European road freight rates on the slide

11/10/2012

After rising by 20% in two years, road freight rates on key international routes in Western Europe have fallen steadily for the past five months.

According to a new international road freight index, compiled by Transport Intelligence using data provided by European freight service provider Freightex, road freight rates have fallen 7% in the past five months from their peak.

By the end of May 2012, the Index (based on actual transactions settled in euros) was 21.2% higher than in May 2010, the starting point for the index. After this date, however, rates have fallen consistently.

The rise in prices up to May 2012 had several factors behind it. Firstly, the market was undergoing a substantial "bounce-back" from the crisis point of 2009, when prices crashed. 

Quantifying the effect of this is difficult, as rather than settle back to equilibrium, prices have remained volatile. This volatility appears to be a structural issue, both in terms of demand and supply in the market.

It would seem likely that the fall in prices over the past few months has been driven by falling demand, while capacity has yet to re-adjust.

John Manners-Bell, CEO of Transport Intelligence, said, “Visibility of international road freight rates in Europe has historically been very poor. 

"At this time of economic volatility and uncertainty, we are delighted to be able to partner with Freightex to provide the industry with an increased level of insight into the market.”

Tim Phillips, CEO of Freightex, added, “Transparency of rates allows consignors to easily check if they are getting the appropriate price for the services they require, or to support and analyse the costs of entering new markets.