The global market size for road freight services is growing at an annual rate of 4% to 5%,

according to procurement intelligence firm Beroe Inc., and is currently valued at US$2.4 trillion.

Beroe said with the impact of Brexit, trade volume with emerging economies would expand in the next 4 to 5 years, which would result in improved road freight activity.

The North Carolina-based market intelligence company said Western Europe, North America, and Australia have a high maturity for buyer and supplier verticals due to advanced technology adoption, but due to the increase in e-commerce and global trade, APAC and parts of Africa are expected to be the future growth-driving markets for road freight services.

"Retail sales will increase by 5% to 6%, which will drive the demand for trucking and ultimately overall road freight services. Since retail e-commerce is growing at 14% to 15% per annum, it will also create new demand for logistics, especially in metropolitan cities," the firm said in a statement.

Increasing fuel, labour costs

However, it noted that the fuel prices are a major constraint in the road freight industry and hold nearly 30% to 35% of trucking freight rates. It said the major cost components are labour and fuel costs, which comprise 55% to 60% of the total cost.

According to Porter's Five Forces Analysis, in developed markets such as North America and Europe, the shortage of skilled drivers coupled with high labour rates act as a deterrent to new players venturing into the market.

In emerging markets such as APAC, however, intrusive regulatory regimes and the non-tradable nature of the market combined with the low level of market maturity makes the market difficult for new players.

Other key findings are:

• Driver wages account for nearly 30% to 35% of carriers' operating costs, and driver wages are expected to increase due to the prevalent shortages in the industry;
  
  
• Growth in GDP implies increased economic activity, which is a positive correlation between the development of freight transport and GDP. Thus, an increase in GDP is directly related to the increase in road freight services;
  
  
• The threat from railways to road freight industry is high, but road transport players enjoy higher accessibility and provide customization so the threat remains between low to medium;

Beroe said the introduction of digital identifiers for accurate tracking of consignments is the new trend on the technological front of logistics and road freight services industry.