Weak demand keeps European road freight rates flat
The European road freight market remained largely stable in Q3 2024, with contract freight rates unchanged quarter-on-quarter while spot rates experienced a decline, as revealed by the latest Upply x Ti x IRU European Road Freight Rates Index. Despite weak demand and falling rates, the cost pressures on operators are keeping rates above pre-pandemic levels. According to the report:
- Spot rates fell to 122.4 points, down by 4.4 points from Q2 and 6.1 points year-on-year.
- Contract rates held steady at 127.2 points but were down by 2.2 points compared to Q3 2023.
These figures indicate a trend of softened demand, which has been suppressing spot rates.
However, contract rates have remained stable, largely due to high operational costs in the road freight sector, which prevent prices from fully reflecting the market downturn.
“Overall European road freight rates were relatively stable through Q3, largely due to stubbornly low demand across Europe. The fall in spot rates in Q3 is indicative of the weak demand situation, but we expect spot rates to be a leading indicator of demand recovery and upcoming rate growth as and when the market changes,” remarked Ti’s Head of Commercial Development, Michael Clover.
Poland-Germany routes show mixed trends
Recent figures published by Upply, Ti, and IRU reveal notable shifts in road freight rates between Poland and Germany. Duisburg – Warsaw freight rates by Upply
Headhaul to Duisburg: . Spot rates: Decreased by 5.9% quarter-on-quarter (q-o-q) to EUR1,665 (EUR1.54/km).
However, this is a 1.3% increase year-on-year (y-o-y). . Contract prices: Slightly decreased by 0.5% q-o-q to EUR1,587 (EUR1.47/km), reflecting a 3.3% rise y-o-y. . Market Dynamics: The difference between spot and contract rates has narrowed significantly from 10.9% last quarter to 4.9%, due to reduced demand pressure on spot rates and sustained high contract prices.
Backhaul to Poland: . Spot rates: Marginally dropped by 0.3% q-o-q to EUR1,446 (EUR1.33/km), yet this is still a 10.0% increase y-o-y. . Contract prices: Rose by 0.5% q-o-q to EUR1,160 (EUR1.07/km), also showing a 3.3% increase y-o-y.
Manufacturing activity continues its downward trajectory. Q3 2024 saw a 5.0% decline in total manufacturing, driven by significant drops in capital and durable goods production. This has led to reduced demand for road freight services, particularly for intermediate goods transported from Poland to German factories.
Despite ongoing contractions in manufacturing, Poland’s economy shows resilience with a 3.3% rise in retail goods volume and a 4.0% GDP growth in Q2 2024, sustaining high demand for inbound freight. The headhaul rates to Duisburg are expected to face ongoing pressure from declining German manufacturing volumes. Conversely, Poland’s robust economic growth maintains demand, though the wider economic challenges in Germany may impact backhaul rates, according to the report.
Still, high operational costs continue to squeeze margins, limiting the scope for future rate reductions.
Road freight rates between France and Germany hit new lows
The benchmark indicates significant declines in freight rates on the France-Germany routes, driven by reduced industrial activity and economic challenges. Lille – Duisburg freight rates by Upply 
Headhaul to Lille: . Spot prices: Dropped 5.3% quarter-on-quarter (q-o-q) to EUR688 (EUR2.28/km), marking a 6.0% decline year-on-year (y-o-y). . Contract rates: Fell by 4.6% q-o-q to EUR650 (EUR2.15/km), now down 4.5% y-o-y.
. Market Impact: Contract prices have reached their lowest point in 2.5 years, while spot prices are at their lowest in three years. Backhaul to Duisburg: . Spot prices: Decreased by 7.7% q-o-q to EUR504 (EUR1.67/km), a 6.4% drop y-o-y.
. Contract rates: Increased by 3.5% q-o-q to EUR485 (EUR1.60/km), up 0.7% y-o-y. . Market Convergence: The gap between spot and contract rates on the backhaul has significantly narrowed from 16.7% last quarter to just 4.1%. The decline in rates is primarily due to falling industrial activity in both France and Germany.
According to Q3 2024 data from Insee, France’s industrial output dropped 1.3% q-o-q and 7.1% y-o-y. Notably, the production of transport equipment has been a major contributor to this decline. Both countries are grappling with weakened global demand, rising producer prices, and supply chain issues exacerbated by the Red Sea crisis.
S&P Global’s PMI indicates an accelerated deterioration in French manufacturing health, further impacting road freight demand. The outlook for road freight rates on this lane suggests further declines, as intertwined production sectors in France and Germany continue to struggle. The automotive sector, in particular, remains in crisis.
Although consumption in both countries is rather stagnant, there is a possibility of upward pressure in Q4 2024 if consumer demand improves, freed from inflation constraints.
France-UK Routes see significant changes
The figures show notable shifts in freight rates on routes between France and the UK, influenced by economic fluctuations and industrial activities. France-UK import/export by Upply 
French Export to UK: . Spot Rates: Decreased by 5.2 index points from Q2 2024, falling to 138.1 points from 143.4 points. Spot rates are still 5.8% higher than contract rates.
. Contract Rates: Increased by 3.3 index points, moving from 127.2 in Q2 to 130.5 in Q3. This marks a 6.4 index point increase compared to the same period last year. UK Import from France:
. Spot Rates: Dropped by 4.1 index points, declining from 140.7 points in Q2 to 136.7 points. Spot rates are only 0.1% higher than contract rates. . Contract Rates: Slightly increased by 2.4 index points, rising from 134.1 points to 136.5 points.
This represents a 5.2 index point increase year-on-year. The report refers to Ken Murphy, Chief Executive of Tesco, who noted that UK customers are “in reasonably good shape,” as evidenced by a 1% rise in the quantity of goods purchased between July and August, according to the Office for National Statistics. This positive trend is reflected in retail performance, with Tesco raising its annual profit forecast.
In France, the HCOB Manufacturing PMI edged up to 44.6 in September from 43.9 in August, indicating a slight improvement but still signifying contraction. Manufacturing output fell by 1.1% from June to August 2024 compared to the previous year, with notable increases in pharmaceutical products and a rebound in transport equipment manufacturing. The resurgence in industrial demand is expected to push French export contract rates higher.
Meanwhile, the UK experienced a sharp decline in trade in July 2024, with goods imports and exports falling significantly. The overall trade balance worsened, driven by a growing goods trade deficit. The report add that consumer confidence in the UK has dipped, which may lead to reduced demand and downward pressure on UK import rates, particularly spot rates.
The end of free movement of goods has caused border delays and increased paperwork, impacting France-UK trade, especially for French SMEs. With the UK government postponing EU import checks on certain products until July 2025, administrative burdens on businesses are likely to increase, potentially driving up contract rates further.
Future outlook: cost pressures to shape rates
The subdued demand and high operating expenses are likely to sustain the current freight rate landscape, with Ti projecting ongoing upward pressure on prices. While spot rates may act as a leading indicator of a possible future recovery, the persistence of high costs suggests any significant rate reductions are unlikely without substantial economic improvement in Europe.
As high operating costs drive the market dynamics, digitalisation is increasingly seen as a strategic avenue to enhance productivity and offset financial burdens, especially as the industry braces for potential growth once economic activity rebounds.
With both regulatory and economic pressures on the horizon, the coming months will prove critical for European road freight operators seeking to balance financial viability and regulatory compliance in an unpredictable market.