The hopes raised by the increase in spot rates observed in the second quarter of 2024 on the European road transport market were short-lived. The third quarter did not confirm the trend, on the contrary. The Upply spot road freight rate index stood at 122.4 points, down 4.4 points from the previous quarter and down 6.1 points year-on-year. At the same time, the road freight rate index on the contract market remained stable quarter-on-quarter, but fell by 2.2 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.
The decline in road transport prices in the third quarter partly reflects lower fuel costs. Indeed, diesel prices fell throughout the quarter, before rising slightly in October. The weighted average price of diesel in the EU reached €1.64/L on 8 July, compared to €1.59/L on 10 June (down 3%), before falling to €1.50/L on 30 September (down 8% since its peak in July, and the lowest value observed since January 2023). However, other operating costs for carriers have increased overall.
This cost base, heavily marked by two years of inflation, prevents prices from falling back to the 2021's levels, as carriers must cover their growing expenses. But the developments in the third quarter show that transport companies are finding it increasingly difficult to pass on the increases.
For the sixth consecutive quarter, the spot price index remained below the contract price index, reflecting weak demand. The European economy is currently struggling. Production in the eurozone is not doing well, with persistent declines in manufacturing activity. The eurozone PMI index fell to 45 in September 2024, one of the lowest values of the year. This is explained in particular by the difficulties in Germany, which saw its manufacturing PMI index fall even more sharply to 40.6. The powerhouse of European production has broken down. Some regions, such as Poland, have shown signs of recovery with an increase in new orders, but the overall industrial outlook remains gloomy.
The trend is more favourable in terms of consumption. But European households are still cautious, and as such it is not enough to get the European economy moving again. "Employment growth and the recovery in real wages continued to support disposable incomes, but household consumption was limited. A persistently high cost of living and increased uncertainty stemming from repeated exposure to extreme shocks, compounded by financial incentives to save in a high interest rate environment, have led households to save an increasing share of their income," the European Commission underlines in its autumn economic forecast published on 15 November. Investments also experienced "a disappointing development, marked by a deep and broad-based contraction across most Member States and asset classes in the first half of 2024", the Commission added.
This situation has an impact on the demand for transport services. "The road freight transport sector is going through a period of turbulence marked by a significant level of business failures. Even if it is slowed down by high operating costs, which continue to increase, the downward pressure on freight rates could continue in the coming months while waiting for a possible rebound in the European economy," says Thomas Larrieu, CEO of Upply.
According to the European Commission's autumn economic forecast, published on 15 November, GDP is expected to grow by 0.9% in the European Union and by 0.8% in the euro area in 2024. This is 0.1 percentage point lower than the spring forecast for the EU, while it remains unchanged for the euro area. The rebound should be more significant in 2025. "Economic activity is expected to accelerate to 1.5% in the EU and 1.3% in the euro area in 2025, and to 1.8% in the EU and 1.6% in the euro area in 2026", according to the autumn forecast.