Both spot and contract road freight rates in Europe have dropped in the first quarter of 2023, according to an index produced by Transport Intelligence, Upply and the International Road Transport Union (IRU).
Spot and contract rates registered a quarter-on-quarter drop of 7.5 and 2.8 index points respectively. Spot rates in the European road freight market have experienced their second consecutive quarter of decline – the first time rates have fallen for two consecutive quarters since Q2 2020.
Additionally, the spot market index has fallen below its Q2 2022 level, a time when cost increases following the war in Ukraine first became clear. Despite this, spot rates remain up by 8.9 points year on year, standing at 132.5 points.
The contract rates index registered its first fall in six quarters, but it is still up 10.7 year on year. With volumes slackening and available capacity improving, the downward trend in rates looks set to continue in 2023.
According to the index, fuel prices were 9 percent lower in the first quarter of 2023 compared to the fourth quarter of 2022.
Freight rates are expected to continue to soften in the second quarter but will remain elevated in comparison to historic norms as supply side pressure keeps costs high. Towards the end of the year, volumes are expected to start recovering, applying upward pressure on rates.
Thomas Larrieu, ceo at Upply, said: “While it’s typical for road freight rates to dip during Q1 after the holiday peak season, this year’s drop is hitting harder than usual. The market appears to be recalibrating after experiencing a hefty double-digit surge in 2022, but how far will it go? It’s doubtful that we’ll return to pre-pandemic conditions, especially with capacity shortages remaining a major concern.”
