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Transport Market Monitor – August 2011

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The eighth edition of the Transport Market Monitor (TMM) by TRANSPOREON and Capgemini Consulting reveals that transport prices increased by +7.8% in Q2 2011 compared to Q1 2011.

This increase has led to the highest price index (103.9) since the beginning of the TMM in Q1 2008 and a faster rise than the diesel index, which only marked +5.8%.

However, uncertainty in the economic climate within Europe and the US could cause differences in the seasonal pattern usually witnessed in the last two quarters of the year.

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Transport Market Monitor – August 2011

  1. 1. Transport Market MonitorTransport prices increase to a 3-year high yearEdition: 8 (August 2011)
  2. 2. Proprietary and Confidential MaterialReceipt of this document constitutes agreement and consent to the confidentiality of its contents. This document and allinformation contained herein are property of Capgemini Consulting and TRANSPOREON.No part of this document may be reproduced by any means or transmitted without the prior written permission of Capgeminiand TRANSPOREON except with respect to copies made or transmitted internally by the client for the purpose of evaluatingthe contained information.The information contained herein is considered privileged and confidential, and its release would offer substantial benefit tocompetitors and vendors offering similar services. This material includes descriptions of knowledge, methodologies andconcepts derived through substantial research and development efforts undertaken by Capgemini Consulting andTRANSPOREON. Under no circumstance may this document or any copies or subsets thereof be reproduced for circulationexternal to the client without the express written consent of Capgemini Consulting and TRANSPOREON.Therefore, it is the position of Capgemini Consulting and TRANSPOREON that the use or release of the information containedin this document for purposes other than an evaluation of its contents as a basis for internal product direction purposes isprohibited, and the materials herein are not considered subject to release under the Freedom of Information Act. The client mayretain this document and associated materials provided with this document for internal use.© Capgemini/TRANSPOREON 2011Capgemini Consulting is the strategy and transformation consulting brand of Capgemini Group 2
  3. 3. Transport prices increased faster than diesel costsThis is the eighth edition of the Transport Market Monitor. It outlinesdevelopments in European road transport rates and contains the latest This report is the eighthfigures including the second quarter of 2011. edition of the Transport Market Monitor. Each• The price index increased by 7.8% in Q2 2011 (index 103.9), quarter, a new edition will compared to the price index in Q1 2011 (index 96.4). outline the developments during the past three months• Compared to the index level of the previous year, Q2 2010 (index and reviews additional 100.9), the price index increased by 3.0%. themes in transportation.• The diesel index increase was 5.8% in Q2 2011, compared to Q1 2011. This increase is lower than that of the overall transport All indices in this report are price. based on the logistics• Another factor with high impact on transport prices is the capacity platform TRANSPOREON, index, which decreased by 34.4% in Q2 2011 (index 66.6), which handles a yearly compared to Q1 2011 (index 101.6). transport volume (different truck types, mainly FTL and• The price increase in Q2 is a seasonal effect that we also LTL) of more than €2 billion, monitored in previous years. It is caused by relatively higher covering all European demand for transportation in Q2 compared to Q1. countries. Information is• The development of the price and capacity index over the next anonymously unlocked from the platform and analysed by two quarters may be influenced by the development of the current Capgemini Consulting. economic situation in Europe and the USA. The TMM monitored a decrease in the price index and an increase in the capacity index in Q4 2008, after the start of the financial crisis in May 2008. It’s The figures in the Transport Market Monitor date back to difficult to predict what the outcome of this will be therefore we January 2008: the earliest will closely monitor the developments within the financial market point of measurement of the over the next few months. index figures. For all indices,• Both the market dynamics and the expected cost increase of the average figures of the 6 transportation emphasize the need to monitor transport price month period January 2008 developments very closely, to mitigate the risk of any unexpected till June 2008 have been set as the basis for comparison negative impact on company results. (Index 100).These are the conclusions of the Transport Market Monitor by TRANSPOREON and CapgeminiConsulting, a quarterly publication, which aims to track transport market dynamics.Capgemini Consulting is the strategy and transformation consulting brand of Capgemini Group 3
  4. 4. Prices increased to the highest level since the start of theTransport Market MonitorThis section of the Transport Market Monitor outlines the quarterly The price index is calculateddevelopments of the price and capacity index, based on a time span by comparing the averagefrom 2008 until the second quarter of 2011. price per kilometre over time.The price index (see figure 1) increased by 7.8% in Q2 2011 (index103.9), compared to the price index in Q1 2011 (index 96.4). Also The Capacity Index is ancompared to the index level of the previous year, Q2 2010 (index indicator for “available100.9), the price index increased by 3.0%. capacity”, the ratio between absolute demand andThe price increase between Q1 and Q2 of 2011 is a seasonal effect capacity. The capacity indexthat we also monitored in previous years. It was caused by a is calculated by comparingrelatively higher demand for transportation in Q2 and the effect of the average number of bids in response to a transportvarious holidays like the Easter weekend, which compressed demand request over time.in shorter working weeks. Therefore, shipped volumes are higher dueto the seasonal effects typically experienced in various industries. Q1is clearly low season, followed by higher volumes in the second quarter. The spring period also impactstransport volumes in different industries such as construction. Higher demand for transportationdecreases the level of available capacity and has an upward effect on price.Transport prices increased higher than the diesel price in Q2 2011: the diesel index increase was 5.8%in Q2 2011. This clearly indicates the impact of the decrease in available capacity: the capacity indexdecreased by 34.4% in Q2 2011 (index 66.6), compared to Q1 2011 (index 101.6).Figure 1: Price and capacity index, quarterly (Q1 2008 – Q2 2011) Price and capacity index (quarterly figures) 110 210 103,1 103,8 103,9 105 102,1 190 100,9 101,7 100 98,6 170 96,9 96,4 Capacity index 94,6 94,8 Price index 95 150 89,9 88,9 90 130 85 83,5 110 80 90 Price 75 70 index Capacity 70 50 index Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111 Q211In 2009 and 2010 we monitored the trend that the price index increased during Q3 and Q4, but lesssteep than in Q2. However, the first indications for the outlook of Q3 20111 is that both transport priceand diesel index is decreasing. This, in combination with the unknown developments in the Europeanand US economy, will be monitored closely in the next few months by the Transport Market Monitor.1 Transport Market RadarCapgemini Consulting is the strategy and transformation consulting brand of Capgemini Group 4
  5. 5. Capacity index drop was similar to previous yearThis section of the Transport Market Monitor depicts the monthly developments in the price andcapacity index over the last 12 months. Analysing Q2 2011 (see figure 2), April and June showed aclear price increase, while May indicates a slight decrease. Following the reverse pattern, the capacityindex was at the lowest level in June 2011 (index 64.9).During the last 12 months, the price index varied, outlining the dynamics in transport prices. Thehighest price index in the history of this report was reached in June 2011 (index 106.1). The lowestprice index during the last 12 months was measured in February 2011 (index 94.6). The capacity indexwas at the lowest point in June 2011 (index 64.9). This index has dropped significantly, by 41.5%, sinceFebruary 2011 (index 111.0).Figure 2: Price and capacity index, monthly (Jul 2010 – Jun 2011) Price and capacity index (month by month) 110 120 106,1 104,3 110 105 103,3 103,1 102,1 102,6 102,4 100,6 100 Capacity index 100 98,5 97,6 Price index 96,7 90 94,6 95 80 90 70 Price index 85 60 Capacity index 80 50 Jul10 Aug10 Sep10 Oct10 Nov10 Dec10 Jan11 Feb11 Mar11 Apr11 May11 Jun11Capgemini Consulting is the strategy and transformation consulting brand of Capgemini Group 5
  6. 6. Figure 3 compares the monthly developments of the price index, over the last 12 months, with the sameperiod one year before. The price index has constantly been above the levels of the previous year: onaverage prices were 6.3% higher compared to the year before. Since December 2010 the difference inprice index compared to the previous year, decreased until May 2011, in which the price index wasalmost the same as the year before.The price index developments over two consecutive years have been similar, showing a seasonalpattern: generally the price index decreases from January to February, thereafter, increasing untilOctober, decreasing in November, but recovering again in December.As already mentioned, the price index in May 2011 was almost at the same level as May 2010 (0.3points difference). In June 2011, the price index increased to the highest level in the 3 year history of theTransport Market Monitor (index 106.1), and increasing the difference again as compared to June 2010as well (2.9 points). As mentioned before, initial developments in Q3 of 2011 show a downward trendof the transport price index.Figure 3: Price index comparison, monthly (Jul 2009 – Jun 2011) Price index comparison 110 105 Jul 09 - Jun 10 100 (Price index same period, 95 last year) Price index 90 85 Jul 10 - Jun 11 (Price index last 12 months) 80 75 70 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 15 11,7 8,7 9,1 8,9 10 8,1 5,4 6,0 6,0 5,0 4,0 Difference 5 2,9 0,3 0 1 2 3 4 5 6 7 8 9 10 11 12Capgemini Consulting is the strategy and transformation consulting brand of Capgemini Group 6
  7. 7. Figure 4 compares the monthly developments of the capacity index, during the previous 12 months,compared with the same period one year before. During the last four months, the capacity index closelytracked the capacity index of one year before, except for May, where the difference between 2010 and2011 was 13.1 pointsThe large differences in the capacity index we saw last year are no longer exist. Where we saw adifference of 47 points between July 2009 and 2010, we are back to 1.2 index point difference betweenJune of this year as compared to June 2010. Overall, the capacity index was relatively low during thelast couple of months, which is common for the second quarter of the last years. For the first time sinceJuly 2009, the capacity index in March 2011 exceeded the level of the year before. In June 2011 thecapacity index dropped again under the level of June 2010, with a difference of 1.2 index points.Figure 4: Capacity index comparison, monthly (Jul 2009 –Jun 2011) Capacity index comparison 140 130 120 Jul 09 - Jun 10 (Capacity index 110 same period, Capacity index last year) 100 90 Jul 10 - Jun 11 (Capacity index 80 last 12 months) 70 60 50 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 20 4 13,1 1 - -1,2 -20 -11 -16 -17 -40 -22,8 -23 Difference -35 -30 -60 -47 1 2 3 4 5 6 7 8 9 10 11 12Capgemini Consulting is the strategy and transformation consulting brand of Capgemini Group 7
  8. 8. Industry focusGeneral economic conditions apply to all industries, but trends may The TRANSPOREON platformdiffer and be stronger or weaker in individual industries. Analysis of handles transport for almostthe price index by the type of industry identifies these differences, all industries. For this editionshown graphically in figure 5. of the Transport Market Monitor, different industryThe development of the price index for construction materials are in types have been analysedline with the development of the overall price index during Q2 2011 individually.and with an index of 103.1 (7.1% increase since last quarter) showsthe highest price index in the history of this report within this Each chart in figure 5 depictsindustry. Timber showed the strongest increase, with 10.8% in Q2 the price development for that2011 compared to Q1 (price index 109.0) and is almost back to the particular industry, indexedlevel of Q4 2010, where the price index reached the highest level in against the industry baseline (H1 2008)three years (index 111.2). Paperboard / Print showed a smallerincrease compared to the other industries, but still increased by 5.2%to a price index of 111.2.Figure 5: Price index for different industries (Q1 2008 – Q2 2011) Price index Construction materials 120 110 Price index 100 Construction 90 Materials 80 70 Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111 Q211 Price index Timber 120 110 Price index 100 90 Timber 80 70 Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111 Q211 Price index Paperboard / Print 120 110 Price index 100 90 Paperboard / Print 80 70 Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111 Q211Capgemini Consulting is the strategy and transformation consulting brand of Capgemini Group 8
  9. 9. Price differences between offers decreasedThis section analyses outlines transport dynamics, by analysing the price difference between the highestand the lowest price offered per transport request. Figure 6 outlines the price difference between offers,and the development of the capacity index. If the capacity index decreases, the level of competitiondecreases, clearly impacting the differences in price between offers by lowering them. This usually hasan upward effect on transport prices. In order to compensate for this effect, the shipper can look forpotential optimization options in e.g. load consolidation to increase fill rates.Figure 6: Capacity index and price difference (Q1 2008 – Q2 2011) Capacity index and price difference (quarterly) 210 40,0% 36,4% 190 35,0% Difference between offers 170 30,0% 26,4% Capacity index 150 23,2% 23,2% 25,0% 21,3% 21,5% 19,4% 130 17,2% 20,0% 16,6% 15,7% 15,7% 14,5% 110 13,2% 15,0% 11,2% Price 90 10,0% difference between offers 70 5,0% Capacity index 50 0,0% Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111 Q211In line with the clear decrease in available capacity, price differences between the highest and the lowestoffered price decreased from a 19.4% difference in Q1 2011 to 11.2% in Q2 2011. This price differenceis an average figure. In general price differences increase with the greater the distance to be travelled(see TMM, edition 1).Capgemini Consulting is the strategy and transformation consulting brand of Capgemini Group 9
  10. 10. Diesel index increases further towards the record levels of2008This section compares the price index with the dieselindex (see figure 7). In general there is a positive For the diesel index, the average figures of the 6 month period January 2008 till Junecorrelation between the diesel index and the price 2008 have been set as the basis forindex, clearly indicating the impact of diesel prices on comparison (index 100), similar to the othertransportation costs and consequently prices. Also indices used in this report.during the second quarter of 2011 this was the case. Thediesel price increased by 5.8% and the transport price The calculation of the diesel index is basedincreased even further by 7.8% in Q2 2011, compared on diesel price figures in Germany, obtainedto Q1. The reason for the steep increase of the transport from www.aral.de. We assume that the index pattern, based on the above figures, isprice is, besides the diesel costs, also dependant on the representative for Europe for the purpose oftransport capacity development. The capacity index in this report.Q2 2011 decreased by 34.4%, which has an effect onthe transport prices over and above the diesel indexinfluence.With the exception of Q3 2010, diesel prices have been increasing since Q1 2009. In Q2 2011 the dieselindex increased by 5.8%, compared to Q1 2011, to index 104.7, reaching the highest level measuredsince the start of the TMM (index 105.0 in Q3 2008).Figure 7: Price index and diesel index (Q1 2008 – Q2 2011) Price and diesel index (Quarterly) 110 110 104,7 105 104,3 105,0 105 100 99,0 100 95 95,7 95 93,5 93,7 Price index Diesel index 90 91,2 90 89,1 85 86,1 85 84,3 84,3 80 80,3 80 76,0 Price index 75 75 70 70 Diesel index Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111 Q211 20% 9,1% 5,7% 5,0% 5,6% 5,8% 10% 0,6% 2,1% 3,5% 4,9% 2,7% Change in -2,4% diesel index 0% -9,9% (%) vs. -10% previous -19,7% quarter -20%Capgemini Consulting is the strategy and transformation consulting brand of Capgemini Group 10
  11. 11. Looking at the average yearly diesel prices (see figure 8), we have seen a decrease of the diesel index of16.1% between 2008 and 2009, followed by an increase of 12.5% between 2009 and 2010. In Q2 2011the diesel index is already 10.8% higher, compared to the yearly average of 2010.Fuel cost is next to driver wages, one of the most important drivers for transport costs (which are not thesame as transport rates). On a European average, fuel costs are accountable for around 25% of the totaltransport costs. This means that in general, if all other factors would remain unchanged, every 10%increase of diesel price would cause around 2.5% increase of the overall transport rates.Figure 8: Diesel index (Jan 2008 – Jun 2011) Price and diesel index (yearly) 105 105 101,8 100 100 97,3 95 95 91,9 90 90 Price index Diesel index 85 85 81,7 80 80 Price 75 75 index Diesel 70 70 index 2008 2009 2010 2011 (ytd) 20% 12,5% 15% 11,1% 10,8% 10% 5% Change in diesel index 0% (%) vs. -5% previous year -10% -16,1% -15% -20%However, apart from cost drivers like diesel and labour costs, “available capacity” (being the ratiobetween demand and supply of transport) is another major influencing factor on transport pricedevelopment. It is therefore complicated to identify the impact of increased cost levels on transportprices. For example during Q1 2011, we monitored a decrease in transport prices, against a clearincrease of diesel costs. Both the market dynamics and the expected cost increase of transportationemphasize the need to monitor transport price developments very closely, to prevent any unexpectednegative impact on company results.Capgemini Consulting is the strategy and transformation consulting brand of Capgemini Group 11
  12. 12. Next editionThis edition looked at the price and capacity developments since the beginning of the Transport MarketMonitor in 2008. It outlined the price increases in Q2 2011 compared to Q1 2011 and the same periodone year before. In addition, we took a closer look at diesel price developments. The next edition,number 9, will include the figures for Q3 2011. It will be published in November 2011.About the Transport Market MonitorThe aim of the Transport Market Monitor is to provide insights into the development of transport prices,and other transport market dynamics to logistics executives and other interest groups. It is a jointinitiative of TRANSPOREON and Capgemini Consulting.The indices in the Monitor are based on the logistics platform TRANSPOREON, on which shipperstender and process their transport needs to their preferred transport partners on a daily basis. Theplatform handles a yearly transport volume of over €2 billion in all European countries. Anonymously,information is unlocked from the platform and analysed by Capgemini Consulting. This results inmonthly indices which are published on a quarterly basis. In addition to each publication of the Monitor,one or more market themes are discussed, supported by detailed analysis.TRANSPOREON and Capgemini Consulting can help you to find the right strategy between static anddynamic prices. Additional information about both companies and their service offerings is availableupon request.This report is available at www.transportmarketmonitor.com. More information about the products andservices of both TRANSPOREON and Capgemini Consulting can be obtained via the contactinformation provided at the back of this report.Capgemini Consulting is the strategy and transformation consulting brand of Capgemini Group 12
  13. 13. About Capgemini and TRANSPOREON About Capgemini About TRANSPOREON With 115,000 people in 40 countries, The logistics platform TRANSPOREON Capgemini is one of the world’s foremost connects shippers from industry & trading providers of consulting, technology and companies with carriers, drivers & consignees outsourcing services. The Group reported 2010 – and optimizes and accelerates logistics es global revenues of EUR 8.7 billion Together processes. Users of our platform receive web web- with its clients, Capgemini creates and delivers based SaaS (Software (Software-as-a-Service) solutions business and technology solutions that fit their as electronic transport assignment, time slo slot needs and drive the results they want. A deeply management and transport visibility. multicultural organization, Capgemini has TRANSPOREON allows to reduce dispatch developed its own way of working, the and freight costs, while minimi minimizing waiting Collaborative Business ExperienceTM, and times during loading and unloading. ® draws on Rightshore , its worldwide delivery model. Currently more than 400 shippers, more than Learn more about us at www.capgemini.com 20,000 carriers and more than 54,000 users ,000 from 70 countries are connected via the tries TRANSPOREON platform. The platform as well as the customer service are available in 16 Capgemini Consulting is the Global Strategy languages. and Transformation Consulting brand of the Capgemini Group, specializing in advising and Operating company of the logistics platform supporting organizations in transforming their TRANSPOREON is the international business, from the development of innovative TRANSPOREON Group. Other solutions the strategy through to execution, with a consistent group is offering are the tender platform ing focus on sustainable results. Capgemini TICONTRACT and the retail logistics platform Consulting proposes to leading companies and MERCAREON. Presently freight orders with a governments a fresh approach w which uses volume of 6 billion EUR are organised via the innovative methods, technology and the talents solutions of the TRANSPOREON Group. The of over 3,600 consultants worldwide. company is on site in 1 locations throughout 16 Europe and the U.S.A. More information at www.capgeminiconsulting.nlCapgemini Consulting is the strategy and transformation consulting brand of Capgemini Group 13
  14. 14. Capgemini Consulting TRANSPOREON For more information, contact: For more information, contact: Benelux: Benelux: Ramon Veldhuijzen Michel Haenen Tel: +31 6 150 30 097 Tel: +31 6 123 95 308 E-mail: ramon.veldhuijzen@capgemini.com E-mail: haenen@transporeon.com Germany/Switzerland: Germany/Switzerland and Nordic countries: Hendrik Mueller Volkert Gasche Tel: +49 151 4025 1707 Tel: +49 4101 8316761 E-mail: hendrik.mueller@capgemini.com E-mail: gasche@transporeon.com UK: UK: Steve Wilson Charlie Pesti Tel: +44 870 366 0236 Tel: +44 (0) 785 094 11 70 E-mail: steve.wilson@capgemini.com E-mail: pesti@transporeon.com Italy: Italy: Roberto Brugnetti Roberto Ostili Tel: +39 02 414931 Tel: +39 050 552168 E-mail: roberto.brugnetti@capgemini.com E-mail: ostili@transporeon.com Austria: Austria: Hendrik Mueller Armin Musija Tel: +49 151 4025 1707 Tel: + 43 (0) 664 1966 542 E-mail: hendrik.mueller@capgemini.com E-mail: musija@transporeon.com France: France: Stéphane Ghioldi Jean Arnaud Tel: +33 060 7714687 Tel: +33(0) 6 27 47 71 46 E-mail: arnaud@transporeon.com E-mail: stephane.ghioldi@capgemini.com Spain: Nordic Countries: Miriam Ribas Kristoffer Arvidsson Tel: + 34 977 6200 39 Tel: +46 70 5305849 E-mail: ribas@transporeon.com E-mail: kirstoffer.arvidsson@capgemini.com Poland: Poland: Via: Ramon Veldhuijzen Michał Krzysik Tel: +31 6 150 30 097 Tel: + 48 (0) 12 / 631 20 85 E-mail: ramon.veldhuijzen@capgemini.com E-mail: krzysik@transporeon.com www.capgeminiconsulting.com www.transporeon.comTMM-team:Capgemini Consulting: Janine Roes (NL), Martijn Gommers (NL), Richard Conway (GB), Hendrik Mueller (DE),Ramon Veldhuijzen (NL).TRANSPOREON: Peter Förster (DE), Michel Haenen (NL), Sandy Buch (DE), Mathias Edel (DE).Capgemini Consulting is the strategy and transformation consulting brand of Capgemini Group 14
  15. 15. www.transportmarketmonitor.comCapgemini Consulting is the strategy and transformation consulting brand of Capgemini Group

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