What you need to know about the EU road freight benchmark

Road freight rates hit an all-time high in Europe at the beginning of this year.

The International Road Transport Union (IRU) attributes this to rising cost pressures, supply and capacity disruptions, regulatory change and the Ukraine conflict.

The effects of inflation on the supply side of the European road freight market have led to substantial increases in rates in Q1 2022. The war in Ukraine and the restriction of oil supplies from Russia into Europe has led to further upward pressure on prices.

The Q1 2022 European Road Freight Rate benchmark is 7.5 points higher than this time last year, increasing 4.3 points since the last quarter.

The Europe-wide weighted average of a litre of diesel has risen sharply since Q3 2021. Compared with the low €1.10 price induced by the COVID-19 pandemic in Q2 2020, the weighted average cost of diesel was 52.7 per cent higher during this first quarter.

Thomas Larrieu, CEO of business start-up, Upply, said freight rates are gradually increasing, with no signs of abating.

“In addition to the factors that have been known for several months (dynamic demand with the reopening of the post-Covid economies, rising fuel prices, pressure on capacities and driver shortages), there is now a parameter that is exogenous to the usual problems of the sector: The war in Ukraine,” he said.

Larrieu said these factors are contributing to Europe’s supply chain issues, while more increases are to be expected.

“This conflict is disrupting European supply chains, affecting driver availability, and causing an unprecedented spike in fuel costs. In the coming months, we can expect further increases in transport costs, which could fuel a subsequent rate increase,” he said.

Upply anticipates the worst may be yet to come, as the price spike in fuel did not occur until after the war started in Ukraine on 24 February. This means carriers were able to make use of fuel purchased prior to this at lower prices.

With lower-cost fuel reserves now depleted, the impact on rates is likely to increase even more in the near term.

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