Worldwide Business Information and Market Reports
ISBN 1-85765-685-7

Activity in the road haulage sector has recovered
substantially since the economic downturn at the start of the 1990s. Key Note
estimates that in 1996, the amount of road freight moved in the UK increased by
4.9 percent to a record 157 billion tonne kilometres. Despite this increase in
turnover, however, trading conditions in the industry remain difficult.
The road haulage market has changed significantly over the last 15 years.
During this time, the industry has evolved from generally being one of
low-level, `trunking'-style operations, to one of considerable sophistication.
The emphasis in the industry is now on providing a wide range of integrated
supply chain management services, such as warehousing and stock control. A
parallel trend has been the growth in the outsourcing of distribution
functions. The development of the third-party distribution sector, however, has
not been without its difficulties.
Another factor contributing to the
upheaval in the distribution market is the rapid pace of technological
development. The advent of affordable technology has revolutionised the
industry by increasing the quality of communication between supply chain
members. One particularly important development is Electronic Data Interchange
(EDI), which allows intensive information sharing by formatting and packaging
information in a standardised form. The effect of technological advance has
been to favour those companies, generally the major players, which are prepared
to invest heavily in information technology (IT).
The road haulage
industry is also encountering difficulties in the environmental arena.
Improvements to road infrastructure are unlikely to keep pace with traffic
growth due to opposition to continued road building, and this is likely to
result in future in increased charges for road use. While road freight
operators can make a limited response to this problem through an expansion in
truck capacity and a move towards 24-hour and weekend working, it is inevitable
that freight operators will be forced to make greater use of the rail
system.
The outlook for road haulage firms is, at best, mixed. Steady
domestic economic growth, international expansion opportunities and a continued
shift to outsourcing will underpin industry growth. Nevertheless, customer
pressure will ensure that margins in the industry remain competitive. It seems
likely that the outcome will be greater industrial concentration, as economies
of scale in terms of both capital and expertise become increasingly critical
for corporate success.
Text © 1997 Key Note
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Last updated by Duncan Nottage 5th March 1999