Across the Pond: The European Transportation Market (November 2021)

Author’s Note: I was asked by Transporeon (a Talking Logistics sponsor) to take a look at what is happening in the European transportation market and they provided me with access to their Transporeon Insights market data for additional insights and perspective. I once again shared my commentary for this month in a brief Transporeon Journal video commentary. Below are my introductory remarks. I encourage you to watch the full commentary for more details on what is happening in the European transportation market.

It’s officially autumn and the weather is a bit cooler here in the Northern Hemisphere, and the days are getting a bit shorter too. But if you’re a supply chain or logistics professional, there aren’t enough hours in the day to deal with all the challenges that continue to plague the industry.

Port congestion, labor shortages, capacity constraints, material and equipment shortages — all these problems that have dominated the headlines the past few months continue today.

If you look at the Capacity Index on Transporeon Insights, for example, a reading under 100 indicates a capacity constrained environment, and the September 2021 reading was 89.8 — a 7 percent decrease from a year ago when it was 96.6, and a 16 percent decrease from 2019 when it was 107.4.

Another example is this October 17th headline from Bloomberg: “Supply Chain Chaos, Surging Costs Set to Plague Europe’s Profits.”

Jose Antonio Montero de Espinosa, head of European equities at Santander Asset Management, states in the article, “Special attention must be paid to the impact that logistical problems in supply chains, rising energy costs and upward pressure on labor costs may have on results. During the third quarter we have witnessed one of the periods with the greatest increase in inflation expectations in Europe.”

Take a look at Central and Eastern Europe, for example. As IHS Markit reports in an October 18th article, many countries in the region are facing high shortages of materials and equipment as well as labor. In particular, Slovenia, Hungary, and Poland are most affected, while Romania is doing well in comparison. Among the industries most impacted by these shortages are motor vehicle manufacturing, computer and electronics, and rubber and plastics.

According to the article, “The logistics crunch has contributed to a surge in industrial producer prices across Central Europe, further affected by labour shortages (which are driving up salaries), rising energy costs (impacted by surging natural gas prices), high industrial capacity utilisation levels, and an overstressed transportation system.”

If you’ve been paying attention, the quote I referenced earlier by Espinosa and the IHS Markit article both mention another factor that is adding cost and complexity to supply chains — that is, rising energy costs.

For carriers and transportation executives, this means rising diesel prices.

Here in the United States, for example, on-highway diesel fuel prices were $3.71 per gallon on October 25th — that’s $1.33 higher than a year ago (a 56% increase).

The situation is very similar in Europe. On the morning I’m recording this episode, I took a look at diesel prices on Transporeon Insights. This is a new metric that was introduced recently and it shows the pump price in Euro (inclusive of all taxes) for one litre of diesel fuel in the origin country of the lane selected. The diesel price is updated once a week.

Over the past 13 months, for example, diesel prices have increased 52% in Luxemburg, 51% in Germany, and 46% in Sweden.

In the past 3 months alone, diesel prices have increased 16% in Germany, 14% in Denmark, and 13% in Luxembourg.

Why does this matter?

For my answer to that question plus more insights, data, and advice related to the European transportation market, please watch the full Transporeon Journal commentary.