04 November 2022

EUROPEAN ROAD FREIGHT RATES SET TO DECREASE AFTER HITTING AN ALL-TIME HIGH

The latest quarterly European Road Freight Rate Benchmark produced by Transport Intelligence, IRU and Upply shows that average European road freight rates rose up again in Q3 despite lower consumer spending. However, data from the end of the quarter shows prices softening towards the end of Q3.

The Benchmark hit 129.7 for Q3 2022, which represents a 5.4-point increase from Q2 2022 and 19.6 points on a year-on-year basis. In the spot market, the rate benchmark hits 142.6 points, an increase of 6.0 points from the last quarter and 26.4 points from Q3 2021.

While lower consumer spending power have started to ease the upward demand-side pressure on rates, supply-side pressures continued to push up prices in Q3 2022. High diesel prices from March have held and created a more costly environment for carriers operating in the European road freight sector. The continent continues to struggle with a driver shortage problem which is driving up labour costs. Climate change’s effect on European weather caused further pressure with water levels on Europe’s rivers running extremely low during the continent’s worst drought for 500 years. River freight capacity was reduced across the continent pushing demand onto road freight and adding more upward pressure to rates on some routes.

The report also highlights that demand for road freight in Europe will be lower in Q4, resulting from a falling consumption and production across Europe. Low order books, high energy prices and gas supply uncertainty are also deterring production expansion in the coming months. The downward trend of consumption/production is accompanied by high inventory levels across Europe, with warehouses already full and prepared for the peak period, which will lower the demand for imported retail goods in Q4.

Source: IRU