TransLogistics

Transport and Logistics Network

European Road Freight Market Update: October 2024

October 18, 2024

By [1] According to Transporeon’s latest insights into European road freight, the spot rate index in September rose to new heights, climbing to 136.52 index points, the highest in the observable period since 2022. This was a 14.7% rise year on year, and a 4.3% rise month on month.

The projections for October stand at 133.58, which is a 12.7% rise y-o-y, a minor MoM decline of 2.1% , but it remains elevated compared to historical levels. Interestingly, the YoY increase of 12.7% shows that the overall price levels in the spot market are significantly higher than they were in October 2023, driven by revalitalised consumer confidence in Europe, in addition to ongoing challenges with the supply chain, such as the delays caused by the Red Sea crisis.[2] The contract rate index has been holding steady for the most part, as it stood at 125.86 index points in September, a modest 0.3% month on month rise.

However, rates have risen 5.6% year-on-year. The projections for October are for rates to stay steady at 125.82 index points. The year on year rise can be attributed to the elevated cost base we have seen across Europe.For example, motor vehicle insurance costs have surged by nearly 20 index points, while maintenance and repair costs have risen by 21.87 index points, and tyre costs by 20.89 index points compared to 2021.

These elevated costs continue to push freight rates higher through the past year. The capacity index declined in September, ending the month at 95.58 index points, 4.4% down from August’s capacity of 99.94. In October the capacity index is projected to increase by 2.1% to 98.16 points.

This index has a baseline of 100 which represents the capacity seen in the year of 2019. This means that values larger than the baseline represent an increase in available capacity. However, compared to the previous year, the index declined by 6.4% YoY.

This suggests that while capacity is still expanding, it has not matched the levels seen in 2023.

The ongoing moderation in capacity could be attributed to a softening industrial demand, as the Euro Area PMI dropped to 45 in September 2024, one of the lowest readings of the year.

This balance between capacity and pricing highlights a market that is transitioning from the high-demand post-pandemic period to a more normalised state, though with lingering inflationary and recessionary  impacts on European road freight costs and rates.

References

  1. ^ (ti-insight.com)
  2. ^ Transporeon’s (www.transporeon.com)