The European road freight capacity index increased by 20.2% in June 2023 compared to June 2022, according to the latest data by Transporeon. The latest figure marks the 12th consecutive month of year-on-year increase. The data reflects the economic downturn and subdued market conditions which continue to take toll on the European road freight market. An increase in available capacity in the summer months matches historic patterns and the traditional cool-down when additional capacity typically opens up and volumes drop.
Due to the continued increase in available road freight capacity since the middle of 2022, transport prices in the spot market have been on a downward trend since November 2022. Spot rates have fallen by 18.5% in June 2023 compared to the year before.
Unlike spot rates, contract rates continue to hold up. Contract rates have been on a downward trend since September 2022 but were still higher than 2022 levels up until June 2023, when they experienced a 0.7% drop compared to the previous year. The reason probably lies in the fact that changes in contract rates take longer to materialise due to freight procurement cycles. As a result, we should expect further declines on the contract side in the months ahead.
The spot rate index has been below the contract rate index for six months now. In January 2023, the spot rate index fell below the contract rate index for the first time since January 2021, signalling real volume decline.
The financial results of the European road freight companies reflect the volume decline in the market. In Q2 2023, DSV’s Road freight division reported a 2.8% decrease in EBIT before special items, due to the lower activity across most sectors in the road freight market. DSV stated that during the first half of 2023, the demand for transport and logistics services has been marked by the macroeconomic situation. At the same time, the logistics markets have quickly normalised after the disruptions in recent years.
Rates look set to continue to fall in the coming months due to lower volumes and increased available capacity. Seasonal demand might however moderate the decline. The peak season lasts from August until October and is typically the busiest time of year for road freight, as retailers begin to stock up for the holiday season.
Transporeon’s capacity and freight rate data is available on GSCi – Ti’s online data platform. Supply chain strategists can use GSCi to identify opportunities for growth, support strategic decisions, help them stay abreast of industry trends and development, as well as understand future impacts on the industry.