Clear International has issued its latest forecast for the East European trailer market which shows that although the market will grow by over 6% in 2016 and by almost 5% in 2017, this is considerably lower than was anticipated at the beginning of the year with the difference being mostly attributable to developments in Turkey.
While these markets are a long way from our shores, South Africa – which is currently embroiled in a number of political shenanigans dominating our local scene – would do well to note the effect political developments have on trailer sales and the transport industry as a whole. 77% of goods in Europe are moved by road and most of that proportion is transported on a trailer.
Gary Beecroft, managing director of CLEAR, the UK-based consulting group which produces the report and works with companies active in the automotive and transport markets, says political instability in Turkey had already undermined business confidence in early 2016 and then in mid-year, there was an attempted military coup.
“This has had a dire and worsening effect on business investment resulting in 10 000 trailers being wiped from the forecast,” he says.
It is worth noting that in 2015, Turkey was the largest trailer market in the East. That position will be taken up by Poland in the current year with Russia coming in a somewhat distant third due to the continuing recession there. “Although Turkey may make a quite rapid recovery, it may be in the 2020s before Russia does the same,” says Beecroft.
Even though the outlook for Russia has worsened, 2015 was the nadir for the market and demand will grow in all years but one to 2020. The Ukraine and Belarus will follow the same pattern. In fact, the growth forecast for the trailer market next year is partially dependent on a rebound in both Russia and The Ukraine.
The East European trade in goods reached an all-time high at the end of 2013 but the growth was choked off in the second half of 2014 – again as a result of the situation in Russia, the Ukraine and Belarus. The trade situation has worsened in 2016 for both exports and imports.
The economic forecast for Eastern Europe is for stronger GDP and investment growth in 2017 which will result in recovering levels of trade and more demand for road transport. However, a cyclical slowdown affecting the whole region will lead to a fall in trailer demand in 2018 before growth resumes.
“Political instability and military conflict has resulted in Eastern Europe being stuck at roughly the same level of trailer demand since 2011. A cyclical economic slowdown, most likely occurring in 2018, means that it may well be 2020 before we see the market move ahead decisively,” says Beecroft.
Many East European countries joined the EU in 2004, which resulted in booming demand for trailers. In particular, semi-trailer demand rocketed as the volumes of international transport increased – both within Eastern Europe and between East and West. From 2002 to 2007, the compound annual growth rate for trailer demand was 25.7%. Demand broke the 100 000 unit barrier in 2007 but fell to 40 000 in 2009.