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The latest Upply x Ti x IRU European road freight rates index, which was presented in a webinar this week, reveals a notable decline in both contract and spot rates for Q1 2025. Contract rates fell by 2.3 points quarter-on-quarter (q-o-q), while spot rates dropped more sharply by 3.8 points q-o-q. Despite these declines, the spot index saw a year-on-year (y-o-y) increase of 1.6 points, and the contract index rose by 0.4 points y-o-y.

Several factors contributed to the decline in freight rates. Consumer demand remained subdued, with consumer spending in Europe increasing by only 0.6% q-o-q. According to a McKinsey consumer survey, 61% of households maintained similar income, saving, and spending levels compared to the previous quarter. Additionally, 74% of consumers reported trading down, primarily by buying less or opting for cheaper retailers. The geopolitical landscape and global economic instability have also played a role, with initiatives like "Buy European" gaining traction to support local economies.

The road freight industry faces ongoing challenges, including a significant driver shortage. According to IRU’s 2024 driver shortage survey, there are 426,000 unfilled truck driver positions across Europe. Diesel prices rose by 4.8% compared to Q4 2024, although prices have fallen in recent weeks. The outlook for rates across Europe has cooled as demand weakens, fuel prices fall, and labour cost growth slows.

Despite the current challenges, there is some optimism for the medium term. Real GDP is projected to strengthen, driven by growth in consumption, improved investment, and recovering foreign demand. Economic activity in the euro area is expected to expand by 0.2% across the first three quarters of 2025. Household spending is forecast to increase by 1.4% in March y-o-y, and annual private consumption growth is projected to improve from 0.9% in 2023–2024 to 1.3% over 2025–2027. These trends point to gradually improving demand conditions, which could support a rebound in freight volumes and rate stability in the medium term.

Source: IRU