Dutch transport and logistics sector achieves modest growth

The Dutch transport and logistics sector is getting back on solid ground this year. Growth is returning in logistics, parcel and road transport as excess stocks have been run down and demand for consumer goods shows improvement. However, the still weak economic recovery and low demand for industrial transport mean that growth potential is limited. On balance, the sector can expect volume growth of 1.5% both this year and next. This is according to ING Research’s new ‘Transport and Logistics Outlook’ (Vooruitzicht Transport en Logistiek).

The big peaks and troughs in the transport and logistics sector are over. The return of passengers to airlines and public transport after the pandemic is entering its final phase, bringing growth levels back down, ING reports.

On the other hand, the correction in freight transport due to a normalization in consumer spending and the running down of inventories is also largely behind us. The upswing in (international) e-commerce is also helping. As a result, growth is returning to logistics and parcel and road transport.

At the same time, a mix of the weak economic recovery, persistently weaker transport demand from the manufacturing industry and capacity constraints means that growth will not pick up strongly in 2025.

Relatively strong year for air cargo handling

The number of flights at Amsterdam Airport Schiphol is on course to be more than 7% higher in 2024 than in 2023. This puts the Netherlands at slightly below the European average for air traffic. The demand for travel continues, although airline tickets are becoming more expensive again due to the distance-based air passenger tax and the higher European carbon tax (ETS).

Due to the Dutch Supreme Court ruling, shrinkage of Schiphol is off the table in the short term. At the same time, Schiphol is already on its way to 475,000 flights this year and the government’s proposed cap of 485,000 only leaves room for 2 to 2.5% more flights. Given the environmental concerns, the margin thus remains limited.

One uncertain factor for the coming years is whether the government will decide to go ahead with Lelystad as an overflow airport after all. Interestingly, ING says air cargo handling is experiencing a relatively strong year due to solid growth in international e-commerce (including from China) and ongoing uncertainties in international supply chains.

Industry headwinds affect inland shipping and rail freight

The major seaports – including Rotterdam – are expected to see some net growth again this year, although uncertainties related to trade policy and supply chains remain high for the time being. Transshipment of raw materials continues to be affected by the ailing energy-intensive manufacturing industry, which is under pressure from relatively high energy prices.

This is particularly noticeable in the German hinterland, which is important for the transport sector, according to ING. Additionally, the now rapidly declining consumption of coal in the energy sector is being felt in inland shipping and especially rail freight, where it still accounts for 20% of cargo. This is not outweighed by growth in other segments.

The shift of containers from road to inland waterways and rail – which the government has long been pushing for – is proving difficult in practice. Whereas inland shipping and rail respectively had a 35% and 11% share of the container transport from Rotterdam to the hinterland in 2013, by 2023 this had actually dropped to 31% and 10%. International container transport via the Rhine, in particular, is at a low point.

The worsened competitive position is partly the result of decreased reliability due to fluctuating water levels and capacity problems on the railways. Initiatives such as subsidies to encourage a modal shift of container transport from roads to waterways have not been able to change this.

Labour shortage often the key problem

While there are limits to the growth in demand for transport and logistics, the labour shortage is frequently a more significant concern for companies. The shortages don’t always just relate to logistics employees such as drivers and conductors, but also technicians and increasingly ICT professionals.

The tight labour market is linked to the ageing population and a reduced inflow, but also to absenteeism in the sector, which is still almost 1 percentage point higher than before the pandemic and significantly higher than the average.

After falling since the end of 2022, the vacancy rate has increased again. For every 1,000 jobs in transport and logistics, there are now currently 47 vacancies, compared with 52 at the peak. More than half of the Dutch entrepreneurs therefore see staff shortages as the key problem.

Sharp rise in bankruptcies in 2024

After several good years, the profitability of companies in transport and logistics in the Netherlands has suffered a setback due to lower demand, higher costs and tariff pressure. The number of bankruptcies in the first half of this year was 40% higher than in 2023 and rose mainly in the largest subsector: road transport.

Despite the strong rise, however, the insolvency rate is still lower than in the past, as many companies have also entered the industry. Nevertheless, the financial challenge is not over yet and the trend may continue, especially due to relatively strong wage increases and rising costs due to ICT investments and compliance with new legislation, among other things.

Thankfully, though, the low point in the transport market appears to be over. Cost increases are slowing down this year and the returning volume growth will ensure a slightly better bargaining position, according to ING.