European road freight capacity index decreases for second month in a row

The European road freight capacity index decreased for second month in a row, falling by -2.9% year-on-year in February 2024, according to the latest data by Transporeon.

The Capacity Index in January 2024 was 109.53. A reading under 100 indicates a capacity constrained environment. The Capacity Index has been over 100 since November 2022, suggesting that capacity availability has not been an issue over the past year. However, the rate of capacity increases has been falling gradually since March 2023, suggesting a reduced capacity surplus and that the capacity situation in the European road freight is normalising.

Compared to the previous month (January 2024), capacity in January 2024 has increased by 6.1%.

The decrease seen over the past two months has resulted in a small increase of the spot and contract rate index. The spot price index has seen a slow but steady recovery since July 2023. On the contract side, this trend of a slow recovery of prices has been evident since September 2023. For carriers, this pricing development offers hope of a gradual normalization.

On the spot market, the 14-month long trend of falling spot rates has been reversed in January. The Spot Price Index reached 115.25 in February 2024, a year-on-year 6.4% increase, and a 4.0% decrease compared to January 2024. The month-on-month price decrease fits the pattern of the price index in previous years due to seasonality.

The Contract Price Index reached 123.65 in February 2024, a 1.0% increase compared to the previous year and a 0.7% increase compared to the previous month.

The spot rate index is still below the contract rate index (115.25 vs 123.65), signalling real volume decline. However, the difference between the spot and contract rates has been falling since August 2023, suggesting a more balanced environment from a supply-and-demand perspective.

Moving forward, lack of capacity is not expected due to the weak prospects of the European economy. The weak prospects of the European road freight market are also reflected in LSPs forecasts. DSV for instance expects a flat or low-growth in the road freight market in 2024. However, even though there is no catalyst for faster growth on the horizon, the Easter business might drive up volumes and cause a further reduction of the capacity surplus.

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. 

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