead to an increased competition between freight forwarders and the service portfolio offered by market competitors. Forwarders have to decide whether they want to offer only a certain segment of the value chain or if they want to expand their service portfolio as a holistic solution provider, from offering own freight capacities to digital forwarding platforms.
The coming Transport Market Monitor, with figures regarding Q1 2018, will show if the rather unusual development of the industry will continue or if the market will go back to its usual yearly development cycles. In addition, we will keep looking at the market offering of freight forwarders, cargo exchanges and digital forwarding companies.