Truck Operational Efficiency Index Sheds Light on 2024 Capacity Challenges
Market Monday - Week 40 - downward trending operational efficiency is intensifying carriers’ burdens
A key takeaway from the Transporeon Summit in Vienna was the significant transformation of transportation networks. These changes resulted from structural measures implemented in response to the supply chain disruptions of 2021 and 2022. Many of my recent analyses indicated the issue of seemingly reduced operational efficiency, which both contributes to and worsens the current unfavorable capacity situation. This aspect, in my view, deserves a more thorough discussion and evaluation.
In this context, I am pleased to introduce a promising KPI we are currently researching: the Truck Operational Efficiency Index. This index quantifies carriers' operational productivity by measuring the daily distance driven and the time taken for these journeys.
European Truck Operational Efficiency
Source: Trimble Transportation
This index typically shows low volatility as it is directly related to trucks' productive output and consists of a 7-days moving average. Significant fluctuations would indicate severe market disruptions which hopefully never occur. Values above 100 suggest increasing production efficiency (e.g., longer distances traveled or shorter time needed), while values below 100 indicate a reduced efficiency. From the graph, we can infer that 2024 shows a decreasing trend, signifying slightly lower operational efficiency compared to 2023. A more detailed analysis reveals that in 2024, trucks require more time to cover almost the same distance.
Why is this happening? The reasons for this observed lower efficiency are complex and can´t be pinpointed to a single factor. Several elements contribute, including:
Congestion
Blocked routes (tunnels, motorways, bridges)
Adverse weather conditions
Road construction and maintenance
Border stops and checks
Slow steaming (intentional reduction in speed)
While this list is not complete and it’s challenging to point to one primary reason, the overall effect is clear and valuable. This phenomenon adds another layer to the broader picture of available capacity in the market, offering insights into why capacity has decreased significantly in 2024 compared to 2023 from a fleet perspective.
What Does This Mean?
This KPI should not be viewed as an exclusive figure explaining market evolution, it's a helpful piece of the puzzle to understand capacity dynamics. The decreasing trend in efficiency not only impacts carriers' profitability but also ripples through the entire supply chain, affecting shippers, consumers, and the broader economy.
We'll keep an eye on this index and share updates on how it relates to other market trends we're tracking. This will give us a clearer picture of what's really happening in the freight market.
Christian Dolderer
Lead Research Analyst