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Effects of external factors affecting the road haulage industry.

Extracts from this essay...

Introduction

Effects of external factors affecting the road haulage industry Objectives * Competitiveness of the road haulage industry and pressures on margins * Impact of economic factors * Delivery pressures * Increased customer requirements * Development assistance for the road haulage sector * Increasing range of products and requirements demanded I have been asked by a road haulage company to produce a review which presents a strategic assessment of the road haulage industry regarding the capacity of the industry to meet the changing environment and the adequacy of the existing structure and organisation of the road haulage industry to respond effectively to these changes. I will also discuss the likely impact of these developments on the market environment in the road haulage industry and the implications this has for the activities that may need to be undertaken to ensure that the industry can meet users' evolving service requirements competitively and cost-effectively into the future. The road haulage industry faces an environment of increasing customer requirements, these are summarised below and are all discussed in subsequent paragraphs. CONCENTRATION OF MANUFACTURING OPERATIONS LEADING TO INCREASED REQUIREMENTS FROM SUPPLIERS EVER INCREASING DEMANDS FOR ENHANCED RESPONSE TIME INCREASING RANGE OF PRODUCTS WITH DIFFERENT LOGISTIC PROFILES LEADING TO

Middle

This is particularly evident among manufacturers who are expanding internationally but is also a more widespread development. The analysis of market trends highlights the future need to expand value-added services. The environment facing haulers could be summarised as one where there will be increasing demand for more services at lower costs. This is discussed below in the analysis of the competitive nature of the market and the pressure on margins. In terms of enhanced services in addition to requirements for supply chain management the two other key trends relate to smaller and more frequent deliveries and greater emphasis on delivery reliability. Very Competitive Market in Road Haulage and Pressure on Margins The British road haulage industry is operating in an environment which is characterised by a very competitive market with resultant pressures on margins. This reflects demand side pressures previously discussed in this section as well as supply side factors. Some of the key features which give rise to this position are summarised in figure below. EASE OF MARKET ENTRY NUMEROUS SMALL COMPETITORS DOMESTIC AND INTERNATIONAL COMPETITION INTENSIFIED NATIONAL AND EU COMPETITION IMPACTS RISING INPUT COSTS CUSTOMER RESISTANCE TO HIGHER PRICES PRESSURE ON MARGINS REFLECTS VERY COMPETITIVE MARKET IN ROAD HAULAGE SECTOR The

Conclusion

attract a wide number of customers and thus gain larger volumes of deliveries and due to the increased demand of customer for the services provided by this industry * Due to the competitiveness and pressures on margins in this industry companies may start merging or taking over. This will allow diversification and also will hope to gain from greater economies of scales and therefore reduce the pressures on margins * The government may look to fund this industry if road haulage companies are leaving the market due to the low profit levels in this sector. The government may look to improve the infrastructure of the country to improve the congestion in Britain and allow for faster lead times for road haulage companies. * Companies should ensure that they build up a good brand image by ensuring they meet minimum requirements such as reliability in deliveries by ensuring products are reached on time and in full. This is likely to enhance road haulage companies chances of gaining a long term contract with a supplier. This will also counteract the problem of road haulage companies being unable to forecast and predict revenue and costs and budget for the future which is a cost in itself.

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