How software solution is bridging the gaps in EU’s logistics sector

PTV Map&Guide enables companies to avoid detours maximising their profits.

EU’s logistics sector is booming and makes up 14% of the total GDP. Retail, e-commerce and manufacturing have propelled its rapid growth, and will only continue to expand year over year. Nonetheless, the sector still has significant challenges to tackle such as problems in the workforce, implementation of local laws, and limited technological interventions. As some of these challenges are proven to be too difficult for some businesses to handle, there is a significant increase in bankruptcies, especially in the logistics sector. In Germany alone, company insolvencies in the logistics sector are the highest, and 80% of it is companies with 1-5 employees.

 

Logistics in numbers
To dig deeper into the issue, let’s look at the figures first. More than 500 million people live in the EU, with more than 30 million companies providing a value added of 14 trillion euros in the world’s second-largest economy. In 2014, the EU logistics market alone accounted for € 960 billion shares in the economy, achieved by 11.2 million people who are employed within the sector. The total goods transported so far have reached over 4 billion tonne-kilometres. Of that, 44.9% of the goods are transported via road, making it the biggest carrier of goods with over 46 million tonnes carried daily. Based on the 2016 Logistics Performance Index (LPI), the top five EU countries with the best service are Germany, Netherlands, Belgium, UK and Sweden.

Challenges in the workforce
The LPI is arguably the best index for global logistics out there based on these core components to determine overall logistics performance: Customs, infrastructure, ease/price of international shipments, track & trace, logistics competence and timeliness. Small and medium enterprises (10 – 250 employees) make up 75.5% of the total respondents while the rest are from larger companies (250 employees or more).

One of the challenges they are currently facing is the shortage of truck drivers. In 2008, at least 70,000 truck drivers were needed. The road freight transport sector simply cannot keep up with the activity growth seeing that the majority of the goods transported are done via road. Worst of all, the profession of the driver is simply unattractive due to the physical environment and the social conditions in which the drivers work.

Yet, there is a second challenge in the workforce: As many as 43% of the total respondents indicated that the major problem they are facing is a shortage in the availability of the logistics managers. This role is the most crucial as the logistics manager needs to:

  • Identify the cheapest service provider offering the best quality,
  • Plan and manage logistics, warehouse, transportation as well as customer service,
  • Direct, optimise and coordinate the full order cycle.

Cash-strapped enterprises
Microenterprise (less than five employees) are struggling even more. These businesses are struggling because of poor approaches to planning, inventory management, supplier relationship management and customer-service responsiveness. Delivering goods from A to B efficiently and within a timeframe is a relatively easy task for larger companies with big budgets to match. If you’re not getting the right products to the customer at the right time with the right documentation and at the right price, you will obviously not meet customer expectations and risk losing the account. But for microenterprises watching its spending, shipping goods requires careful consideration to ensure costs remain manageable and IT infrastructure remains affordable. Similarly, valid price finding can be time-consuming, thus resulting in longer proposal phase and risk losing the account to faster, more flexible companies.

Drivers’ working hours’ law
Another emerging challenge for the logistics sector is keeping up with the minimum wage laws. Minimum wage is the logistics industry’s heavily debated topic, especially in the EU because it challenges EU’s principle of the free movement of goods and services. With the introduction of the French law, LoiMacron, and Germany’s MiLoG, companies outside of these two countries are now feeling burdened by the extra processes needed to operate within the respective territories. France and Germany designed the laws to support the minimum wage regulations intended to end “social dumping” that occurs when workers from low-wage countries are hired in other EU nations at their own pay levels for extended periods. In France for example, transport companies are now required to submit a ‘posting’ certificate for each worker, which must be renewed every six months. Not only this is time-consuming, but companies are also facing extremely high penalties of up to €500,000 and three years imprisonment if these work hours are not reported on the posted workers’ payslips. But not only Germany and France push the topic: since 2017, Belgium and Austria also have similar regulations in place, while Norway even introduced such a law already in 2015 and Italy in December 2016. The Netherlands have a collective agreement, which will be effective from January 2018 onwards.

Central and Eastern Europe on the rise
Because of the minimum wage requirement, most of the logistics activity located in Western Europe where they are the richest now shifts its focus to Central and Eastern Europe. In countries such as Czech Republic, Slovakia, and Poland, they have gained more importance in the logistics market thanks to a low labour cost and good infrastructure. Take Poland for example. The average monthly salaries are only a third of the average wage of Germany, Poland’s neighbour. But, it has been EU’s fastest growing economy, and it is the only country in CEE who managed to escape the global recession in 2008. Poland has also spent more than € 60 billion to renovate roads and bridges, and as such, Bloomberg ranked the country as the best for business in Eastern Europe.

PTV’s winning formula of logistics solution
EU has a burgeoning logistics sector and should harness these challenges instead of working against it. With increasing IT infrastructure and software solutions, even a one-person show in a microenterprise can easily stay ahead of its competitors. Considering the various options available, how can small businesses get the best deal and ensure their goods are delivered on time, safely, and cheaply? PTV Map&Guide has served over 55,000 users to provide high-quality service and have established itself as a professional transport route planner in the logistics sector. Planning with PTV Map&Guide saves time spent on dispatching and enables companies to avoid detours and calculation errors, and above all – to maximise their profits.

To make better, more confident planning for your company, visit our product website and try our solution free with no installation necessary!

References:

  1. 14% of the total GDP.
  2. 80% of it is companies with 1-5 employees.
  3. More than 500 million people live in the EU.
  4. 14 trillion euros in the world’s second-largest economy.
  5. EU logistics market alone accounted for € 960 billion shares.
  6. 44.9% of the goods are transported via road.
  7. Logistics Performance Index.
  8. As many as 43% of the total respondents indicated that the major problem they are facing is a shortage in the availability of the logistics managers.
  9. Planning, inventory management, supplier relationship management and customer-service responsiveness.
  10. Another emerging challenge for the logistics sector is keeping up with the minimum wage laws.
  11. French law, LoiMacron.
  12. Germany’s MiLoG.
  13. Submit a ‘posting’ certificate for each worker, which must be renewed every six months.
  14. Shifts its focus to Central and Eastern Europe.
  15. Bloomberg ranked the country as the best for business in Eastern Europe.
  16. Avoid detours and calculation errors, and above all – to maximise their profits.

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