Inflation, weakening demand, social instability and war in Ukraine are causing tumultuous road freight price developments, report reveals Ti/Upply/IRU Road Freight Rate Benchmark for the second quarter of 2022. For the first time, this edition offers a separate analysis of the evolution of spot and contract rates.

• The European Contract Road Freight Rates Index reaches an all-time high of 121 points in the second quarter of 2022, which represents an increase of 6,1 points in quarter-on-quarter terms and 13,1 points in year-on-year terms.
• The European Road Freight Spot Rate Index also reached an all-time high of 134 points, up 11,8 points from the first quarter of 2022 and 20,1 points from the second quarter of 2021.
• Inflation is rising in all European countries and reached an all-time high of 8,6% in the eurozone in June, weighing on costs and demand.
• Although diesel prices have varied according to the countries, in July they have remained high and are 69% above the level of January.

The report European Road Freight Rates Benchmark, produced by Transport Intelligence, Upply and IRU, analyzes Europe's road freight transport prices and market outlook quarterly, to inform the decisions of shippers, transport providers and carriers.

For the first time since the report's inception, Ti, Upply and IRU are able to offer differentiated analysis of spot and contract rates in this edition covering the second quarter of 2022.

• War in Ukraine: After the invasion of Ukraine in March, the price of diesel before taxes in the EU-27 soared 69% compared to its level in January.
• Weakening demand: Multiple indicators point to weakening demand for road freight transport in Europe, with declining activity in major economies and inflation rates weighing on consumer and business confidence.

• Rising Inflation: Inflation is rising in all European countries and reached an all-time high of 8,6% in the euro zone in June. According to the latest data, Spain is the country that experiences the greatest increase, with a rise in prices of +10,2%, higher than the other large European economies: Germany (7,9%), France (5,8%) , Italy (8%) and the United Kingdom (9,1%).
• Shortage of drivers: The shortage affects the entire European continent. Germany is in a particularly critical situation, with an estimated shortage of between 50.000 and 80.000 truck drivers. Migrant workers make up 24% of the German driver workforce and the loss of Ukrainian nationals returning to defend their country has further restricted the supply of drivers in Germany.
• France/Spain: In this corridor there have been very significant increases in spot rates. In particular, the increase reached 21,2% quarter-on-quarter in the Paris-Madrid direction. This is almost double the average increase in European spot rates and is also the second largest increase of all European spot rates.
• Germany/Poland: All rates, with the exception of spot rates from Duisburg to Warsaw, have reached new all-time highs on this route after following an upward trend since the start of the pandemic. Contrary to the relationship seen on most European routes, spot rates on this route increased more slowly than contract rates. Demand has been affected in particular by the weakening of the sector in Germany and Poland. The instability created by the conflict in Ukraine is particularly notable in this part of Europe and also affects the evolution of industrial prospects.
• France/Great Britain: After the Proposed referendum on United Kingdom membership of the European Union, transport operations between France and Great Britain have become more expensive and lengthened. Researchers from the London School of Economics (LSE) have found that while exports have largely recovered, UK imports from the EU have fallen by 25% compared to other destinations. In addition, the variety of goods traded fell by 30%. Low-value goods were the most affected by the increase in administrative costs.

Thomas Larrieu, CEO of Upply, comments: “The slowdown in European demand should curb the upward pressure on road freight rates. On the other hand, carriers continue to face significant cost increases (fuel, labor, etc.), so it is likely that rates will remain at high levels in the coming months.”

Nathaniel Donaldson, Economic Analyst at Ti, says: “The effect of rising costs in 2022 is now very apparent, with road freight rates across the European continent reaching new all-time highs. Initial fuel price hikes following the invasion of Ukraine have held, producing a much more expensive environment for European road haulers, while industrial action and worsening driver shortages keep capacity tight. A series of indicators point to a drastic slowdown in consumption and production, which will facilitate further increases while high costs keep tariffs high.

Vincent Erard, Director of Corporate Services at IRU, adds: “The driver shortage is one of the biggest challenges facing the road transport industry at the moment, and its effects are likely to increase in the near future and continue to affect prices. of transport. The age distribution of drivers already gives an idea of ​​what lies ahead, since 34% of drivers are over 55 in Europe and young people under 25 only represent 7%. This trend will be exacerbated if older drivers continue to retire, some of them early, as occurred during the COVID-19 pandemic, further reducing the pool of available drivers. All actions and initiatives aimed at improving the attractiveness of the driving profession and at removing barriers to access the profession (cost of training, minimum age) will be decisive in the long term”.