Freight Perspectives: state of carrier consolidation in Europe

Episode 3 of the Freight Perspectives podcast addresses a topic that continues to simmer in our industry’s consciousness; carrier consolidation. Is the market increasingly shrinking and becoming more concentrated by the hands of just a few giants in the field? For a while, there’s been an underlying feeling that soon, only major players will be running the show. 

When we look at the current European transport landscape, however, it presents a bit of a paradox. On one hand, it’s clear that these massive paneuropean conglomerates exist—they’re the household names with undeniable presence, sophisticated tech and huge networks. On the other, the vast majority of the market still consists of incredibly small players in comparison. 

In truth, we are working with an atomized landscape. A blanket, if you will, of many carriers, a strong contingent of medium-sized specialists, and a comparatively small list of large players recognised the world over. This fragmented picture forces us to question any narrative that suggests aggressive, widespread consolidation and market structure amending is taking place at all

What the data reveals

To help provide clarity, we’ve analysed market share changes over the past five years for different sized carriers using the Transporeon platform. The data neither confirms nor denies evidence of consolidation. Expecting to see a clear tendency for consolidation upon studying the data, we were surprised to find that this is not, in fact, the case. Our platform data reveals some effects arguably linked to carrier consolidation, however overall, we can’t confirm that any consolidation activity is currently translating into certain sized player clusters gaining substantial market share.

For now, shippers using the Transporeon platform appear to maintain a balance between larger and smaller players, indicating no trend towards one size cluster outpacing another. 

What the data does reveal is market share increasing for medium-sized carriers during periods when capacity is squeezed, associated (though not exclusively) with seasonal patterns. Furthermore on seasonality, December normally presents a downward tick on the small carrier curve, indicating their business activity likely closing down during Christmas and New Year, while larger carriers continue to operate. In this instance, it's the larger players gaining market share. 

Analysis by business model

We can break this down further by anchoring our analysis around asset-owned versus forwarding-based business models. The data reveals a slight (1.3 percentage points) trend towards the forwarding-based business model gaining market share, however, predominantly asset-based carriers represent around 80% of the volume, meanwhile companies focused purely on forwarding maintain around just 20%. 

The figures show a relatively stable picture of market share across clusters, and yet there is an undeniable tendency towards consolidation in terms of perception of the market.

Players like NTG and DSV made headlines recently for acquiring other companies, but we’re not seeing this activity directly reflected in aggregate market share figures because this kind of consolidation is taking place within segments. Many of these types of mergers or consolidations are happening, but the results simply aren’t visible in the data. Furthermore, many acquired companies remain active under their original trading name, making it harder to detect consolidations in the analysis. 

But notably although consolidation takes place, structural shifts towards a certain size of carrier or business model is not confirmed by the analysis, clarifying the need for distinction between perceptions and what the data reveals in terms of broader market structure dynamics. 

What are the main drivers for consolidation?

We identified six main factors fuelling the consolidation narrative:  

1. Economic pressure and the need for cost control on the carrier side 
2. Lack of suitable successors, particularly in family-owned enterprises and in the smaller or medium-sized segment 
3. Increasing complexity around regulatory burdens e.g. emission standards, driver working hours, CO. based tolling systems.
4. Persistent shortage of truck drivers in Europe—it’s harder to find the drivers and more professionalization is needed in order to attract drivers
5. Growing pressure for sustainable practices e.g. transition to green fleets 
6. Technological advancements, digitisation in logistics, internet of things, AI, telematics as well our digital freight platform.

Overall market development projections

Right now it’s clear that road transport is far too fragmented to be heading towards the oligopoly we have in ocean freight. Based on our findings, the outlook doesn’t signal any major shifts simply because the volume of carriers is so high. We may see the gap increase between the very large players and the small to medium-sized ones, but we will continue to see thousands of carriers remain in their niche for local supply. 

It turns out the narrative is much more nuanced. We’re seeing specialisation, adaptation and finding strengths in different models as opposed to large scale headline acquisition in what remains a very diverse European road freight market.