Short-term European road freight demand down in Q2 2023: IRU

Meanwhile, the spot rate index, at 126.3, is down by 3.5 points QoQ and down by 7.5 points YoY.

The data suggest short-term road freight demand is down with high consumer prices and lagging wages pushing down demand for the distribution of goods throughout Europe, resulting in further falls in freight rates on the spot market, IRU said in its ‘The European Road Freight Rate Development Benchmark Q2 2023’ report.

Q2 2023 is the first time that the contract rate index has been higher than the spot rate index in the six years of data available.

Freight rates are expected to remain subdued in 2023 but high costs continue to sustain a relatively high base.

Rate falls in the contract market have been much more muted than in the spot market. The two top reasons for this are improved business sentiment and a structural lag in prices reflecting falling costs, said IRU.

Lower prices have also encouraged many shippers to tender contracts in what they see as a buyer’s market, increasing demand for contracted capacity. 

New data from IRU shows that driver shortages across Europe eased in 2023, with 7 per cent of driver positions unfilled. According to the latest IRU driver shortage data, the shortage of truck drivers in Q2 2023 was slightly lower than in 2021. Though the evidence shows that driver shortages are easing, the shortage is still applying upward pressure on rates.

The outlook for European road freight in the coming months is for further reduction in demand-side pressure, freeing up capacity and allowing for the possibility of further rate falls in the spot market.

Falling order levels, compounded by 22-year high European Central Bank interest rates, indicate that demand pressure on the contract market will continue to ease, allowing for falls in the second half of 2023, albeit to a higher floor due to a larger carrier cost base.

Fibre2Fashion News Desk (DS)