Heavier and more efficient

Heavier and more efficient

Demand for heavy trucks is increasing while the need for medium-duty haulage is decreasing. This is a global trend but differs in speed and intensity between mature and emerging markets, explains Carl Holmquist, Automotive Analyst at Rementum Research.

The aviation sector has large airports, railways have central stations and the transport industry increasingly has reloading centres in more and more places in the world.

The industry calls this phenomenon “hub and spoke”. It is the basis of an efficient transport system. Instead of the same haulier being responsible for transporting a product from point A to point B, goods of the same type are brought together, and a heavy rig is allowed to handle as much of the route as possible. It drives to a strategically located reloading centre outside a city centre, then a light or medium truck handles the final part of the journey – “the last mile”, to the door.

Trend towards heavier haulage

In Europe this is nothing new, but in more and more emerging markets, this is one of the strongest driving forces in the transport industry as the economy develops and public infrastructure improves.

“The trend towards heavier haulage and more heavy trucks at the expense of light trucks is the strongest trend in the entire industry,” says Carl Holmquist, Automotive Analyst at Rementum Research.

“The more developed an economy becomes, the greater the role of transport and logistics issues,” he adds. The focus shifts towards efficiency, productivity and the costs of each transport job. And since heavier haulage boosts productivity and reduces overall fuel costs, there is also greater demand for heavy vehicles with powerful engines.

Heavy haulage rose to 60 percent

In Brazil, medium-duty haulage fell from 65 to 40 percent of the total between 1992 and 2012. During the same period, heavy haulage rose from 35 to 60 percent.

Brazil’s truck mix follows a typical curve for emerging markets: when infrastructure improves, the share of heavy trucks increases quickly at the expense of medium-duty and light trucks.

Brazil’s truck mix follows a typical curve for emerging markets: when infrastructure improves, the share of heavy trucks increases quickly at the expense of medium-duty and light trucks.

The same trend may be seen in mature markets in Europe but is not occurring as quickly. Between 1992 and 2012, medium-duty haulage fell from 45 to 30 percent of the total in Europe. Heavy haulage rose from 60 to 70 percent.

Greater demand for efficiency

The driving forces look somewhat different in mature markets and in emerging markets. “The rapid change in emerging markets is initially driven mostly by improved infrastructure, which creates opportunities for haulage in general. In Europe, the driving force is still greater demand for efficiency in the logistics chain. And although retailing in the electronic age is becoming less and less physical, this trend will continue,” Holmquist predicts.

In Europe, the share of heavy trucks in the logistics system has increased during the past decade, while medium-duty trucks have decreased.

In Europe, the share of heavy trucks in the logistics system has increased during the past decade, while medium-duty trucks have decreased.

Today retailing increasingly takes place when customers order goods on the Internet and have them transported home to their door. This reduces the importance of physical stores while warehouses, logistics and transport services assume greater importance for all retailers. They compete with fast deliveries, so an efficient logistics process is needed.

Winners of the trend

Who are the winners in this trend? Are they truck manufacturers like Scania, which specialises in heavy and robust vehicles for customers with strict demands for uptime, efficiency and a well-developed service network? The answer is not totally clear.

“The competition is intense. But Scania obviously benefits from the trend that more sophisticated needs require more sophisticated transport solutions. The company has always focused on such solutions. Domestic manufacturers of light trucks in emerging markets risk losing sales.”