An interview with Carolin Dörfler, Transport Market Expert at 4flow, and Marc Kolodzick, Manager Purchasing at 4flow
Economic and political developments are impacting many industries, due to factors like labor shortages, a weaker economy and political instability. Freight carriers are also affected. What are key prognoses and challenges in the freight market? How do they affect rates? And how should supply chain managers react? Carolin Dörfler, transport market expert at 4flow, and Marc Kolodzick, manager purchasing at 4flow, researched industry trends in a survey with over 70 participants from freight carriers involved in various 4flow customer projects. In this interview, they share their insights, key results and their recommendations for supply chain decision makers.
What are some key trends right now in transportation?
Carolin Dörfler: We see that global economic and political developments are impacting carriers. Along with slow economic growth, demand for freight capacity is shrinking. This leads to significant challenges for the industry, like unused capacities, cost pressures and, ultimately, smaller margins. Then, there’s the political uncertainty – due to crises around the world, border closures or strikes are causing disruptions across the entire supply chain.
Marc Kolodzick: At the same time, the transportation industry is confronted with significantly higher costs, which increases the pressure on carriers. In addition to the downward trend in terms of demand, we’ve observed growing pressure on freight rates due to rising costs.
What’s behind the increasing costs?
Marc Kolodzick: Carriers must balance out higher toll fees. The carbon-based toll was already introduced in some EU countries in late 2023 – for example, in Germany and Austria. Other countries will follow suit in the coming years. For freight carriers, this creates a significant cost burden.
Carolin Dörfler: As in other industries, labor costs are also expected to rise due to labor shortages. Although the driver shortage has eased slightly due to decreased demand for transportation and lower freight volumes, it remains a central issue.
How are freight rates expected to develop?
Marc Kolodzick: Growing costs increase the pressure on carriers to raise their rates. But due to low demand for freight transportation, we expect only a small increase in the short term. Looking ahead to the next twelve months, we can expect more significant rate increases.
Carolin Dörfler: Still, carriers are not planning to pass the full impact of growing costs on to their customers. They’re focusing instead on securing long-term partnerships.
What strategies are carriers using to cement these long-term partnerships?
Carolin Dörfler: Above all, carriers are aiming to consistently fill their books. Ensuring guaranteed transport volumes is becoming an important strategic objective, as that’s how carriers can ensure reliable utilization of their fleets and cover costs even in an uncertain economy.
Marc Kolodzick: Strategic coordination with all stakeholders and long-term rate stability are additional goals. Here we see again that carriers are trying to ensure freight orders and cover their operating costs. To do this, they’re prioritizing security over large profit margins.
How should supply chain managers react to these developments?
Carolin Dörfler: The expected increase in freight rates and the difficult economic situation will continue to pose challenges for the transportation industry. Still, understanding the current market can give companies a competitive advantage. Supply chain managers should create transparency about their own supply chain structures and keep an eye on market developments. This also applies to technology like electric trucks and trends like sustainable technologies more generally. Supply chain decision makers should actively engage with these developments.
Marc Kolodzick: It can be advantageous to bring on external expertise via an experienced partner or use software support. This helps businesses gain end-to-end supply chain transparency and an overview of the current market.
Learn more about key developments in the European transportation industry in the 4flow carrier survey 2024.
An interview with
Carolin Dörfler
Transport Market Expert
4flow management
Marc Kolodzick
Manager Purchasing
4flow management