Transportation costs could increase as much as 20-30 percent in Europe says CEO of Girteka Group

Edvardas Liachovičius, the chief executive officer (CEO) of Girteka Group, the largest asset-based logistics company in Europe, speaks about the current situation in the market, exploring tendencies and the most important questions that road freight transport companies have currently.

He said: “Throughout the 25 years of working in the industry as an executive, I have seen and experienced a lot of different market situations in logistics. Yet the current state of affairs is truly one of a kind – while there is a huge demand for transport services, the industry is still struggling, as truly unique economic conditions are present in Europe.

“Despite the temporary setback in March 2020, road freight transport companies’ trucks have not stopped moving since. The average prices for services across Europe have risen correspondingly. You would think that this would benefit carriers, making it a carrier market – yet on the contrary, as the global economy attempted to adapt to the swings in demand for goods, the prices for the most important materials continued growing. That included oil, and as the price for the commodity began to climb, so did the operating expenses for transport providers.”

He added: “Despite consumers spending more than ever during the pandemic, resulting in rising demand for Full Truck Load (FTL) capacity, carriers had to deal with inflation. Inflation meant rising costs for necessities for everyone, including truck operators.

“Whilst the most obvious item whose price has risen over the past year or so is fuel, other operating expenses have gone up as well, ranging from salaries, administrative costs, to basic truck and trailer maintenance.

“More than one-fifth of transportation costs are related to fuel. Combining this with the fact that, per the EC’s Weekly Oil Bulletin, fuel prices have reached and plateaued at their record-high prices of around €1,500 per 1,000 litres of fuel in the European Union (EU), with the Eurozone’s average prices being around €1,530 per 1,000 litres of fuel, the largest slice of the operating cost pie has only continued to grow. Even rising gas prices have a negative influence on the average logistics company, as the price of AdBlue has continued to climb due to the status quo with natural gas.

The pandemic has affected the industry’s administrative costs as well, with the issuing personal protection equipment, including masks, gloves, and disinfectant.”

Trucking companies have also experienced growth in operating costs due to the fact that there is a clear lack of human and vehicle resources. While Europe has experienced a driver shortage like never before, truck manufacturers have also struggled to produce enough trucks for road transportation providers globally, especially as there is a shortage of semiconductor chips that are responsible for various systems on trucks.