Europe, like the United States, is feeling the effects of a hot economy. Even with all the uncertainty around the stability of the European Union, especially in light of Brexit, it seems that demand is outpacing supply.
One proof of this is the announcement this week by DHL Freight of an average 4% peak season surcharge in Europe, due in large part to increased demand, low capacity, and a shortage of drivers.
The surcharge will be effective from September through December 2019 and will apply to all Full-Truck-Load, Partial-Truck-Load, and Less-Than-Truck-Load in Europe.
DHL is of the leading providers of freight services in Europe, and their projection of demand can be seen as a bellwether of the European market, at least in the short term.
Economics Drive Freight Costs
According to Martin Leopold, CSO of DHL Freight, “The shortage of drivers and constantly increasing road freight demand are further constraining the available capacity. We therefore expect capacity challenges similar in 2018. We have and will secure additional capacities for our customers. However, to ensure the high level of service quality and reliability our customers expect, we have to add a Peak Season Surcharge of average 4%.”
This is an issue that the United States has been dealing with as well, particularly in terms of the supply of drivers.
Similar to carriers in the United States, DHL Freight has launched an initiative to recruit more drivers. While it’s still only running in limited locations in Germany, it’s already recruited more than 50 new drivers and helped increase the supply of high-tech trucks. According to DHL, the goal of this program would be to create up to 500 new driver jobs in all of Europe.
As mentioned earlier, Europe and the European Union has been experiencing the most pressure its seen since its formation as an economic block over 4 decades ago. Brexit, the rise of anti-EU parties in some European countries, political unrest, and trade tensions have created a level of uncertainty that is greater than in the United States and there are fears that it will have a negative impact on the economy.
With DHL Freight’s announcement and the reasoning behind it, some fears of a near-term slowdown in the Eurozone may be assuaged.