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Statistics show prices softening towards the end of Q3 2022.
Diesel prices, driver shortages and drought in Europe have all played a significant role in pushing average European road freight rates up again in the third quarter this year despite lower consumer spending, according to the European Road Freight Rates Benchmark Report, produced by Transport Intelligence, Upply and the International Road Transport Union.
Average European road freight contract rates were up to an all-time high in Q3 this year (129.7 index points), up by 5.4 points quarter on quarter (QoQ) and by 19.6 points year on year (YoY). In the spot market, rates hit 142.6 points, an increase of 6 points QoQ and 26.4 points YoY.
Rates on many European lanes are beginning to soften after this Q3 peak. Spot rates are now 12.9 points above contract in Europe. The gap was 12 points in the previous quarter and 6.1 points in Q3 2021.
Diesel costs usually account for one third of the total operating transport costs, but given the increase, they may now account for half of the costs.
Driver shortage growth is expected to continue to increase until the end of 2022, with a 40 per cent estimated increase in unfilled truck driver positions.
This quarter’s smaller rate rises in both spot and contract signify that the market has adjusted to higher costs, while higher production costs and lower consumer spending power have started to ease the upward demand-side pressure on rates, an IRU press release said.
Growing energy costs and uncertainties in energy supply are causing difficulties for the German industrial sector. This has pushed Germany’s manufacturing industry into a decline. This is the first clear sign that German industry will begin to demand less and less road freight as its factories demand fewer outputs and produce fewer intermediate and finished goods.
Forward delivery electricity prices in the United Kingdom are up by over 500 per cent YoY, with prices increasing 64.2 per cent in August alone. The United Kingdom heads into winter in the most uncertain energy supply predicament in Europe.
While the effects of this are uncertain, it is possible there will be interruptions to manufacturing in the UK over the winter, reducing road freight volumes, the report said.
Among main European countries (France, Spain, Germany, Romania, Poland and Denmark), between January and September 2022, the demand for drivers is continuously increasing (44 per cent rise). The shortage is projected to be far worse in 2026, with a multiplier effect of up to seven in the case of France.
Drought in Europe meant river freight capacity was reduced across the continent pushing demand onto road freight and adding more upward pressure to rates on some routes. High summer temperatures have also affected the continent’s agricultural production, with many sectors expecting to see record-low harvest volumes.
Fibre2Fashion News Desk (DS)
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