European Road Freight Market: Q2 2025 Outlook
May 21, 2025
By Jenan Hasan[1] EU road freight rates dropped in Q1 2025, continuing their gradual decline. The average index for European freight rates dropped quarter on quarter.
Although there was a small uptick in April, with the index increasing by 0.20 points from March 128.11 index points to 128.31 index points respectively, the broader picture tells a different story. Compared to Q4 2024, the index fell by 10.73 points, reflecting a market under slight but persistent downward pressure. Ti's new European Road Freight Rate Outlook[2] provides quarterly updates on road freight rate expectations and developments.
New capacity hitting the market maybe declining.In Q1 2025, new HGV registration figures from the ACEA[3] show that truck registrations in the EU dropped by 16%, reaching just under 73,000 units. All major European markets saw declines, with Germany and France hit particularly hard--down 25.4% and 17.6% respectively. Spain and Italy also posted notable falls.
Part of this trend is due to fleets completing their vehicle replacement cycles, reducing the need for new trucks. But it also reflects the industry's cautious outlook and lack of confidence in new demand. The lack of new registrations has limited new supply, putting an upwards pressure on rates.
That being said, lower new capacity is a symptom of a lethargic market, slower recovery, and declining rates. Therefore, it is likely that rates will continue falling in spite of the lower registrations. At the same time, there's more evidence that existing spare capacity is growing across Europe.
Labour costs continue to rise, according to Eurostat, wages for drivers in the EU went up by 4% year on year in Q4 2024, Greece, Bulgaria, Latvia and Hungary showed the highest growth rates at 16%, 15%, 15% and 14% respectively. While higher labour costs usually push rates up, having an upwards pressure on rates, the overall sluggishness in demand seems to be offsetting that effect. On the cost side, diesel prices have been easing.
According to the latest data, diesel prices across the EU dropped again between April and May 2025. France remained flat, while Germany and the UK both saw small declines. Quarter on quarter, diesel costs are down significantly, over 7% in France, around 5% in Germany, and more than 6% across the EU average.
This continued drop in fuel costs is likely to apply further downward pressure on freight rates. Tyre costs, on the other hand, are edging up. Following the EU's ban on non-compliant natural rubber imports at the end of 2024, tyre prices have been slowly climbing.
The average monthly increase across Western Europe was 0.43%, with a modest 0.25% rise from the previous quarter. This could become a bigger cost concern in the months ahead, especially as the ban extends to smaller businesses this year. Meanwhile, disruptions from port and national strikes are adding some chaos.
A major strike on May 20 in Belgium has effectively halted operations at the Port of Antwerp-Bruges, Europe's busiest container port. With over 100 ships depending on it daily, congestion is worsening. At the time of writing, 12 ships were delayed and 9 more were waiting.
Trade figures add further context. While EU exports rose by 8.6% and imports by 4.1% in Q1 2025, mainly due to stronger trade with the US, intra-European trade grew only slightly. Quarter-on-quarter growth within Europe was just 1.3%, and year-on-year growth was 1.7%.
In contrast, trade outside the EU grew at a healthier 4.1%. This lack of movement within the EU means that demand for road freight inside Europe is still flat, leaving plenty of trucks and drivers without full workloads. All signs point to continued downward pressure on road freight rates in the near future.
While some input costs are rising, the broader trend of soft demand and growing spare capacity looks likely to keep rates down in the medium term. Contact us to preview the outlook grid.[4] Author: Jenan Hasan
Source: Ti Insight
References
- ^ Jenan Hasan (ti-insight.com)
- ^ European Road Freight Rate Outlook (gsci.ti-insight.com)
- ^ ACEA (www.acea.auto)
- ^ Contact us to preview the outlook grid. (gsci.ti-insight.com)