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First fall in road freight rates since early 2020

[ February 8, 2023   //   ]

The Upply x Ti x IRU European road freight rate index for Europe showed the first fall in spot rates since the first quarter of 2020, of 2.4 index points in Q4 2022 versus Q3. However, spot rates still remain up 18.1 points on Q4 2021. Meanwhile, the contract rates index rose 0.4 points quarter-on-quarter in Q4 and contract rates are now up 19.0 points year-on-year.

The drop in European spot rates results from low peak season demand due to inflation, pushing consumer confidence down to record low levels while European inventory levels remain high.

Spot rates often lead development in contract rates, so the fall in the index, along with clear indicators of lower demand for road freight services in the short term, suggest that contract prices will eventually begin to fall too. However, any fall in freight rates over the next few months is likely to be moderated by supply side pressure causing road freight operating costs to remain high.

It adds that new data from the International Road Transport Union (IRU) shows that driver shortages across Europe eased marginally in December 2022 but unfilled positions remained high at between 380,000-425,000, or around 10% of all driver positions.

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