Over the next decade, the transport industry will change significantly. The transformation will be driven by changes in legislation, technology, and a shortage of drivers, among other factors

The challenges currently facing the Polish transport industry will have a decisive impact on the development of this sector over the next decade. One of the biggest problems is the shortage of professional drivers - by 2022, this gap could reach as many as 200,000 people. The European Mobility Package regulations, as well as advancing digitalization and industrialization, will also have a huge impact on transport services - these are the conclusions of the study "Transport of the Future: Report on the Development Prospects of Road Transport in 2020-2030," prepared by the consulting firm PwC in cooperation with the "Transport and Logistics Poland" Employers' Association.

"Over the last 10 years, we have seen dynamic growth in the transport industry, both in the domestic market and in European markets. However, changes in the Polish labor market and administrative and legal barriers introduced in many EU countries have meant that our advantage, based until recently on labor costs, has been eliminated. Many carriers are also asking themselves how new technologies will affect building a competitive advantage. There are several possible scenarios for the industry's development, but it is worth emphasizing at this point that without cooperation with the administration, maintaining the current position of Polish road transport will not be possible. Joint efforts should focus on enabling further growth, improving workers' social conditions, and taking effective action aimed at environmental protection," says Maciej Wroński, President of the "Transport and Logistics Poland" Employers' Association.

The authors of the "Transport of the Future" report, whose partners are Santander Bank Polska, DAF, and Uber, identified five main factors that will most strongly influence the development of the transport industry in the coming years.

Growth in domestic, import, and export transport

The projected economic growth and investment attractiveness of Poland will translate into an overall increase in tonnage handled by the industry within the country at a level exceeding approximately 23% over the years 2018-2022. The dynamics of volumes handled by Polish carriers in 2018-2022 will be positive but will begin to slow compared to previous levels due to the projected slowdown in economic indicators affecting the industry.

According to the data and analyses collected in the report, factors such as the Mobility Package regulations, the ongoing shortage of drivers in the labor market, rising costs related to environmental regulations, and increased road toll costs will lead to cost increases in the industry in the range of 7-15% by the end of 2020 compared to 2018.

Reorganization of international transport as a consequence of changes in EU law

The European Union is preparing fundamental changes to road transport regulations, including the provisions of the Mobility Package and changes to regulations on the coordination of social security systems and other social regulations. Their implementation will result, among other things, in increased costs of transport networks, a decline in revenues associated with reduced market access, and a shift of Polish carriers' services from EU markets to the Polish market.

Experts point out that a reduction in transport work in international transport services by, for example, 20% would mean a reduction in the total transport work performed by Polish carriers by nearly 13%. Transport work performed by Polish entrepreneurs in international transport accounts for as much as 64% of their total transport work, meaning that a major portion of Polish carriers' activity is threatened by changes in the law.

Driver shortage

The shortage of drivers with the desired skills will deepen and by 2022 may reach a level of up to 200,000 drivers (20% of labor demand). A revolution for the industry will be the deployment of autonomous vehicles, but this will not fill the shortage in the short term. It is estimated that fully autonomous solutions will appear on the market only after 2025. In the initial phase, the implementation of autonomous solutions will involve investment outlays, but in the long term, it will enable increased cost advantage.

Advancing automation and digitalization in the long term will require the development of personnel with new skills, including IT specialists. This is also an opportunity to increase the attractiveness of work in the transport industry for young people.

"Entrepreneurs should prepare for the growing multiculturalism of their workforce. In 2018, drivers from Ukraine accounted for as much as 72% of drivers from outside the EU working in Poland. If the supply of workers from Ukraine is exhausted in the near future, carriers may consider recruiting workers from Central or South and East Asia as well. Although driver shortages are observed in some foreign markets, employment in Europe remains attractive to workers from outside our continent due to differences in pay levels."

"It will also become necessary to introduce professional human resource management in order to respond to drivers' growing expectations associated with generational change, reduce their turnover, and increase employee loyalty to employers," emphasizes Grzegorz Urban, director in the transport and logistics team at PwC.

Digitalization

Digitalization of transport in Poland is progressing in four areas.

  • Basic digitalization - computerization of processes, automation of administrative handling, optimization of transport networks through the use of geographic network modeling solutions.
  • Platformization of markets - development of digital platforms allowing online ordering of services from a large base of service providers.
  • Digital giants - entry into the transport and logistics market by large companies that were built on digital technologies.
  • Advanced digital technologies - the expected intensification after 2022 of advanced solutions in telematics, artificial intelligence, and blockchain-based solutions entering the market. Currently, they are only in the testing phase.

The implementation of digitalization solutions will be crucial for reducing operating costs, adapting services to changing customer needs, and implementing high-value-added solutions. In the shorter term, however, they will be available to large carriers that have the capacity to implement them, which may create an additional barrier for smaller entrepreneurs and contribute to increased market concentration.

Industrialization - vehicle automation and the development of alternative powertrains

According to the report's authors, the transformation of the transport industry from traditional to industrialized will occur due to two technological factors. The first is vehicle automation, which will make it possible to reduce operating costs by approximately 15% by 2025 thanks to lower labor costs, and potentially even to a level about 28% lower around 2030 compared to 2016. It will also contribute to a decline in demand for drivers and an increase in demand for specialists dealing with the operation of autonomous systems.

The second decisive factor is the development of alternative powertrains - it will adapt the industry to growing CO2 emission requirements and in the long term will make it possible to reduce transport costs, although this effect will not be observable before 2025.

The development of new technologies involves high outlays, so solutions in the area of autonomy and new powertrains will be more easily accessible to large carriers with greater investment capacity, which may be a factor in increasing the level of concentration in the industry.

"Consolidation in the road transport industry is inevitable. The position of large enterprises will strengthen, while small, less efficient companies will have increasing difficulty staying in the market. That is why building an appropriate scale of operations today, which will enable cost optimization, is a key success factor. A response by smaller enterprises to sector challenges may be an attempt to reduce costs, for example by joining purchasing groups, or specialization in niches, which will allow them to generate higher margins," summarizes Bartosz Toczony, director of the strategic sectors department, Santander Bank Polska S.A.