🚛 European Road Freight Rates Q4 & Beyond. During Q3, road freight rates remained relatively stable, largely due to short-term weak demand. While consumer confidence across Europe is gradually recovering, it still remains below par. Looking ahead to Q4 and beyond, rates are expected to rise steadily, driven by persistent inflationary pressures on costs. There are several factors affecting European road freight rates at the moment, with both supply-side and demand side dynamics playing a role. For instance, the post-covid shortage ripple effects in EU truck orders is tapering off, thus after a period of new capacity picking up, we are now observing a slow down. New EU truck registrations saw a 7.5% decline, totalling 249,708 units from January to September. This drop was driven by a 9.5% downturn in heavy-truck sales. Thus this has had an upwards pressure on rates in the past quarter and current quarter, due to less new capacity than usual hitting the market. On average, carriers are keeping vehicles on for longer, and purchases due to new regulations are being phased. The average age of trucks is 14.2 years, and around 6.5 million trucks are currently in circulation in the EU Tyre prices are expected to drive rates higher, as a new EU regulation will ban non-compliant natural rubber imports by year-end. This regulation will extend to SMEs by 2025. Diesel prices, although trending downward in Q3 2024, are still volatile. High inflation and energy costs, despite a drop in core inflation to 2.7% in September 2024, continue to strain operational budgets. Elevated producer prices are also exerting pressure, rising to 124.9 points in Q3. In addition, supply chain disruptions from the Red Sea crisis further pressure production sectors. Since 2021, European road freight costs have risen sharply, driven by volatile diesel prices and increases in insurance, maintenance, and tyre costs. These persistent expenses keep freight rates above 2021 levels, despite softer demand. In summary, the road freight market is experiencing elevated rates driven by structural increases in operational costs, despite softer demand in the short term. With the cost base remaining high, upward pressure on rates persists, keeping them well above 2021 levels. This trend highlights how rising costs continue to shape the market, counterbalancing the effects of declining demand. GSCi’s new European Road Freight Rate Outlook provides quarterly updates on road freight rate expectations and developments. Contact us to preview the outlook grid ⬇️ ⬇️ https://lnkd.in/e9jw9hWy #RoadFreight #FreightRates #EuropeanLogistics #SupplyChain #FreightTransportation #LogisticsIndustry
