A powerful impression

South-central Europe is rife with health and economic crises exacerbated by political tensions both domestic and international. Italy is a remarkable place that continues to defy the odds.

During the early days of the Covid-19 pandemic, in March, European Central Bank (ECB) President, Christine Lagarde, dismissed calls by Italy for financial assistance. Lagarde, however, changed her tune after her initial response was met with disdain from the financial market community to one of commitment to avoid fragmentation for the euro area.

The President of Italy, Sergio Mattarella, responded by saying that Italy had a right to expect solidarity from beyond its borders rather than obstacles. By 18 March 2020, ECB announced it would spend €750 billion to purchase bonds issued by national governments which according to Lagarde equated to extraordinary action for an extraordinary time.

The Economics Editor of the Guardian newspaper, Larry Elliott, claimed that this announcement from the ECB was evidence that without a massive support package, the eurozone – a monetary union of 19 of the 27 member states of the European Union (EU) that have adopted the euro as their common currency – was in danger of collapse. He wrote: “The situation is immensely more dangerous — both economically and politically — than it was when spiralling Italian and Spanish bond yields prompted Mario Draghi’s [President of the European Central Bank between 2011 and 2019] ‘whatever it takes speech’ in 2012. With people dying in their thousands, borders closing and activity collapsing, the entire European project is at risk”.

EU leaders met via video conference on 26 March 2020 and were unable to agree on an economic response to Covid-19. The day prior, nine eurozone countries (Belgium, France, Greece, Ireland, Italy, Luxembourg, Portugal, Slovenia and Spain) called for a common debt instrument called ‘coronabonds’ to mitigate coronavirus-related damages. These leaders said in a joint statement: “We are all facing a symmetric external shock, for which no country bears responsibility, but whose negative consequences are endured by all”. The eurozone’s ‘frugal four’, which includes Austria, Finland, Germany and the Netherlands, rejected the idea of issuing joint debt to finance economic recovery in Southern Europe. Issuing a joint debt, according to Dutch Prime Minister, Mark Rutte would be “crossing the Rubicon” because it would turn the eurozone into a ‘transfer union’ in a way that was not foreseen by the Maastricht Treaty – the code that established the EU and laid the foundation for a single form of currency.

Coronabonds, according to Dutch Finance Minister, Wopke Hoekstra, would introduce the threat of ‘moral hazard’ by disincentivising the economic reform in debt-ridden Southern Europe. Hoekstra also requested that the European Commission investigate why countries such as Italy and Spain had not made adequate economic reforms since the 2008 financial crisis. Other economic commentators including a correspondent at Wall Street Journal reviewed this situation and found that if the Covid-19 crisis was to eventually cause Italy to default on its debt, the reverberations would be felt across Europe and the rest of the world. Italy, with a Gross Domestic Product (GDP) of nearly $2 trillion is said to be ‘too big to fail, too big to bail’. German economist and Executive Director of The New Zealand Initiative said that not a single European country is doing well which means there is a limited willingness for European countries to aid each other.

“An almighty economic earthquake is in the making,” he said. “In a few weeks or months, several large European economies will require bailout and assistance packages. These will be several times larger than anything Europe has seen. Yet no country, central bank or institution will be eager or even able to provide them. Even the gargantuan sums on the table now will not be enough. Incidentally, forget about the International Monetary Fund. It was already stretched when it got involved with Greece last time. It cannot bail out all of Europe when the euro collapses.”

Another industry commentator of interest, more focused on the trailer side of things, is Gary Beecroft who studied Mechanical Engineering at Edinburgh University and completed a Masters in Automotive Engineering at Cranfield.

After a brief stint as a Radar Engineer, he worked for Rover Group in Oxford where the Mini is still produced and then moved to Ford in Cologne, Germany, to work on the Mondeo program. Then it was back to Cranfield to do an MBA. In the 1990s Beecroft worked for an economic consultancy based in London.

“I worked with vehicle and component manufacturers forecasting demand for specific types of vehicles, systems, components and technologies,” he said. “A German bank contacted me and asked if we could forecast future demand for truck trailers – something that no–one in Europe had done before I believe. From 2000 I carried on doing the same type of work but for my own company, CLEAR International.”

CLEAR, according to Beecroft, is focused on working with companies active in automotive and transport markets. The projects he engages in focus on the future demand for products and services as a result of changes in technology, markets, business processes and legislation. CLEAR specialises in forecasting heavy trailer markets on a global basis.

“In the 1990s the trailer forecast only covered a few West European countries and only looked at trailer registrations and body type,” he said. “In 2003 there was a recession in Europe and a lot of the consulting work I was doing dried up. I was looking for something that would provide a regular revenue stream, so I decided to launch the trailer forecast as a regular service. I started with a twice a year report covering the big five European economies: Germany, France, the UK, Italy and Spain. Gradually the report expanded to cover 15 West European countries and in addition to the registrations forecast both production and parc (fleet size) were added.”

In 2004 several East European countries joined the European Union and it was immediately apparent to Beecroft that there would be a huge expansion in the market for commercial vehicles in that region, so an East European Trailer report was launched in 2005. Subsequently some databases were added to cover the trailers market in the major regions outside of Europe plus provide a trailer production by manufacturer forecast.

So, what is the trailer market like in Italy and what makes it stand out from other European countries? “In the last economic cycle, the large European economies all peaked in 2007/08 and fell into recession in 2009,” Beecroft said. “By 2011 Germany had recovered to the Gross Domestic Product (GDP) level of 2008. All the other economies got back to the level of 2007/08 at some time between 2013 and 2017 with the sole exception of Italy.

Italy’s GDP kept falling until 2013 then grew incredibly slowly until 2019. This lack of economic vigour since 2009 has of course been bad for commercial vehicle demand.

“Trailer demand fell to 8,400 in 2009 having peaked at 17,800 in 2007,” he said. “Demand was still at 6,600 in 2014 but then a rapid recovery got underway peaking at 16,100 in 2017. There were small falls in the market in 2018 and 2019 and a 25 per cent fall in 2020 due to covid-19 is likely.”

At the moment, according to Beecroft, a strong rebound in 2021/22 is forecast with further growth in 2024. “However, that would only bring the trailer market back to the level of 2016 – well below the last peak of 2017. Given the fact that there is now a second peak of the coronavirus developing in Western Europe even this forecast is contingent on the virus at least remaining under control, with infection levels staying well below what we saw in March to May 2020.”

Italy’s economy has impacted the domestic trailer market.

Beecroft said that many famous Italian trailer brands have never recovered from the 2009 Global Financial Crisis (GFC) and though some are still around they are operating with much reduced output levels. In recent years many European trailer builders have expand into the Italian trailer market. Beecroft has analysed these major players.

“Menci, Tecnokar and Viberti are the leading Italian brands but the big German exporters of Schmitz Cargobull, Krone and Kögel have had higher market shares than the domestic firms in recent years,” he said.

Beecroft has observed much political instability in Italy and many changes of government and leadership which does not help the country’s economy especially with investment levels that are well below pre-2009 figures.

“Industry needs political stability and economic growth in order to have confidence to invest,” he said.

JOST Italia Next year will mark 50 years of JOST Italia S.r.l. which was established in 1971 near Milan. The new headquarters were founded in 1979 and with the purchase of a building plot of 2700 square meters, 1400 square meters warehouse plus offices were built. The 12 employees of JOST Italia take care of all commercial aspects to supply both trailer OEMs and the official network. They focus on the distribution of original spare parts, only thanks to the strong relationship with the dealers towards a complete and well-stocked warehouse in order to guarantee a widespread presence.

Moreover, they have set up a dedicated technical assistance team as an after-sales service that works in synergy with an assistance network of authorised workshops, but also to support the technical offices of trailer OEMs.

Since JOST’s acquisition of the Mercedes Benz axle division in 2015, a restructuring of the service network has been necessary. In addition to the dedicated team, JOST Italia and the customers can rely on a network of 120 workshops distributed throughout the Italian territory. These workshops can count on an equally widespread sales network. Now there are 70 authorised dealers and also about 100 distribution warehouses / branches distributed throughout the territory that must be added. A team of three external sales managers deals with the direct contacts with the customers that include additionally more than 300 Fleets and end users.

JOST Italia also provides an on-demand training service formulated ad hoc for the customer (for example fleets) or collaborator (for example the sales office of the dealer or technicians of the authorised workshop). Market shifts for heavy trailers in Eastern Europe Transport consulting group, CLEAR International, has released its September 2020 forecast for the East European heavy trailer market. Demand for trailers grew by 4.4 per cent in Eastern Europe in 2018 then fell by 12.7 per cent in 2019 as evidence of a cyclical downturn became more apparent. At the beginning of 2020 another modest decline in trailer demand was forecast for Eastern Europe but the outlook quickly worsened as the Covid-19 pandemic started to close down parts of the economy. A reduction of new trailer registrations of 24.5 per cent if now forecast for 2020, and that figure assumes that the second wave of the virus, which is already in evidence, is at least contained.

Trailer sales in 2018 were the third highest on record, only surpassed in 2007 and 2008. The forecast now is that registrations of new trailers will not match the 2007/8 level until after 2024 but will surpass the 2018 level in that year. However, the short-term outlook is anything but positive according to CLEAR International. Demand for both trailers and trucks has continued to plunge in 2020. The East European trailer demand forecast for the five-year period from 2020 to 2024 has been reduced by 52,000 trailers with the largest markets of Turkey, Poland and Russia accounting for over 60 per cent of that reduction. The largest fall in demand will occur in Poland – a country that was a model of stability in the 2009 Global Financial Crisis – Poland was the only country in Europe not to have a recession in that year. Russia, the largest trailer market in Eastern Europe until 2010, suffered a 50 per cent fall in demand between 2011 and 2015, but had an astonishing recovery in 2017/18 and is now the largest market once again. Turkish demand reached a new low in 2019 but recovery has already begun, though it will remain in third place behind Poland until the end of the forecast period. Whereas the demand for road transport (measured in tonne-km) in Western Europe has yet to recover to the levels that were typical before the 2009 recession, in Eastern Europe both domestic and international road transport demand has continued to grow every year.

Every year that is until 2018 when growth stalled. Slowdowns in Bulgaria, Czechia, Estonia, Poland and Hungary were enough to halt the growth which has been continuous since 2000. There was some growth in demand in 2019 but this was mostly due to international activity in Poland and Lithuania and it will not be sustained into 2020.

“Turkey will be the only country in Eastern Europe to see any growth in trailer demand in 2020 but it is recovering from a very low base,” said Beecroft. “Russia will have the smallest decline in the region,” he said. “Other countries will see falls of between 15 per cent and 50 per cent.”

Interview with SAF-Holland Italia General Manager, Cristiano Sturaro

Q: Are there any news or developments regarding operations in Italy?

A: The Italian subsidiary of SAF-Holland operates from Verona, northeast of Italy, well connected to Germany and to the main Italian highways. SAF-Holland Italia started its activity in 2002; nowadays 13 people works in SH Italy and I am the Managing Director since end of 2015. During these past years, we developed the business of SAF-Holland in Italy with a good cooperation with all Italian trailer builders and truck importers. The focus on after-sales and a better commercial coverage of the market have been the turning point of our strategy in Italy. Actually, our growth also continues in a difficult year like 2020.

Q: Can you comment on the Italian trailer market?

A: In the first eight months of 2020 the Italian trailer market collapsed of 32. 2 per cent compared to the same period of 2019 (total numbers, January-August: 7,047 units against 10,394 in 2019). The worst period of the lockdown, (March-April) seems to be behind us and trailer builders are now more positive looking at the next months. In general, the Italian trailer market is still dominated by foreign trailer builders with a total market share of 62 per cent on the total registrations, while Italian manufactures covers the remaining 38 per cent and are very strong in certain applications such as tippers and low-beds.

Q: Has there been a spike in demand for any particular products or services?

A: Demand remains on a high level for tippers and reefers (coolers), while curtainsiders suffered the most. There is an increasing demand for renting semitrailers and telematics solutions in order to keep track of all the important information on the trailer. Market shows interest about tyre pressure systems, which maintain the pressure of tires across the trailer, improves fuel consumption and protect the wear of tires.

Q: Would you like to contribute any comments on Italy’s economic situation and how that affects the trucking industry?

A: Starting from the end of February the Covid-19 containment measures introduced by the Government has having a deep affect the economy influencing production, investment and consumption decisions and very negatively affecting the labor market. Our truck and trailer industry has also been affected, however the sector shows signs of improvements and the outlook is positive.

Q: Are there any third party reports or government announcements that stand out?

A: Yes, I think it is very important to take into consideration the new measures decided by our Government during August. Actually, the Italian Government supports our industry with incentive measures in favour of investments made by transport companies. These measures will be valid for the next two years (2020-2021) and will terminate June 2021.

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