Truck Cooperation ELVIS Demands More Insight from Shippers

In light of the tense transport market, the European Cargo Alliance of International Forwarders AG (ELVIS) calls on shippers to show more understanding for the unusual market situation and to no longer resist urgently needed price adjustments. As the volume of cargo has long exceeded the available freight capacity, the transport market has fallen out of sync.

(Alzenau) “Unaware of and disregarding market mechanisms, large shippers have over the years squeezed the last percentage point from forwarders and carriers through tenders and cherry picking. It is no wonder that transport companies now lack the capacity to compensate for the high volatility of the market,” criticizes ELVIS board member Jochen Eschborn. Clients must finally understand that logistics providers can only fulfill the important buffer function for the economy if they are paid adequately. Many companies see the resulting loss of quality as a failure of their transport service providers, completely ignoring that they largely bear the responsibility for the causes themselves.

Four Times More Cargo than Available Trucks

Where the ruinous price competition in the transport sector leads can currently be seen particularly clearly in the spot market. According to the figures from the transport exchange Timocom, the ratio of posted cargo to offered trucks on domestic routes has been at an extreme level since spring this year. On average, four times more cargo is posted than trucks are available. This imbalance has significant effects on prices. For May alone, the increase rate compared to the previous month is 8.4 percent according to the Transport Market Monitor from Transporeon.

In contract logistics, however, the high demand for transport has so far only had a limited impact on price development, according to ELVIS. Especially small and medium-sized forwarding companies and carriers continue to have significant problems passing on obvious and justifiable cost increases – particularly in fuel. Furthermore, the ongoing shortage of driving personnel, coupled with COVID-related supply bottlenecks for tractors, trailers, and spare parts, makes it difficult for companies to quickly adjust their capacities to the increased demand.

Logistics Must Be Recognized as Part of the Value Chain

“In this context, shippers would do well to abandon their blockade mentality and finally pay fair and adequate prices for good services,” demands Eschborn. “Otherwise, significant market concentrations are to be expected as a consequence.” Sooner or later, substantial price adjustments will occur anyway. Until then, however, significant disruptions in supply chains should be anticipated.

Eschborn: “Logistics must finally be recognized as an inherent part of the value chain. Only in this way can the performance of the German economy be sustainably secured.”

Photo: © ELVIS