The European Road Freight Rates Benchmark, produced jointly by Transport Intelligence (Ti) Upply, and IRU, analyses European road freight rates and the market every quarter.
The latest index reached an all-time high of 121 points in Q2 2022, up 6.1 points quarter-on-quarter and 13.1 points year-on-year. The European spot road freight rate index also rose to a record high of 134 points, up 11.8 points from Q1 2022 and 20.1 points from Q2 2021.
The report notes that inflation is rising in all European countries and reached a record high of 8.6 per cent in the Eurozone in June, weighing on costs and demand. While diesel prices have varied by country prices remained elevated in July and are 69 per cent above the January level.
Key points
Regional differences
France/Spain: This corridor has seen very significant increases in spot rates. In particular, the increase reached 21.2 per cent quarter-on-quarter in the Paris-Madrid direction. This is almost twice the average increase in European spot rates and is also the second highest increase of all European spot rates.
Germany/Poland: All rates, with the exception of spot rates from Duisburg to Warsaw, have reached new historical highs on this route after having followed an upward trend since the beginning of the pandemic. Contrary to the relationship observed on most European routes, spot rates on this route increased more slowly than contract rates. Demand has been affected in particular by the weakening of the industry in Germany and Poland. The instability created by the conflict in Ukraine is particularly noticeable in this part of Europe and also affects the development of industrial prospects.
France/Great Britain: Following Brexit, transport operations between France and Great Britain have become more expensive and longer. Researchers at the London School of Economics (LSE) have found that while exports have largely recovered, British imports from the EU have fallen by 25 per cent compared to other destinations. In addition, the variety of goods traded fell by 30 per cent. Low value goods were the most affected by the increase in administrative costs.
Thomas Larrieu, Chief Executive Officer at Upply, comments: “The lull in European demand should slow the upward pressure on road freight rates. On the other hand, hauliers are still facing significant cost increases (fuel, labour, etc.), so rates are likely to remain at high levels in the coming months.”
Nathaniel Donaldson, Economic Analyst at Ti said: “The effect of rising costs in 2022 is now very evident with road freight rates across the European continent reaching new all-time highs. Initial fuel price rises following the invasion of Ukraine have held and produced a much more costly environment for European road carriers whilst industrial action and a worsening driver shortage keep capacity tight. A range of indicators are pointing towards a drastic slowdown in consumption and production which will ease further increases while high costs keep rates elevated.”
Vincent Erard, IRU Director of Corporate Services, adds: “The driver shortage is one of the biggest challenges for the trucking industry at the moment, and its effects are likely to increase in the near future and continue to impact freight prices. The age distribution of drivers already gives a taste of what is to come, with 34 per cent of drivers aged over 55 in Europe and young drivers under 25 representing only 7 per cent. This trend will worsen if older drivers continue to retire, some of them earlier than expected, as during the Covid-19 pandemic, further reducing the pool of available drivers. All the actions and initiatives aimed at improving the attractiveness of the driving profession and removing the barriers to entry into the profession (cost of training, minimum age) will be decisive in the long term.”