Road Transport: Labor costs expalin the large gap in profitability in Europe

A highly fragmented sector, with weak growth prospects that intensify competition. A quick look at cost breakdowns reveals three major determinants of differences in Europe, in addition to regulation.

Determinant #1: The volatility of oil prices is currently not as damaging, but remains a point of concern for a sector with low profit margins.

Determinant #2: Investments in equipment are more and more expensive due to the accumulation of environmental standards aiming at improving air quality.

Determinant #3: The gradual opening of the European market, known as "cabotage", is not complete.

Determinant #4: Labor costs, the main factor, create the largest gap. Furthermore, the cost of labor cancels out a majority of the value-added. In conclusion, net profitability is weak or even insufficient in Western Europe, except in Spain.