20% of road freight kilometers in the EU in 2020 were done by empty vehicles: what are the ramifications?
Empty kilometers are one of the ways to measure out how efficient a road freight transport company is with its assets, as those driven distances bring no revenue and can become a costly venture for an organization. After all, by driving without a load at the back of a trailer not only a logistics provider has to pay for fuel, wages, and other operating costs, including depreciation of the truck, but is also releasing emissions into the environment without benefiting either consumers or the business itself.
With that in mind, on average, 20% of road freight kilometers in 2020 were carried out by empty vehicles in the European Union (EU), according to recently released data by Eurostat.
According to the EU’s statistical office, “the share of performance by empty vehicles is somewhat higher for national transport (24%) than for the total (20%), and is significantly higher compared with international transport (13%).”
Differences between countries
Eurostat pointed out that in addition to the differences between national and international road freight kilometers, there were differences between countries as well.
“For total road freight transport, Cyprus recorded the highest share out of the Member States for which data are available (44% of vehicle-kilometers by empty vehicles). This likely reflects that a majority of the journeys either carry goods imported through ports or concern construction traffic, both of which are largely one-directional traffic,” commented on data from 2020 the statistical office of the bloc. Furthermore, “empty journeys are more prevalent in domestic transport where the distances journeyed are typically much shorter,” as proved by the fact that only three out of the 27 countries within the EU, on average, had more than 20% of international empty freight kilometers.
“This shows the economic importance of being able to acquire loads for return journeys in international transport,” concluded the statistics bureau.
Overall, split between national and international road freight transport, 13% of the total kilometers were driven by empty vehicles on international legs, while the number is as much as 24% for national transport. While the split showcases, and as Eurostat pointed out, that many domestic journeys driven with no loads in the trailer were as a result of different types of requirements for trucks (drayage, construction, and warehouse runs, for example) that travel within the country. However, with an inefficient domestic road transport network, shippers could struggle to enter the international market. A study by several Spanish scholars concluded that “poor domestic transport links can constitute an important obstacle to participation in global production networks which rely heavily on speed across global space.” It has to be pointed out that the authors noted that “infrastructure improvements could be more successful in helping at least small and medium-sized firms to start exporting,” compared to traditional ways of promoting export.
International transport inefficiencies
While poor infrastructure could also negatively impact the number of empty kilometers driven by international trucking companies, drayage runs, construction site transportation, and intra-warehouse freight runs are guaranteed capacity. For shipments between countries, the ability to balance and secure loads is crucial for carriers, as a stranded, per se, truck inside a country with no way out means that even the load that was brought into the country could become unprofitable. Especially considering that cabotage rules have gotten tighter over the years.
The balancing game of loads becomes particularly difficult during peak seasons in certain countries, where shippers demand a lot of truckload capacity in a cluster of an industry, such as food production or e-commerce. The increased demand means that many carriers’ trucks, even a single carrier’s trucks, are present in a single location, as they will look to deliver goods out of the cluster. However, in order not to drive there empty-handed, commercial departments have to proactively look for loads to bring to that region, which is no easy feat, considering how many operators’ trucks are going from Germany to Spain, for example.
No doubt, a peak season and heightened demand for transport services can mean lucrative business for road freight transport providers. If shippers have not secured capacity beforehand, the SPOT market for loads tends to become hot and prices tend to increase due to there not being enough supply of capacity, allowing trucking companies to secure additional revenue. At the same time, relying on the SPOT market is a venture that could prove to be as if it was walking on a tightrope over a volcano, as at any moment, an overestimation of your abilities can result in a frightened soul.
Or in regular business terms, sending your empty trucks to the closest region where there is demand for capacity, resulting in inefficient usage of an asset, as well as operating costs that are not offset by any kind of revenue-generating opportunities.
While running empty kilometers previously did not have such a harsh impact on trucking companies, as the situation in the market changed, the sensitivity to the impact that empty kilometers have has also shifted. Currently, the European road freight transport is experiencing an unprecedented boom in prices and expenses, a balance that has leaned towards the former for the past few months, putting carriers in a difficult situation.
Still, other than seasonality, there could be several reasons why some journeys are done with an empty trailer. Per an article by two authors from Lund University in Lund, Sweden, the list of reasons also includes structural, design dependent, operational, and commercial imbalances, as well as lack of communication (between departments within a company), inspections, differentiating planning tools, and incorrect information in the system.
Navigating empty kilometers
As the market situation for carriers worsened across the bloc, entering 2021 with an average of 20% of road freight kilometers not having a load was not a positive sign. Nevertheless, as companies have progressed in terms of integrating various technological solutions into their daily operations, the statistic can vary between two different road freight transport providers.
After all, the European market is filled with small and medium-sized asset-based businesses, as in “2017, the sector counted more than 570,000 companies and employed some 3.3 million persons,” according to a report funded by the EC. Whether those small companies have established digitalization processes in place is another question, especially as it is a costly venture to go through – much more so for large transport companies. However, there are tangible and fairly obvious benefits of digitalizing a company’s operations, as it would mean that a carrier would operate more efficiently and perhaps even avoid empty kilometers altogether, or at least minimize the number of kilometers driven without a load. The same study from the Swedish University named a few ways of how to reduce that number, including proper arrangement, metrics, and follow-up, as well as the reduction of imbalances within an organization.
“Imbalance due to low customer density is considered the most critical factor contributing to empty kilometers. By working actively on reducing all types of imbalances, the number of empty kilometers can be reduced drastically,” stated the authors.
One of the most general ways of ensuring that metrics, proper order arrangements, and imbalances could be overlooked by a company without taking too much time to do so is to digitalize every process and that those processes provide data to analyze. Having complete oversight would allow a carrier to make arrangements that not only the company is utilizing its assets, namely trucks and trailers, efficiently, but also reduce the effort to do so by employing the latest software solutions, such as Artificial Intelligence (AI)-based programs tailored towards road freight transport providers. For example, by utilizing an AI Planner developed by one of its partners, Girteka Logistics has been able to significantly reduce the number of empty kilometers driven by its vehicles even during the initial phase of the integration of the software solution. One of the biggest benefits of having AI-based technologies assisting in the organization of the daily and even weekly load directions is the fact that the software solution helps in overseeing the big picture of the whole fleet, meaning that it could prevent an imbalance in cargo flows from occurring under certain conditions.
Nevertheless, reducing empty kilometers going forward is and will remain an important part of how road freight transport will develop in the coming years. Especially considering the fact that there is more and more pressure for the industry‘s representatives to reduce their environmental impact, and as empty kilometers bring no benefit neither to the consumer nor to the environment, it is likely that the number will be looked at with a magnifying glass over the course of the next decades.