Small and mediium-sized truck operators in Europe have been challenged by the rapid change in their customer base as demand for essential products soared and the volume of non-essential consumer goods tumbled. Photo credit: Shutterstock.com.

The coronavirus disease 2019 (COVID-19) has shaken up the trucking industry in Europe, with continent-wide lockdowns and deepening economic uncertainty forcing changes in the road freight product mix that some truck operators are finding difficult to follow.

Demand for truck transport of non-essential consumer goods to supply retail outlets across the continent virtually disappeared overnight as most stores were closed in early March. But at the same time, demand for essential medical equipment, pharmaceuticals, and fresh food soared through March and April.

For the larger forwarder-controlled trucking operations that cover many different product channels with a wide customer base, shifting capacity from falling demand in one area to meet fast-growing demand in another is more straightforward than for Europe’s smaller companies.

“How do you change your customer base in a month? You do not,” Jonah McIntire, CEO of road transport platform TNX Logistics, told JOC.com. “The world rolled the dice and logistics providers have had to run with the book of business they had on Feb. 1. It takes long enough to crack into new sectors in the best of times, and doing so overnight as a way to get into the only areas still moving simply isn't possible.”

According to European Commission data, small and medium-sized truck operators comprise more than half of Europe’s trucking market, and for these smaller operations, adapting trucking services to the rapidly changing market dynamics is not simply a matter of switching from the transport of one set of products to another.

Nick Bailey, head of research at Transport Intelligence, said the shock to the European trucking sector was “exceptionally rapid” as volume in some sectors fell overnight and spiked in others just as quickly.

“Logistics providers with newly idle assets were quick to recognize the opportunity to match that capacity with rising volumes elsewhere, but still needed to understand and plan for the reality of the situation — i.e., what goods need to be moved and to which standards, along which trade lanes, and for whom, among other factors — to determine how well placed they were to offer a viable solution,” Bailey told JOC.com.

“As medium-sized and larger providers switch capacity to sectors with higher levels of demand, it took time to reposition assets and drivers and plan operations, meaning supply remained more restricted than it perhaps seemed,” he added.

Adapting to a new road reality

Bailey noted that while the business was essentially the movement of palletized goods by trucks, the internal processes at logistics services providers required reorienting sales and commercial teams, possibly to sectors they were unfamiliar with, while repositioning assets and planning new routes.

“On the whole, the road freight sector has adapted well,” he said. “However, as the situation continues to develop, short-term pragmatism won’t be enough by itself.” Bailey highlighted the near-complete shutdown of Europe’s automotive manufacturing capacity that is bad news for less-than-truckload (LTL) network operators relying on the sector for base loads in those networks. 

“So while in the short-term, many operational-level challenges have been met well by the sector, it will be in the nature and character of the recovery where we’ll see the significant strategic decisions being made, and it’s through those that we will ultimately see how successfully the crisis has been managed,” he said.

Even if truck operators were able to pivot to serve the new channels of demand, obstacles remained. Despite being grouped under the European Union, member states are free to adopt their own internal control measures that, in addition to the lockdowns, included delay-causing cross-border travel bans and truck access to ports limited to the drop-off and collection of essential cargo. 

Another issue was that measures to combat the coronavirus were not uniformly applied across Europe, and some countries were affected more than others. Philip Stephenson, chairman of UK-based logistics provider Davies Turner, noted in a statement that while the European road freight market has been hit hard by the coronavirus, overall market forecasts masked significant variations across geographies and regions. 

This was also pointed out by SEKO Logistics in a recent coronavirus update that highlighted tighter checks at many border points within the European Union to prevent unnecessary travel, which was extending road transit times. 

Contact Greg Knowler at greg.knowler@ihsmarkit.com and follow him on Twitter: @greg_knowler.