Sectoral report from Bank Austria Economics & Market Analysis:
Austria’s transport industry slows down in 2008
- Consequences of the economic downturn for transporters clearly noticeable, investment is falling and unemployment rising
- Precarious earnings situation in the sector will deteriorate even further
- Austria as a logistics centre is competitive
The Austrian transport industry, like its most important customers, is clearly feeling the effects of the major economic slump. The demand for transport and logistics services is falling rapidly. That is the conclusion of a current sectoral report from Bank Austria Economics & Market Analysis. As a reaction to the drop in demand, the number of newly licensed heavy goods vehicles fell by 11 per cent in the third quarter of 2008, and by as much as 17 per cent in the carrying trade. In addition the number of unemployed in this sector has risen since July, the first time since 2005. The economic downturn will put a strain on the demand for transport until at least the second half of 2009, with an annual decline in transport services of at least 5 to 10 per cent to be expected in 2008 and 2009. Transport services provided by Austrian companies fell by 5 per cent overall back in 2007. The sales growth in road haulage and among forwarding agents has slowed significantly with plus 2 per cent at 16.8 billion euro.
With falling demand for transport the utilisation of freight capacity is dropping and pressure on prices and earnings increasing. Providers of ordinary transport services are particularly affected, these are service sectors where competition is first and foremost centred around price. For years the segment has suffered above all from cost disadvantages in the face of East European competitors. Labour costs in Hungary and the Czech Republic are still 50 per cent lower than those in Austria, and in Romania they are up to 80 per cent lower. This is one reason why Austria’s transport companies have been losing market shares for years in transit and cabotage transport. In the last few years the sharp increases in the price of diesel, which could only be partly passed on to customers, have also put a strain on earnings in the transport industry. The proportion of the fuel price in the freight price has risen from an average of 15 to 20 per cent in 2005 to 20 to 30 per cent in the first six months of 2008. “The precarious earnings situation of many transport companies has probably got even worse. The ratio of profits to sales of an average of 1.7 per cent in the transport industry and 3.2 per cent for forwarding agents has increased little even in the last few, comparatively successful financial years”, said Bank Austria sectoral analyst Günter Wolf.
The economic downturn will cause the transport sector considerable problems in the short term. Nevertheless the conditions are there for long-term satisfactory growth in the sector in Austria. A comparison of the quality of the logistics services in 150 countries places Austria 5th – behind Singapore, the Netherlands, Germany and Sweden and ahead of Japan, Switzerland, Hong Kong and Great Britain. The index, drawn up by the World Bank, is based on surveys of operators in the sector, asking them to assess the quality of the logistics environment in their most important markets. The results clearly show that a trading regime which is as liberal as possible and a very good transport and telecommunications infrastructure are only one factor for a well operating logistics centre. “Austria’s very good position is also remarkable because the costs of local transport services, handling goods and warehousing are among the highest in the world”, according to Bank Austria economist Wolf, “In contrast to this, there is the above-average punctuality of the available transport and shipment services, the ease of availability of shipment capacities and the high degree of competence in the national logistics industry.”
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