The European road freight market is projected to show growth in 2022, expanding by 4.9% in real terms to reach €390,754m. According to Ti’s COVID-19 Recovery Tracker 2022 (CRT22), the European road freight market is expected to reach a CRT22 of 6.3%, representing a full recovery, with an additional 6.3% growth compared to 2019 levels.
All European markets are forecasted to recover from the pandemic in 2022, however the major European road freight markets are set to have some of the slowest recoveries. Out of these major markets, Spain has had the slowest recovery. The strength of the recovery in eastern Europe is prominently displayed in the CRT22. Poland has pushed ahead with its strong GDP growth forecasts, which have remained strong despite its proximity to the war in Ukraine.
European Road Freight Transport Market CRT22 – Strongest & Weakest Recoveries
Overall, the European Road Freight market continues to be affected by a number of supply and demand side factors which influence demand, growth, opportunities and challenges.
The economic environment has promoted growth in the European road freight market throughout 2021, with the recovery being driven by a surge in consumption as households reduce their savings rate, and pent-up disposable income unwinds into the economy. However, moving into 2022, the outlook is less optimistic. With the war in Ukraine, supply chain disruptions, low unemployment, and rising energy prices continuing into 2022, inflation will be a crucial factor in determining future levels of demand. With rising prices, households have less disposable income, and thus overall demand is set to fall relative to 2021.
The Mobility Package will demonstrate its impacts more fully after 2023. Domestically, the cooling off period for cabotage operations is expected to reduce domestic capacities, which is likely to limit growth. The cooling off measure will have a disproportionate effect on Eastern European hauliers, as they are most likely to be currently not complying with the new provision. Countries such as Bulgaria, Romania, Lithuania, and Latvia, will likely lose market share to countries closer to the west such as Poland, the Czech Republic, Hungary, and Slovenia.
Pricing in the European road freight market continues to rise. This has been in response to both falling capacity, rising demand, and increases in the cost base, especially in diesel prices. The Russian invasion of Ukraine and the restriction of oil supplies from Russia into Europe has led to further upward pressure on prices. Although fuel costs are often mediated by heavy taxes, it is very likely that the recent increase in the price of diesel has resulted in fuel costs approaching 50% of truck operating costs.
A surge in demand for road freight services has further exacerbated price increases. Girteka recently stated that the increases in the cost base are set to continue into 2022, stating a possible increase of 35.0% compared to the levels in mid-2020.
These factors have led to a nominal 14.8% year-on-year growth in the market, with a total European price growth of 4.9%. European domestic prices have grown faster than international, at 5.3% and 2.8% respectively. Domestic markets have been faced with increasing capacity issues, giving more pricing power to hauliers operating within their respective borders.
Ti’s latest market projections for 2026 show that the European road freight market is expected to reach a real CAGR of 3.0% from 2021 to 2026. The COVID Recovery Tracker for 2026 (CRT26) shows that the region’s total road freight market will be 23.1% larger in 2026 than it was in 2019 in real terms. On the back of solid trade forecasts, the international road freight market is expected to grow faster than domestic during the 5-year period, although it will remain the smaller of the two markets.
Source: Transport Intelligence, June 1st, 2022
Author: Transport Intelligence
Ti’s latest European Road Freight Market Sizing data is now available on the Global Supply Chain intelligence (GSCi) platform, available exclusively to GSCi subscribers. This includes historical growth rates, market sizes, 1-year growth projections and 5-year forecasts.
For more detailed market forecast data, please contact Ti’s Head of Commercial Development, Michael Clover about GSCi at [email protected]