France: road transport prices at a low in October

BAROMETER. Uncertainty seems to be overwhelming all players in the transport sector. Prices are still falling in October 2024, contrary to the increases normally expected during the high season.

In economic matters, the enemy number one is uncertainty. And the least we can say is that France is currently going through a particularly uncertain period. At the head of the country, the Barnier government is trying to move forward with its 2025 finance bill, but the debates have gone in all directions in the National Assembly, according to the newspaper Les Echos. The "central bloc", that backs the Prime Minister, has extensively demonstrated its divisions, to the point that the government seems to be under threat of implosion.

At the same time, the IMF has warned France about its budgetary slippage. The rating agencies Fitch and then Moody's did not downgrade France's rating, but they gave it a negative outlook.

It is still uncertainty which, according to the monthly economic survey by INSEE, caused the business climate in France to decline in October (-0.6 points to 97.3, below the long-term average). This deterioration is mainly due to the collapse of the climate in industry (-7 pt to 92), concentrated in the automobile and aeronautics sectors. Excluding the health crisis (April 2020), this is the largest monthly drop since November 2008.

Road transport prices fall more than expected

Economic uncertainties weigh heavily on the volumes to be transported, pushing down transport prices. Road transport prices in France continued to fall in October, losing 1.5% compared to September.

Source: Upply Freight Index – Route France

We also note that the mechanism for passing on the variation in the price of diesel with a one-month delay has not completely disappeared. In September, professional diesel had fallen by -4%, leading to a 1.1% decrease in Long Distance Articulated Unit (LDEA) transport costs, according to the CNR. But the drop in transport prices in October caused a surprise because it was higher than expected.

With a transport price down 5.6% year-on-year, and at the same time non-diesel costs up 5.2% according to the latest developments in the RFT indices published by the CNR, carriers’ margins could only contract, putting many transport companies in danger.