How will rates change in 2020?

The start of a new year is a natural turning point and it is traditionally the time when any rate changes come into effect. It is important for companies in the transport and logistics sector to be aware of these changes. That’s why this article outlines what to expect in 2020 – including the potential impact of Brexit.

Facts and figures

In 2019 the costs for road freight rose less steeply than expected, mainly due to the low interest rate. The researchers at Panteia and Evofenedex expect this trend to continue in 2020, with increases of between 4.1 and 5.6%.

Besides that, the researchers forecast that:

  • Fuel costs will fall on average by 2.1%
  • Depreciation costs will rise by 1.5%
  • Insurance costs will increase by 9.0%

Employee shortages pushing up labour costs

The figures predict that labour costs will rise by an average of 1.4% for drivers and 3.0% for other employees. According to Panteia, this difference is due to the fact that 

drivers received an average one-off payment of €750 this year to compensate them for a discrepancy in paid annual leave. The research firm assumes that employees in other roles have not received such a payment. For some companies, the labour shortage will cause extra cost increases due to the need to hire temporary workers, higher staff turnover, the payment of extra compensation and bonuses, and the time spent onboarding new employees.

Eastern Europe catching up

A striking, but not unexpected detail is that labour costs in Hungary, Poland and Slovakia are growing at a greater rate than in Western Europe. It seems that the labour costs in Eastern Europe are slowly catching up, with rises between 5 and 8%.

Secondary effects of employee shortage

The secondary effect of the employee shortage is difficult to quantify. Nevertheless, companies should not underestimate its impact on workloads, absenteeism, customer satisfaction and business growth. Business Development Manager Arno Spoek from IDS explains: “The IDS Control Towers are often a good solution in such situations. A control tower immediately provides better visibility and facilitates faster and more efficient order fulfilment. That creates much-needed breathing space for the overstretched workforce. Once all the transport flows are running smoothly again, companies can turn their attention to looking for an optimal longer-term solution.”

A big step closer to Brexit

In addition to the rate changes, Brexit is another factor that will play a major role in the coming year. Now that the Conservatives have won the general election in the UK, it looks increasingly likely that an orderly Brexit will happen on 31 January 2020. This means that companies can start putting their carefully prepared plans into action. Any companies that have not yet registered with the customs authorities should make a point of doing so as quickly as possible!

Effects of trade agreements

Over the past years, IDS has helped numerous customers to gain insight into all their transport flows, and the scenarios we’ve developed for them are coming in particularly useful now. Even so, it remains to be seen how Brexit – and the new trade agreements the UK must subsequently reach with the EU, the USA and other countries – will affect international business in practice. But it will undoubtedly have a substantial impact on the transport sector and lead to extra costs.

To learn more about how control towers and/or Brexit could affect your organization, feel free to contact our Business Development Manager, Arno Spoek: arno.spoek@idsnl.com or +31 (0) 88 437 4370.