Transport Refrigeration Markets in Europe - Latest Findings by Frost & Sullivan
Transport Refrigeration Industry Feels The Chill As Excess Capacity Hinders Growth In today’s society, the growing need to preserve and protect food, drugs and medical supplies in a wide range of ambient temperatures has provided fresh impetus for growth in the European transport refrigeration market. A new study by Frost & Sullivan, the international market consultancy, warns that the market is fraught with challenges. Factors such as the uncertain economic outlook, mounting pressure to prove green credentials, and smaller market participants’ endeavours to reposition themselves as global players, are taking centre stage. The situation is further being aggravated by the reform process in EU legislation governing food transportation and the quest for low-noise refrigeration solutions in light of impending national legislation on noise emission. Over the last few years, supermarkets and distributors have been exploring new ways of enhancing efficiency of their logistics operations in order to reduce the number of refrigerated vehicles required. The prevalence of excess capacity could prove a massive stumbling block. The adverse effect of excess capacity is exacerbated by the intensification of competition in the retail market. Profit margins have been hurt by European consumers’ price-consciousness. The lack of sufficient margins forces retailers to postpone investments, thereby reducing demand for refrigerated vehicles,” explains Gaia Nocchi, Research Analyst at Frost & Sullivan. The increasing durability of equipment and the outbreak of foot-and-mouth disease and BSE represent further serious setbacks for companies active in the European transport refrigeration market. Frost & Sullivan’s study is optimistic that buoyant demand for replacement vehicles – the average lifespan of trucks and trailers is estimated at seven to ten years - will reverse fortunes in the European transport refrigeration market. Growing volumes of perishable products that require transportation across Europe help generate demand for more vehicles. The study also observes increased diversity in the types of products that need to be transported under temperature-controlled conditions, including pharmaceuticals and computers. The social phenomenon of internet shopping is gaining prominence as a new distribution channel, prompting growth in the transport refrigeration market. In the short term, the UK home delivery market will outshine performance of other regional European market. Frost & Sullivan values the European market for transport refrigeration at approximately EUR 630 million in 2002. Roughly 79 per cent of the overall value derives from the refrigeration units sector. The remaining share is accounted for by the body builders who insulate the body of the refrigerated vehicles. At an overall level, the growth of the market appears modest, with a compound annual growth rate of just 1.7 per cent between 2002 to 2008. In the body builder market, the rising price of insulation is reviving the competitive landscape with the battle for leadership in emerging as well as in established markets hotting up. Dual temperature systems are, according to leading body building companies, the fastest-growing sector in the overall market, as small retailers and supermarkets need to transport growing volumes of fresh and frozen food. The European transport refrigeration’s recent success story has been the exploitation of growth potential in smaller national markets such as Scandinavia, Portugal and Greece, against a backdrop of sluggish growth in the large established markets, including Germany and France. Thermo King won the challenge for leadership in 2001 on the strength of its investment in smaller markets. Hot on the heels of the market leader – with a miniscule difference of 0.2 per cent in terms of market share - is Carrier Transicold. In recent years, companies such as Zanotti have started to implement a more innovative strategy to penetrate new markets in Europe, launching a price war in the process. “The main victims of the price war were the other smaller players, such as Eurofrigo and Frigiline, traditionally losing market share to the more aggressive competitors, but also Thermo King and Carrier, who suffered as their prices decreased substantially,” Ms Nocchi notes. Trying to leave the pack behind, the two market leaders have successfully introduced a key competitive differentiator in the shape of a more extensive product and service package,” she concludes. Background Frost & Sullivan is an international marketing consulting company that monitors a comprehensive spectrum of high-tech markets for trends, market measurements and strategies. This ongoing research is utilised to complement a series of research publications to support industry participants with customised consulting needs. Interviews and free executive summaries are available to the press. For more information contact: Kristina Menzefricke, Public Relations Department Tel. +44 (0) 20 7343 8376 Fax. +44 (0) 20 7343 8380 kristina.menzefricke@frost.com http://frost.com http://pressroom.frost.com --------------------------------------------------------------------- If you would prefer not to receive further messages from this sender: 1. Click on the Reply button. 2. Replace the Subject field with the word REMOVE. 3. Click the Send button. You will receive one additional e-mail message confirming your removal.