Fragmentation and too many competitors in the European logistics market is constraining industry development and making it more difficult to achieve net zero goals, according to Automotive Logistics’ new research.
The European Automotive Logistics Market Report 2023-2033 found that across both inbound and outbound logistics, the leading companies in the industry have single-digit market shares. Due to this over-abundance of competitors, price competition is getting more intense and making it more difficult for the industry to achieve profitable margins.
The leading nine companies in inbound component logistics make up a market share of just 32.4%, and all of the largest players have market shares in low single digits, illustrating that there is no clear dominant market leader.
The outbound finished vehicle logistics (FVL) market is similarly fragmented, with the leading ten outbound FVL firms holding just 48.4% of the overall market.
In the short term, many FVL companies in particular are operating on fixed price contracts within a rapidly inflationary climate, meaning more operators are working with slim margins, at break-even or at a loss.
This is contributing to a lack of asset capacity in FVL as there is a reluctance and lack of investment to expand fleets. Similarly, optimising fleets requires investment in digitalisation and tracking technologies to improve visibility and transparency, but the confidence to invest is limited.
The problem is also affecting companies involved in inbound logistics, too. “For example, within inbound logistics, the leading nine companies account for only 33% of the market,” said Daniel Harrison, inhouse automotive analyst, Automotive Logistics. “This highly fragmented sector creates a particular set of industry characteristics which explain many of the challenges automotive logistics operators face within the market space.”
The market is also being negatively affected over the medium to long term too. A lack of investment also threatens transitioning towards a sustainable net zero future. Meeting sustainability targets requires funding for green fleets, fuels, technology and infrastructure, as well as industry-wide collaboration. But this is particularly challenging to accomplish when the industry is so fragmented and uncoordinated in its strategy.