BAROMETER. In an extremely gloomy atmosphere, road freight transport prices continued to fall on the French market. Low demand, despite it being theoretically the high season, is worrying carriers.
In this month of November 2023, a considerable amount of negative economic news has accumulated: erosion of business orders, increase in payment deadlines, decline in cash flow, surge in insolvencies and rising unemployment...
Figures from INSEE show that the French economy fell into the red in the third quarter, contracting by 0.1% in quarterly variation. The Purchasing Managers' Index, HCOB PMI™, for the French manufacturing industry, produced by S&P Global, stood at 42.9 in November, far from the 50 mark synonymous with growth. The HCOB composite PMI Flash index of overall activity in France also fell to 44.5 in November (44.6 in October). Under these conditions, it seems difficult to share the optimism of the Banque de France, which still expects a slight growth of 0.1% in the 4th quarter. France should however see its GDP decline again during this period, before officially entering into recession.
It is therefore not surprising that the business climate deteriorated for the second consecutive month by falling 1.3 points. The construction, wholesale and retail sectors drove the index down, while the industrial and services sectors stagnated at best.
French road transport prices confirm their decline
Under these conditions, road transport prices in France fell by 1.2% in November month-on-month. As such they recorded a second consecutive month of decline, in a faltering economy that led to a decrease in the volumes to be transported.
Source: Upply Freight Index – Road France
The decline in road transport prices is primarily explained by the fall in the price of diesel observed last month. The price of Brent oil had lost more than $8 in one month (and more than $13 since October 2nd). Commercial diesel fuel decreased by 4.5% over 1 month and by 7% over 2 months.
The mechanism for passing on the variation in the cost of diesel, with a month's delay, was effective. We are expecting a decrease in prices of at least between 0.6 and 0.7% due to the fuel factor. However, it is still surprising that a variation of $13 in Brent, i.e. a fall of more than 15% in the price, only causes a 7% decrease at the pump.
The unease in spot transport
Usually, at this time of year, road transport prices are on an upward trend. November is the start of the peak season before Christmas (...)
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