European road freight rate benchmark Q2 2021: Rates stay on upward trajectory through pandemic recovery

Ti and Upply’s European Road Freight Rate Benchmark Q2 2021 shows prices are being pushed up due to rising demand levels and supply chain disruption.

• The Q2 2021 European Road Freight Rate benchmark was €1,147, up 3.2% year-over-year or 0.4% quarter-on-quarter.
• UK outbound rates are 16.8% higher year-on-year, with carriers pricing in disruptive new Brexit procedures, compounded by an increasingly acute driver shortage problem.
• Duisburg to Rotterdam rates grew 5.3% compared to Q1, bolstered by recovering global import demand and congestion around Northern European ports.

In spite of ongoing pandemic-related disruption, economic activity levels continued to improve in the second quarter. Vaccine roll-outs are enabling governments to reopen their economies, whilst the rebound in consumption after the first wave of the pandemic remains strong. In its Summer Forecast, the European Commission sharply upgraded its GDP forecast for the EU to 4.8% from 4.2% in the Spring. This situation is leading to a positive development in road freight demand levels, leading to upward pressure on rates.

Supply chain disruption is increasingly influencing road freight rates. Due to a shortage of semiconductors, manufacturing production growth is slowing in some areas. This is dampening the rate momentum on certain lanes, such as Warsaw-Duisburg. Meanwhile, congestion in Northern European ports appears to be increasing turnaround times for hauliers, which looks to be being priced in by carriers. On Duisburg-Rotterdam, rates grew 5.3% quarter-on-quarter.

UK supply chains are showing more acute signs of strain. Rates remain elevated after their jump in Q1 due to the administrative burden around new trade rules. The loss of EU hauliers due to new immigration rules has served to squeeze capacity further. The UK’s outbound lanes, which are generally lower priced and in which goods are subject to more stringent EU import checks, are where the added disruption is being priced in.

Andy Ralls, Senior Quantitative Analyst at Ti, commented, “The strong recovery in economic activity and supply chain disruption are the key drivers pushing rates higher. Over the coming months, demand levels are likely to increase, although perhaps less sharply than in Q2. In terms of disruption, some short term issues might subside, such as a shortage of transport equipment and intermediate goods. However, issues such as driver shortages remain problematic over the longer term. These pressures are likely to keep rates high over the remainder of 2021.”

Thomas Larrieu, Upply’s Chief Data & Research Officer, commented: “For the end of the year, the European road transport market will most certainly remain under pressure. The increase in demand in Europe in Q3 and Q4 2021 with Black Friday and the festive season will certainly push up transport prices in a market where capacity will be in high demand. Terminal congestion may lead to even higher and more volatile rates on routes from European ports. However, the impact of the Delta variant could change the scenarios in case of further drastic restrictions..”