Trucking is the leading form of freight transportation in Italy: 85 percent of all goods are shipped by road, compared to a European average of 76.5 percent. But Italian trucking companies are under pressure: an increasing driver shortage, high labour and operating costs, international competition and stricter emissions regulations are challenging the trucking industry on an unprecedented scale.
Although trucking is a hugely significant link in the Italian freight transportation chain, the exclusive use of trucks is no longer sustainable – economically, operationally or environmentally. Consequently, the transport industry is on the verge of a sea change, where new businesses models must be adopted to merge road transport’s flexibility with rail transport’s efficiency and sustainability. However, for this shift to be successful, customers, operators and political decision makers need to engage in conversation about upcoming challenges and together, embrace a forward-looking mind-set.
The Italian situation
According to data processed by Eurostat, in 2016, Italian transport providers moved 881,330 tonnes of goods nationwide, totalling over 10,200 million tonne kilometres, with an average distance of 114 km travelled for each journey.
Internationally, Italian companies moved 20,170 tonnes, totalling over 12,355 million tonne-kilometres, with an average distance of 600 km travelled per trip. The average international transport distance in Italy is significantly higher than the distances recorded in Germany, France and the Netherlands but instead is in line with Croatia, Slovakia, Slovenia and the Czech Republic.
As a result of its close proximity to Eastern European countries characterised by low labour costs, Italy has continued to suffer from a progressive reduction in competitiveness. Moreover, the country has experienced a constant increase in costs, and today, the cost per kilometre of Italian heavy transport is one of the highest in Europe.
The truck driver shortage stretches back for many years, and across Europe, staggeringly high turnover rates and waves of baby boomer retirements have begun compounding the problem. According to a report by the German association DSLV (Bundesverband Spedition und Logistik/German Forwarding and Logistics Association access, see an article from “The Loadstar” here), 30,000 operators leave the trucking profession each year while only 2,000 people annually obtain professional qualification for driving heavy vehicles. The report also estimates two thirds of drivers in Germany will retire in the next 15 years. In Italy, the industry landscape is similarly dire. The country currently lacks 15,000 drivers, and this number is only expected to increase in coming years.
Labour and fuel costs
The high costs of labour and fuel – the two largest trucking industry operating expenses – are also adding significant pressure to Italian trucking operators and eroding operational margins.
In Italy, the annual cost of a truck driver is more than twice as high as in countries such as Bulgaria, Romania, Lithuania, Hungary, the Czech Republic, Poland, Slovakia and Slovenia. As a result of their lower labour costs, Eastern European haulers have surged into the Italian market, thus leaving Italian haulers fewer opportunities.
The rising cost of fuel is also lowering operators’ margins and curtailing growth. From January 2016 to March 2019, the cost of fuel rose by a startling 26 percent.
In addition to economic and operational challenges, operators also face environmental concerns. Heavy duty vehicles (HDVs), i.e. trucks and buses, account for more than a quarter of road CO2 emissions in Europe but only make up 4 percent of vehicles. For policymakers, reducing truck emissions is high on the agenda. Therefore, developing sustainable modes of transport as well as reducing road congestion and pollution is a looming challenge for freight forwarders and beneficial cargo owners (BCOs).
Smart solutions to road transport challenges
To adapt to the trucking industry’s changing landscape, redistributing heavy goods traffic and limiting long-distance road haulage is crucial. Moving forward, trucking companies will need to renew their business models to combine the first and last mile flexibility of road transport with the speed, economic viability and environmental sustainability of intermodal rail services.
Calling on beneficial cargo owners
Although the transport sector is responsible for a share of emissions, it is also one of the key pillars of economic development and a vital element of the trading economy, ensuring prosperity and development across all of Europe. As a result, progressing an effective, sustainable transport system should be seen as a critical responsibility for governments, operators, producers and consumers.
Whilst it is up to hauling companies to reject practices such as social dumping or cutting safety costs, BCOs are also in the driving when it comes to assessing the sustainability of the transport model the market offers. In Italy, it is common for cargo owners to export under “ex works” incoterms, meaning the seller’s commitment ends at the production plant. However, logistics should be considered as part of the value chain, and producers should claim responsibility for the freight they sell – especially in terms of monitoring and reducing their freight’s respective transport emissions.
For national and EU policy makers, opening a dialogue with the transport industry is key. By stimulating discussion on the need to pursue sustainable infrastructure development and offering incentives for solutions that contribute to more efficient transport, public entities can help spark true change within the industry.
To make this cooperation a success, politicians and companies cannot be left alone; it is necessary to support them by developing awareness among consumers of the risks associated with sacrificing safety and sustainability for the lowest possible price.
How far could such a paradigm take the transport sector?
In Switzerland, for example, a significant share of freight traffic has been shifted from road to rail over the last 25 years. Thanks to innovative policies and funding that encourage and facilitate conversion, the country has achieved the highest rail freight share in Europe, reaching a 72/28 ratio between rail and road transport for transalpine freight forwarding in 2018.
If public and private sector bodies combine capital, resources and ideas to streamline shifts from road to rail, similar results could be achieved for the Italian transport sector. This intermodal strategy will undoubtedly result in a more efficient, profitable and sustainable future for commercial transport in Italy and a better future for Europe.
To learn more, we invite you to download and share our white paper “Italian road haulage in the midst of the economic crisis, international competition and new business models".