Road haulage prices have taken a slight downward turn during the first quarter of 2019 according to Upply’s data. On a year-on-year basis the progression has been positive but the downturn in the manufacturing sector, especially in Germany, seems to have had a real impact.
The monitoring of road haulage prices contained in Upply’s data base clearly indicates a break in the upward trend over the last 3 months in the French market. We have observed an average drop in prices of -0.4% between December 2018 and March 2019, this is despite a rise in the price of diesel which alone has caused inflation of 1.1% according to data from the CNR. During the same period last year transport prices showed a marked increase (+2.7%).
This slowing down is backed up by the latest economic trends survey from the FNTR (French National Federation of Road Transport) which also covered the first quarter of 2019. The company directors that were interviewed displayed less optimism than during the first quarter of 2018 and forecast a reduction in the outlook on development of the activity (-0.1% during the 1st quarter of 2019 compared to +1.5% during the 1st quarter of 2018).
On a year-on-year basis, the rise reached 1.2% between April 2018 and April 2019, which amounts to more or less the impact of diesel on inflation.
The progression has been shown to be mixed depending on which corridor is being considered. Over a year transport prices increased substantially in the South-East: +7.3% leaving from the region around Lyon and +7.0% leaving from the region of Provence-Alpes-Côte d'Azur. Departures from the South-West saw their prices rise slightly over 1 year (+0.3%). Heading towards the North we see prices drop, first slightly with departures from the Pays de la Loire (-0.7%) and then considerably with departures from the Hauts-de-France region (-2.4%) and departures from the Paris area (-3.1%).
But when taking a closer look, we observe that these differences correspond to the geography of transport exchange: the arc that leaves Strasbourg and passes through Lille, Paris, Angers and Bordeaux is largely covered by cabotage from large fleets from the Eastern European countries in the North and from Spain in the South.
On the other hand, the freeze in price increases that has hit the northern part of France may be directly linked to the reduction in demand for European transport. This fall has itself been linked to a considerable slowing down in activity in Europe, and in particular in Germany. According to the PMI index by IHS Markit, the Eurozone manufacturing sector has shown its greatest contraction for almost 6 years in March 2019. IHS Markit wrote in their news release “The overall downturn was led by Germany, where operating conditions deteriorated to the greatest degree in over six-and-a half years. Italy fared little better, with its PMI at a near six-year low. France returned to contraction, having recorded modest growth in the preceding survey period.”
We will see over the next few months if the impact on transport prices will be confirmed during 2019. According to our analysis, the downturn should remain relatively limited so long as the inflation factors remain strong in the medium term : the aging of the population of drivers in Europe and the absence of coverage of the retirements by the younger generation, the rise in payroll for the drivers from Eastern Europe, or the carbon taxation, to name but a few of these factors.