Road freight transport prices in Europe rose in the fourth quarter of 2024, but much more on the contract market than on the spot market. Demand remains sluggish.
The European road freight transport market had not really seen the effects of the peak season that usually precedes the end-of-year holidays. In Q4 2024, the Upply spot road freight rate index increased by only 0.5 points quarter-on-quarter to 123.9 points, and is down 1 point year-on-year. In the contract market, the road freight rate index shows a more significant increase of 2.8 points quarter-on-quarter to 128.9, but it is also down 1.4 points year-on-year.
"The gap between spot and contract rates is diverging, with contract rates rising faster than spot rates. The spot index first fell below contract rates in Q2 2023 and has remained below the contract index for seven consecutive quarters. Currently, the gap stands at 5.0 index points, slightly smaller than a year ago when the gap was 5.4 index points", says the latest quarterly report on road freight rates published by Upply, Transport Intelligence and IRU.
Content source: Upply - NB: Our price estimates are based on actual transactions. The index may therefore be subject to revisions as new data are incorporated into the Upply database.
A decrease in transport volumes
The evolution of road transport prices reflects the difficulties of the European economy, whose seasonally adjusted GDP increased by only 0.1% in the Eurozone and by 0.2% in the European Union in the 4th quarter of 2024 compared to the previous quarter. During the same period, the volume of retail sales decreased, unlike the production of services. This shift in demand from goods to services is leading to a contraction in transport volumes. On the other hand, activity is also being penalised by the difficulties seen in European industry. "Europe’s manufacturing sector continues to struggle with high energy prices and weak international competitiveness", the Upply/TI/IRU report highlights.
Persistently higher costs
While, given its weakness, demand has a rather deflationary effect on freight rates, costs, on the other hand, are pushing prices upwards. This is particularly felt in the contract market: the increase in rates highlights a certain revaluation of prices at the time of contract renewals.
However, this seems insufficient to cover the increase in carriers’ costs. Admittedly, fuel prices did decrease compared to 2023. But the market remains volatile. In the 4th quarter, fuel prices increased slightly, from €1.50/l at the end of September to €1.57/l on December 31 (+4.6%).
On the other hand, other operating costs remain under pressure, particularly on one of the most important items for carriers, along with fuel: labour. After two years of significant salary increases, linked to the period of high inflation, the increases should be more limited this year. However, pay levels stabilised at levels significantly higher than during the pre-Covid period. On the other hand, even if the shortage of drivers is a little less significant at present, due to the drop in demand, it remains a structural phenomenon. Remuneration will remain a key factor of attractiveness in the coming years.
Other cost items are also increasing. "Truck operators, 89% of which are SMEs in the EU, continue to face soaring costs, further squeezing their thin margins. Rising toll charges, driver shortages and new EU regulations, including the Eurovignette and CO₂ standards, are pushing both operating costs and capital investments ever higher", said Vincent Érard, IRU Senior Director for Strategy and Development. “In this context, even small cost increases or supply chain disruptions can push rates up, even though demand remains fragile”, said Thomas Larrieu, CEO of Upply. According to Transport Intelligence, the modest rate increases seen in the fourth quarter are expected to continue into 2025.
Where to learn more
- See the webinar (in English)
- Download the Upply / Transport Intelligence report on European road freight rates as of the 4th quarter of 2024 (in English)
