Capacity in the European road freight market is normalising

The European road freight capacity index increased by 0.5% in December 2023 compared to December 2022, according to the latest data by Transporeon. The latest figure marks the 18th consecutive month of year-on-year increase.

The Capacity Index in December 2023 was 101.9. 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 data shows that the rate of capacity increases has been falling gradually since March 2023, suggesting that the capacity situation in the European road freight is normalising.

Source: Transporeon

Compared to November 2023, capacity has decreased by 5.6%.

Looking at the Spot Price Index, which tracks the spot rates across Europe, it reached 124.8 in December 2023, a 0.4% decrease from December 2022, and a 18.1% decrease compared to November 2023.

Contract rates in December 2023 experienced a 0.1% drop compared to December 2022.

In January 2023, the spot rate index fell below the contract rate index for the first time since January 2021, signalling real volume decline. However, the difference between the spot and contract rates has dropped since August 2023, suggesting a more balanced environment from a supply-and-demand perspective.

Overall, the latest capacity data by Transporeon suggests that the European road freight market has returned to a typical seasonal pattern at the end of 2023.

Moving forward, we should see further normalization in the European road freight market with a more balanced demand and supply environment. Lack of capacity is not expected in the medium-term due to the weak prospects of the European economy. Despite some positive signs, including easing inflation, robust labour and recovering real incomes, the weaker growth momentum in the EU is likely to continue in 2024. The European Commission lowered its growth prediction for 2024 from 1.6% to 1.3% at the beginning of September mainly due to the monetary tightening which may weigh on economic activity more heavily than expected. This poor outlook for the European economy will have a dampening impact on the road freight market, which is expected to experience a continued decline in demand in the first half of 2024, and possibly beyond.

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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