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Three key trends defining European road freight rates: Q2 to Q4 2024
Europe | Geneva

Three key trends defining European road freight rates: Q2 to Q4 2024

14 Jun 2024 · Prosperity

Both road freight spot and contract rates fell in Q1 2024. Here are three key trends shaping European road freight rates right now.

1. Flat demand

Demand for road freight services remained weak in Europe in Q1 2024. Continuing soft consumer demand and lower industrial output contributed to the decrease.

This drop in demand has pushed down both spot and contract rates. The spot rate index fell to 123.9 points, 1.1 points lower than in the previous quarter, and 8.2 points down year on year. Contract rates dropped to 127.6 points, 2.6 points lower quarter on quarter and down 1.0 point year on year.

Despite the fall, the magnitude of spot rate declines is decreasing, suggesting a less negative demand environment that could lead to rate normalisation later this year.

March's 2.4% European inflation rate was the lowest in 33 months and produced a 0.6-point growth in consumer confidence, according to McKinsey.

In 2024, EU road freight volume growth is expected to improve to 0.4% year on year (up from -1.1% in 2023), according to the latest IRU forecast. This will be possible due to real wage growth (as inflation decelerates) and a strong labour market supporting a rebound in consumption.

2. Impact of CO₂ tolls

Following Germany, CO₂ truck tolls have now come into effect in Austria, Hungary and the Czech Republic. They have resulted in toll increases of 7.4% in Austria, 13% in the Czech Republic, 40% in Hungary, and 83% in Germany.

These new tolls are part of a broader initiative under the revised Eurovignette Directive aiming to incentivise lower emissions, despite a lack of enabling conditions for a significant uptake of zero-emission vehicles. The toll increases pose additional financial burdens on freight operators already grappling with high operational costs, impacting overall freight rates.

Adjustments to toll rates are expected in many European countries. Sweden is set to implement changes in May 2024, followed by Denmark next year, the Netherlands and Romania in 2026, and parts of Belgium in 2028.

3. Rising costs

Operating costs for road freight remain high. They are driven by factors such as vehicle maintenance, insurance and tyre costs. These expenses continue to climb compared to previous years, keeping cost pressures high.

Diesel prices, which had decreased in 2023, began to rise again in early 2024. The average diesel price at the pump increased by 3% by the end of Q1 2024 compared to the beginning of January 2024. This rise in fuel prices adds to operational costs, contributing to the pressure on freight rates.

While demand is expected to recover, regulatory changes, geopolitical uncertainty and fluctuating fuel prices will continue to shape market dynamics throughout 2024. The industry must navigate these challenges to achieve stability and growth in the coming months

A complete picture of European road freight rates is available in the The European Road Freight Rate Development Benchmark Q1 2024.