Industry Report by UniCredit Bank Austria:
Austrian transport industry slows down passage in 2018

  • The transport performance of domestic road transporters has fallen by 1.6 percent in 2017, but the industry turnover is expected to have nominally increased by at least 3 percent in 2017.
  • Loss of shares in cross-border carriage of goods are offset by a strong foreign involvement
  • After a good start, the transport economy will probably cool down in 2018
  • Logistics location Austria gains attraction

The transport performance of Austrian road transporters, i.e. the volume of goods transported multiplied by the distance travelled, has fallen by 1.6 percent in 2017. As in recent years, the minus is largely due to cross-border traffic. “Despite the decline in performance, Austria’s transportation trade should have ended with an increase in turnover in the range of 3 percent for the year 2017. This development shows that foreign involvement and foreign turnover of the transport companies have continued to gain importance,“ says UniCredit Bank Austria economist Günter Wolf. The turnover of foreign subsidiaries is attributed to the companies in Austria, but not their transport performance with lorries registered abroad.

Loss of shares in cross-border carriage of goods
The transport performance of carrying trade with vehicles registered in Austria has declined by 31 percent from 2008 to 2016. The loss of shares is mainly due to increased international competition in cross-border road freight transport. Of almost 40 billion tonne kilometres carried out in road freight transport in 2016 across Austrian external borders, domestic lorries accounted for less than 20 percent; in 2008, the figure was 38 percent. In 2017, the decline in cross-border transport performance in carrying trade was 5 percent and is likely to have been largely offset by foreign companies (international data is not yet available).

Austrian companies have lost the majority of their share of cross-border road freight transport services to transporters from the new EU member states. Their shares increased from around 30 percent in 2008 to around 50 percent in 2016; a further 11 percent is attributable to German lorries. “Statistics suggest that Austrian companies are likely to experience major performance loss here. Ultimately, however, the trend in cross-border freight transport is likely to be less dramatic. At least some of the transports were carried out with vehicles registered by domestic transport companies abroad, i.e. registered under a flag of convenience, or handled by foreign subsidiaries of Austrian companies,“ says Wolf.

While turnovers of foreign subsidiaries are attributed to domestic companies and thus increase sector turnover, transport performance with lorries registered abroad is not included in the figures. The fact that sector sales are growing but transport performance is declining shows the economic importance of foreign involvement and the lorry fleets registered under a flag of convenience for the domestic carrying trade.

From 2008 to 2016, the sales in road freight transport nominally increased by around 8 percent. The profit situation has also improved in line with the industry average. This shows the return on sales of the companies in a KMU Forschung Austria sample, which rose from an average of 1.2 percent in 2011 to 3.3 percent in 2016. This increase is also remarkable in the sense that in the same period the prices achieved in road freight transport in Austria increased by just under 9 percent, while costs increased by 12 percent.

After a good start, the transport economy will probably cool down in 2018
The economic environment in the transport business remains favourable in 2018. As in the entire EU region, the economy in Austria is expected to grow only slightly slower than in the previous year, with important demand impulses continuing to come from manufacturing and the construction industry.

In the initial months of 2018, the transport economy in Austria is even likely to have somewhat accelerated, as suggested by the above-average employment growth in the road freight transport market. By May 2018, the number of new employees in the sector had increased by 5.1 percent to 55,300, thus achieving the employment level of 2007 before the crisis. However, business expectations became more cautious throughout the transport sector in May. Overall, the sentiment indicators still signal an active transport economy, which, however, will continue at a lower level in the upcoming months.

“A relatively reliable economic indicator in the transport sector are the new registrations of heavy lorries and semi-trailer vehicles. In the months up to April 2018, a decline of 3.6 percent can be observed here. This development is a signal for the expected economic slowdown in road freight transport, although some of this is due to the strong growth in new registrations in 2016 and 2017 and now less investment is needed in vehicles,” says Wolf.

Attraction of Austria as a logistics location has increased
The prospects for the transport industry in Austria are pleasing, not only due to the high prosperity of the population and the internationalisation of production and the associated strong trade flows. The location is also very competitive in an international comparison due to its central location at the intersection of important European transport axes and its good infrastructure. In a comparison of the logistics services offered by 160 countries, Austria was most recently ranked 7th in 2016. World Bank’s “Logistics Performance Index” is based on business surveys on the quality of the logistics environment in its most important markets. The results show that a liberal trade regime and a good transport and telecommunications infrastructure are just as important for a functioning logistics location as the speed, reliability and costs of freight transport.

Germany has been at the top of the ranking for years. The gap between Austria and its neighbouring country is due to slight deficits in the quality of airports and the duration of customs clearance. “On a positive note, it should be noted that, compared to Germany not only lower freight rates were recorded for all modes of transport, but also that the quality of services relating to the transport of goods was rated higher in both the private and public sectors for the logistics location Austria,” says Wolf.

Enquiries: UniCredit Bank Austria Economics & Market Analysis Austria
Günter Wolf, Tel.: +43 (0)5 05 05-41954;
E-mail: guenter.wolf@unicreditgroup.at