What next for the European Freight industry?

Inflation and geopolitical crises are having a major impact on the fortunes of Freight Forwarders across the European market. That’s according to a recent survey by DP World, which surveyed companies within the industry during October.

Having been analysing the European Freight Forwarding market for more than three decades, Plimsoll can concur that market conditions are indeed having a significant impact on the performance and financial stability of forwarders with a quarter of companies in a financially weakened position.

One of Plimsoll’s Irish customers, operating in the forwarding market recently commented “we have zero time to think anymore….largely due to Brexit”. A recent survey by Haulage Exchange showed a third of hauliers avoid working with the Food & Drink sector due to issues surrounding Brexit.  The impact of additional costs in arranging shipments into and out of the UK has become a bureaucratic minefield. Is that driving the increase in the number of major forwarders that Plimsoll see making a loss in this year– around 20% of all companies across Europe.

Climate change policies and access to staff are also exerting pressure on the ability of forwarding companies to create and maintain seamless supply chains. The inflation spike we are experiencing is not forecast to abate until at least Autumn 2023, leading many to reassess their forwarding operations. An example can be seen in air freight contracts. Forwarders are continuing to opt for short-term airfreight deals in the hope of future declining prices and better margins.

Latest statistics show that in November air cargo volumes declined 8% year on year. It is the ninth month in a row that demand has fallen. Operational capacity appears to be in a period of flux as companies decide how best to return to profit in an increasingly fractious world.

Plimsoll has just released its latest findings on the European freight forwarding market to help business leaders spot those companies that are least equipped to deal with the malaise. We also want to highlight opportunities for growth and improved prospects, in these turbulent times.

Our latest assessment of the thousands of leading freight forwarding businesses around the world includes a health rating based on 5 years of financial data. It shows each company’s ability to weather the current crises.

Based on the latest Plimsoll Analysis here is a breakdown of ratings:

Rating

% of companies

STRONG

56%

GOOD

10%

MEDIOCRE

8%

CAUTION

6%

DANGER

20%

 

More than half of the companies analysed by Plimsoll have been rated as Strong. This indicates that they are balancing their commercial and financial health well in the current climate. However, over a quarter of companies have been rated as Caution or Danger. These companies need to make urgent changes to their financial performance if they are to survive the coming years.

The Plimsoll Analysis also shows a growing divergence in performance by region. The following is a breakdown of the percentage of companies to have been rated Caution or Danger by leading country:

Country

% of companies rated Danger

Holland

40%

Germany

35%

Ireland

33%

UK

28%

European

25%

Finland

24%

Norway

22%

Denmark

20%

Portugal

19%

France

17%

Italy

13%

Sweden

13%

 

The freight markets of North Western Europe (excluding France), seem to be the worst affected by recent macroeconomic conditions. The Nordic and Southern markets seem to be have been less affected. With such large trade flows, particularly between Ireland and German into the UK, is this due to Brexit or are other, more powerful forces at play?

The latest Plimsoll Analysis – European Freight Forwarding is available now. With the UK already in recession and continuing economic challenges seemingly ever-present, the Plimsoll Analysis provides a welcome health check on the UK’s leading Freight Forwarding companies. We can show you the companies that are best prepared to sail through these choppy economic times smoothly and who may sink in 2023.

For more information about the Plimsoll Analysis just click here.

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