The second quarter of 2024 brought a slight glimmer of hope to the European road transport sector. Thanks to a slightly less negative economic environment in terms of demand, road freight rates started to rise again in the second quarter of 2024, after two consecutive quarters of decline. The Upply European Road Freight Spot Rate Benchmark Index stood at 127.7, up 3.5 points quarter-on-quarter and 0.8 points year-on-year, according to the latest edition of the Ti/Upply/IRU report on road freight rates in Europe.
On the other hand, it would be premature to talk about recovery. In the contract market, the decline in freight rates that began in the previous quarter continues. In the 2nd quarter of 2024, the Upply European Road Freight Contract Rate Benchmark Index stood at 127.1, down 1.3 points quarter-on-quarter and 0.7 points year-on-year.
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.
Since the first quarter of 2023 and during four quarters, the spot price index has remained below the contract price index, reflecting weak demand. The trend reversal in Q2 2024 is slight, and needs to be confirmed. But it seems to indicate a certain normalisation of the market, linked to a slightly less negative demand environment, especially in terms of consumption. On the other hand, industrial production in the EU remains lagging, which weighs on the contract rate market.
Road carriers have to deal with this uncertain economic context. They also have to face an increase in operating costs that is undeniable and concerns all areas. Across the EU, labour costs are up 7.7% compared to 2023. While the pressure on wage increases is easing, as inflation ebbs, the driver shortage is keeping the road transport sector tense. According to the preliminary results of the IRU Driver Shortage Study, in 2024, 48% of European companies still face very serious difficulties in filling driver positions.
On the other hand, the pressure has eased a little in terms of fuel prices, the main cost item for carriers along with labour. Diesel prices have been falling since the beginning of April and until the beginning of June, due to the fall in crude oil prices. The weighted average price of diesel in the EU reached €1.07/l on 10 June, compared to €1.20/l on 8 April (-11%), and the lowest level observed since the summer of 2023. Nevertheless, the situation remains fragile. Diesel prices rose again at the end of the second quarter, reaching €1.14/L on July 8.
Other cost items, such as insurance or tolls, are also continuing to rise.
The challenge for the next few years will therefore be the ability of carriers to pass on or not the cost increases. Thomas Larrieu, CEO of Upply, is relatively optimistic : "the first signs of stabilisation in consumer demand are beginning to appear, offering a positive outlook. Market conditions should gradually improve as the year progresses."
"With volumes returning and capacity tightening again, we expect to see carriers be more successful in passing on cost increases to their customers. In that sense we are expecting market conditions to return to their long-term trend of gradual increases in line with costs for the remainder of 2024" is also the opinion of Michael Clover, Head of Commercial Development at Ti.
Vincent Erard, Senior Director for Strategy and Development at the IRU, would like to point out, however, that the situation remains complicated for the road transport industry, a sector in which margins are particularly low, particularly for SMEs. “Policymakers must support operators and the sector to meet demand, including by quickly investing in both efficiency measures – for vehicles, drivers and the wider logistics system – and alternative fuels implementation.”
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