Rising cost pressures hit freight rates
Since April 2007, the new working hours regulations for driving staff have pushed up costs in the transport sector. A new comprehensive study covering a number of different segments clearly shows the impact the new regulations are having. Confirmed by internal analyses, the new cost situation means that freight charges in the consolidated goods segment will have to rise by an average of 6.4% for overland transport services.
Up to now, the rise in diesel and energy prices, as well as legislation such as the introduction of motorway toll charges in Austria, Germany and the Czech Republic, have been the main factors that have significantly changed the cost situation in the transport industry.
On top of these factors, the new regulations on working and driving times that came into effect on 11 April 2007 have also had a major effect on costs in the transport sector. The Fraunhofer ATL working group for logistics technologies has undertaken a detailed study of various transport systems in truck traffic. The study clearly shows the impact the changes are having. The new working regulations for drivers have been directly responsible for pushing up costs – across all transport systems – by an average of 9.4%.
Looking at systems transport services in greater detail, the study reveals that there are significant differences between the situation in local and long-distance transport. While systems long-distance transport has seen costs rise by only 3%, due to the high degree of structuring there, costs in systems local transport have rocketed by 19%, since these services cannot be planned anywhere near as efficiently.
Many external factors influencing costs run quite contrary to the efforts made by scheduling managers to optimize activities. Two of these are the completely overstretched road networks, especially in major conurbations, and the long waiting times in deliveries. The restructuring of upstream driver activities is also having an effect on cost structures. The reorganization of processes in transshipment warehouses will lead to the need for more personnel. On top of this, in many cases buildings have to be adapted. The new working regulations mean that more lay-bys are needed on major highways, and at the same time force the network operators to provide more truck parking facilities at their branches. The demand for space is considerable, bearing in mind the vehicle fleets needed to serve urban areas with local services plus the higher demand for space for long-distance vehicles. There, too, the number of trucks at transshipment bases is set to rise, since even drivers carrying direct loads will have to drive to the depots if their direct consignees are unable to unload goods on schedule due to queues at their ramps.
Rising cost pressures hit freight rates
Even today, the industry expects that a significant shortage of drivers will combine with productivity losses to increase costs in the industry. For years now, the truck driver’s profession has been becoming less attractive. And if entry to the profession is now made more difficult by age barriers, additional tests and a lack of training opportunities, there will be even less chance of recruiting young people. The economic consequences of such shortages are well-known. To make matters worse, load space cannot simply be increased to respond to the shortfalls that have been emerging for some time now. This applies even to geographical regions which, so far at least, have had sufficient load capacity.
Companies right across the board do not merely face these external cost pressures. They also have to cope with internal rises in costs, such as infrastructure costs for the ongoing development of their networks, as well as investment in personnel development and technical advances. If we consider the kinds of present and future demands facing companies, we can see that organizations would be well-advised not to keep their cost base artificially low simply by exploiting short-term rationalization advantages. A number of recent examples in the logistics industry clearly illustrate this.
We are confident that we will be able to work together with our customers in a spirit of partnership to arrive at a solution that promises a strong future for all concerned. It is, though, already clear that analyses of cost structures will in future focus on an even greater number of processes, and that concentrating on freight rates alone will not prove to be the way forward.
eLetter overview 04/2007
Rising cost pressures hit freight rates
