Stagnating demand, rising capacity mark European road freight market

The latest figure marks the 16th consecutive month of YoY increase.

The rise in available capacity makes European road transport cheaper as it leads to increased competition between road freight operators, an insight piece by UK-based Transport Intelligence (Ti) noted.

The rate of decline in the spot market has slowed due to abated inflation. In September 2023, the spot rate fell by 14.2 per cent in comparison to September last year, and compared to October 2022, spot rates fell to 10.2 per cent. The cause is smaller falls in the demand for goods, thus, suggesting some spot prices may begin to normalise.

Contract rates have been kept high by an elevated cost base, and cost increases continue to push rates up.

However, if the European economy continues to stagnate at activity levels below previous years, Ti expects this to add downward pressure to contract rates as renewal volumes decline.

The total demand-side pressure for road freight continues to fall, freeing up capacity, and allowing rates to slide further.

The financial results of the European road freight companies reflect the volume decline in the market.

Overall, the road freight market continues to be characterised by a stagnating transport demand coupled with falling spot rates and increasing capacity. Decreasing real income, tight financial conditions, and soft external demand weigh heavily on the European Road Freight market this year.

The outlook for European rates is reduced volatility as European demand stagnates at lower levels than in previous years.

Fibre2Fashion News Desk (DS)