The Upply x Ti x IRU European road freight rates index shows that the contract index rose by 2.8 points quarter on quarter (q-o-q) in Q4 2024, while the spot rate index increased by 0.5 points. Year on year (y-o-y), the spot and contract indices are down by 1.0 point and 1.4 points, respectively.
- The Q4 2024 European Road Freight Spot Rate Benchmark Index rose to 123.9 points, 0.5 points higher than in Q3 2024 but 1.0 point down y-o-y.
- The Q4 2024 European Road Freight Contract Rate Benchmark Index rose to 128.9, 2.8 points higher than in Q3 2024 but 1.4 points down y-o-y.
- There are now 500,000 unfilled truck driver positions across Europe, representing 12% of all positions, according to IRU’s driver shortage data.
- Diesel prices fell to their lowest value since January 2023 at the end of September 2024 (reaching €1.50/L). The EU weighted average diesel price reached €1.57/L on 30 December (+4.6% versus September).
- The outlook for rates across Europe indicates moderate increases, driven by persistently high costs and a slight rise in demand despite overall weakness.
The European benchmark’s trend has reversed from last quarter, when both contract and spot rates fell. In Q4 2024, both indices recorded a rise, although the rise in spot rates was more marginal than that of the contract market.
The gap between spot and contract rates is diverging, with contract rates rising faster than spot rates. The Spot index first fell below contract rates in Q2 2023 and has remained below the contract index for seven consecutive quarters. Currently, the gap stands at 5.0 index points, slightly smaller than a year ago when the gap was 5.4 index points.
As contracts rise and spot rates marginally increase, European road freight is gradually recovering after a significant decline. The EU remains in a state of stagnation: in Q3 2024, seasonally adjusted GDP increased by 0.3% compared with the previous quarter, according to Eurostat.
As demand shifted from goods to services, declining demand for goods has led to lower transport volumes y-o-y, with retail trade (excluding motor vehicles) falling by 0.8%. Quarter on quarter, demand recovered from a sluggish Q3 2024, as unadjusted retail trade volumes increased 3.8% in the build up to the holiday season.
In Q3 2024, European port throughput reflected some recovery, with Antwerp and Rotterdam seeing a 9% and 3% y-o-y increase, respectively. Most businesses report inventory levels as “low” or as “desired”. Restocking efforts, combined with higher port volumes, have put upward pressure on rates.
Despite improving consumer demand, Europe’s manufacturing sector continues to struggle with high energy prices and weak international competitiveness. Production volumes fell by 0.3% q-o-q and 0.8% y-o-y. Electricity and fossil fuels account for 7% to 9%, respectively, of industry production costs, according to the European Commission. The difficulties in production are likely to decrease contract demand for road freight as European industry struggles to keep up their long-term production levels.
Ti Head of Commercial Development Michael Clover said, “Demand across Europe remains relatively weak and, as such, upward pressure on rates is relatively low. However, as capacity remains constrained and costs are continuing to increase overall, we expect to see the moderate increases in rates seen Q4 continue into 2025.”
New capacity entering the market has been constrained, as highlighted by ACEA’s Q3 2024 data on heavy goods vehicle registrations. In the EU, new heavy truck registrations dropped by 29%. Diesel trucks accounted for 95.3% of registrations in the first nine months of 2024, despite a 7.3% y-o-y decline. Electrically chargeable truck registrations fell by 6.6%, maintaining a 2.2% market share.
In Q4 2024, costs rose across all components except diesel, which fell by 11.7%. Labour costs in the EU increased by 5% y-o-y, with driver wages being the fastest-growing cost component.
Upply Chief Executive Officer Thomas Larrieu commented, “European road freight rates are caught between rising costs and weak demand. While low consumer spending is preventing prices from climbing too much, high labour costs and limited capacity are keeping them from dropping. In this context, even small cost increases or supply chain disruptions can push rates up, even though demand remains fragile.”
Persistent driver shortages, with 500,000 vacancies (12% of all positions) according to IRU, continue to challenge the industry and are likely to push both contract and spot rates higher, due to available capacity constraints coupled with the rising costs of drivers, who are short in supply.
As a result, while lower diesel prices have eased supply pressure on rates, the cost base remains extremely high, with labour costs continuing to push it higher. This has created an environment of low profit margins, leaving little room for further cost reductions. As such, small cost rises, or supply disruptions, are resulting in price rises even while demand remains weak.
IRU Senior Director for Strategy and Development Vincent Erard added, “Truck operators, 89% of which are SMEs in the EU, continue to face soaring costs, further squeezing their thin margins. Rising toll charges, driver shortages and new EU regulations, including the Eurovignette and CO₂ standards, are pushing both operating costs and capital investments ever higher. By addressing the needs of SMEs in particular, we can drive meaningful decarbonisation progress and boost the competitiveness of the broader European economy.”