The Upply Ti IRU European road freight rates index for Europe hit an all-time high in Q1 2022 as rising cost pressures, supply and capacity disruptions, regulatory change and war in Ukraine created a potent mix of rate drivers. The Benchmark index rate rose by 4.3 points over the previous quarter, while it increased 7.5 points over the first quarter of 2021.
- The Q1 2022 European Road Freight Rate benchmark index stood at 110.9, 4.3 points higher than in Q4 2021 and 7.5 points higher than in Q1 2021.
- Q1 2021 is the seventh consecutive quarter of rate increases across Europe.
- Rising fuel costs, up around 52.7% y-o-y on average across European markets, and the ongoing driver shortage have helped push up road freight costs and rates across Europe.
- New data from IRU shows driver shortages across Europe in 2021 reaching up to 425,000 unfilled positions; made worse by the war in Ukraine.
- Freight rates are expected to remain elevated through 2022 as volatility from inflation and the fallout from the war in Ukraine continue to increase costs, though as inflation takes hold overall demand may decrease, relieving upward pressure on rates.
The result of the forces currently exerting themselves on the European road freight market is an uncertain, challenging and complex market environment. After buoyant consumer spending in 2021, rising inflation in the first three months of 2022 and the expectation of higher interest rates to come have seen confidence amongst consumers erode in much of Europe, including in Germany, the UK, Spain, Italy and France.
The effects of inflation on the supply side of the European road freight market, especially on diesel prices, have led to substantial increases in rates in Q1 2022. The war in Ukraine and the subsequent restriction of oil supplies from Russia into Europe has led to further upward pressure on prices. The EU-wide weighted average of a litre of diesel has risen sharply since Q3 2021. Compared with the pandemic-induced low of €1.10 during Q2 2020, the weighted average cost of diesel was 52.7% higher in the first quarter of 2022.