Transport in Poland 2023+: green, integrated, digitized

Summary of 2021, predictions for 2022

As part of the PwC T&L Trend Book 2019 analysis, we identified 5 forces that are changing the transport sector globally: digitization, changes in international trade and domestic commerce as well as software- and machine-driven process changes in transport.

The last 3 years have confirmed our predictions regarding the growth of transport markets, directions of technological changes, emission requirements evolution and changes in international flows. For example, the road transport industry in Poland has recorded double-digit growth in recent years, which is in line with PwC's forecast, and other industries indicate a return to or even exceed the levels of pre-pandemic demand.

In 2019, we forecasted an increase in tonnage transported by the road transport industry at a level exceeding 5% per year over the years 2018-2022. Statistics from the Central Statistical Office indicate that this trend will be maintained until 2020, despite the impact of the COVID-19 pandemic. We expect a similar level of average annual growth in 2021.

The capacities in air transport in 2020 were severely limited by the grounding of passenger planes, which, according to IATA data, globally reduced the availability of air cargo capacity in the early stages of the pandemic by 25%. In 2021, global air cargo capacity (in FTK) was still 10.9% lower than in 2019, but nevertheless, in 2021 the demand for air cargo transport globally increased by 18.7% year-on-year, exceeding 2019 volumes by 6.9%. The results for Poland for 2021 are expected at a slightly lower level of growth.

Sea transport in 2021 struggled with the global container crisis caused by the uneven availability of containers around the world and prolonged port procedures, which together increase delays in the transport of cargo by sea, reaching up to 60% of deliveries.

According to UTK data, in the first three quarters of 2021, the weight transported by rail was 1.2% higher than the weight transported in the comparable period of 2019. Bearing in mind the volume drops in 2020 compared to 2019, last year's results can be expected to return to the level of transport before the pandemic, however, it is difficult to expect high growth. High hopes for the further development of rail transport are placed in intermodal rail transport, which records much higher growth.

Based on the analysis of key development factors, answering the question "How should the transport sector in Poland be developed in the coming years?", we identified the concept of the G-I-D, i.e. "Green, Integrated and Digital".

 

Green, i.e. focused on reducing emissions

According to the data of the European Environment Agency, greenhouse gas emissions from the transport sector in the EU (which at the EU level accounted for approx. 27% of total emissions in 2017), increased both in 2018 and 2019. The data clearly shows that meeting the EU's greenhouse gas reduction targets requires ambitious changes in the transport sector. The strategy for sustainable and intelligent mobility adopted by the European Commission will provide momentum to transformation. Increasing investments in modern fleet and infrastructure, support for innovation and new technologies, and incentives for pro-ecological choices of users will act as the key enablers.

Agnieszka Gajewska, PwC partner, leader of the public sector and infrastructure team in Central and Eastern Europe.

According to the data of the European Environment Agency, rail transport generates 6 to 9 times lower GHG emissions per tonne-kilometer, (unit of transport performance), therefore a dynamic increase in the volume of road transport contributes to increase in emissions. The goals of reducing emissions in the transport sector may be even more of a challenge because, according to EU requirements, electric vehicles are to replace vehicles with conventional (combustion) engines among all new registrations only in 2035, and the emission reduction itself is significantly dependent not only on the type of vehicle, but also primarily on the fuel source used for producing electricity, so it also depends significantly on the share of renewable energy sources in the production of energy consumed in a given country.

For companies involved in road transport operations, decarbonisation should be a priority, especially since investments in development of combined EV + renewables systems is possible, in which vehicles can be powered by the operator’s “own energy” produced from renewable sources. Unfortunately, electricity-powered vehicles are still not available in truck transport. Even in January 2022, the launch of Tesla's flagship product - the Semi Truck - was postponed to 2023 due to the constraints related to the crisis in the semiconductor manufacturing industry. On the other hand, the availability of electric vehicles in the category up to 3.5 tons with fast charging capabilities has increased. However, it should be remembered that the electrification of the fleet often requires the creation of your own network of charging stations. Fortunately, a significant part of the support measures in the EU's decarbonisation plans is also to be allocated to the necessary infrastructure, so it is worth looking for opportunities to reduce decarbonisation investment efforts by preferential financing of charging infrastructure.

Integrated

The hopes of Polish road hauliers for growth in the coming years may, unfortunately, be shaken by the inevitable entry of the provisions of the EU mobility package into force. It is predicted to a large extent for 2022. The mobility package provides for changes in the rules of transport services, including requiring drivers to return to their home country on a regular basis, which will make it very difficult to plan long, often international, sections. Now, more than ever, it is becoming essential to collaborate and integrate the processes of operators of different modes of transport - road, rail, sea, air and river - to allow shippers to offer comprehensive long-distance delivery services that combine different modes of transport.

Integration in the transport sector is the driving force behind its changes and an absolute condition for its development. The impact of the COVID-19 pandemic has fueled change in very different directions. There is a very high dynamics of the parcel market growth in Poland (although also different levels in other Central European countries), shifts of supply chains towards emerging economies, integration of activities of entities of various sizes (e.g. 4PL activities undertaken by logistics operators and freight forwarders). In recent months, we have been meeting more and more often with plans to "reshore" logistics and manufacturing activities towards Eastern Europe, that is, to transfer these capacities back from overseas locations. The progressive integration has various dimensions, such as the integration of various modes of transport in the forwarder's services and online shipping platforms, the integration of carriers with platforms and exchanges, the integration of ordering parties with operators and, of course, the increasingly deeper integration of operators with carriers cooperating with them.

Digitized

In the context of, for example, road transport, which is the foundation of the retail industry, transport efficiency depends on the planning of logistics operations, and each kilometer saved is not only a reduction in costs, but also a real reduction in CO2 emissions. The quality of transport planning depends on the IT tools used, not only at the level of a single company, but also at the level of integration between the retailer or wholesaler and the logistics operator serving it.

Krzysztof Badowski, PwC partner overseeing the PwC strategy team in Poland, leader of the consumer goods and retail team in the Central and Eastern Europe region.

Our analyses show an increasing level of availability of digital solutions for carriers and road transport operators, ranging from transport management systems (TMS), through the automation of working time settlements of drivers, to the automatic collection of information on the location of vehicles and the expected time of cargo delivery and the possibility of integrating various systems entities in road transport. However, a greater challenge may be the integration of systems in across different modes of transport, and it may require support at the level of national infrastructure development systems (i.e. financing from EU or national funds) in the field of creating digital standards for the integration of systems of various stakeholders (shippers, freight forwarders, carriers, infrastructure operators), at the interface of individual types of transport.

Our predictions are also correct in the field of autonomous transport, the development of which can be expected on a large scale after 2023. Currently, the implementations are already visible, with e.g. DB Schenker leading the way in tests with start-ups (remote controlled driving with Fernride, pilot implementations of autonomous vehicles with Einride which is also performing tests in the US currently).

However, the coming years will be focused on digitization. From the perspective of shippers this also means creating own systems with which carriers and operators will be able to integrate. Increasing level of logistics digitization on the side of shippers naturally accompanies the growth scale of operations and the desire for greater control over delivery processes.

Overall, despite the potential for continued volume growth in the coming years, the level of complexity can also be expected to significantly.

 

PwC Retail Platform

 
 

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Krzysztof Badowski

Krzysztof Badowski

Partner, Strategy& Poland

Tel: +48 608 333 277

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