Economic downturn slams brakes on global trucking sector

The road transport sector is suffering in the wake of the global economic meltdown, according to an industry lobby group. That has meant a sharp jump in bankruptcies and job losses - 140,000 cuts in the EU and some 200,000 in North America, according to data from the last quarter of 2008.

The International Road Transport Union (IRU) forecasts that 2009 will not be much better for the sector and has advocated that governments and the EU adopt more business-friendly policies that take some of the burden off an industry that is already suffering.

It isn't as if goods are not still being moved from point A to point B on the highways and byways, it's just that fewer of them are as the globe struggles through an economic downturn.

The severity of the fall in business varies from country to country and depends on the products. Auto and heavy equipment transport has been most hard hit while the transport of perishable goods has remained fairly steady.

Spain, for example, was especially hard hit as the downturn took hold there last year. Since Germany lies in the center of Europe and is a transit country, the blow has not been quite as devastating.

Trucking company bankruptcies have jumped

Still, while German car drivers often complain about the number of trucks on the autobahn, they have a little less to moan about these days. In 2008, 19 percent more road transport companies went out of business than the year before. It is estimated that this year, trucking companies in Germany will reduce their capacities by up to 30 percent.

"What we have seen since the beginning of the year is rather dramatic," said Jens Hügel, head of sustainable development at the IRU.

One large Dutch road shipping company, which wanted to remain anonymous, said its volume fell from 30 to 40 percent in the first quarter of this year over the previous one. While the 2nd quarter has brought a little more stability, there is still overcapacity in the market, according to the company's president. He said his firm will likely survive the downturn, but many others won't. In his estimation, it will take three to five years for business to get back to where it was in early 2008.

Business-friendly change wanted

The IRU, which has 1809 members in 74 countries, has put forward a long list of way in which governments and authorities in the face of the downturn could make the business environment more friendly to their road transport sector.

"In this time of global economic crisis and so as not to repeat the historical errors of the Great Depression of the 1930s, where the economic crisis was exacerbated by the halt in transport and trade, it is essential that governments give top priority to facilitating road transport and reducing the restrictions and unjustified fiscal burden it bears," said IRU Secretary General Martin Marmy earlier this year.

Germany has not been as hard hit as some countries, like Spain

The group wants countries to reduce taxes placed on transport firms and to roll back environmental regulations that it says are unnecessary and bad for business. It wants more investment in roads and a stop of what it calls protectionist barriers that adversely and unfairly affect the sector.

"We have seen that billions of dollars have been put into the banking industry. What is the effect of this? The casino of Wall Street has been opened. But not much has been done for the road transport sector," he said. "If road transport comes to a half, the economy comes to a halt.

The lobby group is especially critical of the EU's Eurovignette Directive, which charges heavy goods vehicles on EU roads.

"It penalizes road transport and as such penalizes the economy as a whole," Hügel said.

They doth protest too much?

But others say the economic climate is affecting everyone negatively and that using the downturn as a reason to roll back important environmental and tolls that fund infrastructure projects is disingenuous.

"To give the impression that road transport is disproportionately effected by the crisis or generally unfairly treated just does not correspond to reality," said Andreas Geissler of the Pro-Rail Alliance, a group which advocates increased use of rail transport.

Some say the trucking industry is not hurting more than others in the recession

"If you compare the different modes of transport, road traffic has actually won some market share recently," he added.

His group is against a proposal by Germany's business-friendly Free Democrats to stop a proposed increase in German road tolls in January 2010.

“Rail freight transport is also suffering from the economic crisis, but no politician is saying that freight trains should be allowed to travel without having to pay track charges,” said Dirk Flege, Managing Director of Pro-Rail.

He pointed out that, in spite of increased tolls, road freight transport still had a competitive advantage.

Author: Kyle James

Editor: Michael Knigge