European road freight capacity tightens and raises spot market rates

The European road freight capacity index decreased for fourth month in a row, falling by 3.6% year-on-year in April 2024, according to the latest data by Transporeon.

The Capacity Index in March 2024 was 103.97. A reading under 100 indicates a capacity constrained environment. Since November 2022, the Capacity Index has been above 100, indicating that capacity availability has not been a concern. However, since March 2023, the rate of capacity additions has been progressively decreasing, indicating a decrease in capacity surplus and a normalization of the capacity situation in the European road freight market.

Capacity in April 2024 fell by 4.2% from the previous month (March 2024), following a 5.1% drop and falling below 100. This indicates that the European road freight capacity is approaching potential supply chain bottlenecks due to demand picking up, resulting in a reading of 99.58. According to data from the European Union, the annual core inflation rate, which excludes energy and food products, fell marginally from 2.9% in March 2024 to 2.7% in April 2024, somewhat more than the expected fall of 2.6%.

In April 2024, the Spot Price Index increased by 5.1% from March 2024 to 127.46, representing an 7.6% year-over-year increase. Similarly, the Contract Price Index also increased by 2.8% from the prior year and by 0.2% from the previous month to 125.04 in April 2024. The fact that the spot rate index is higher than the contract rate index (17.46 vs 125.04) indicates that volumes are increasing. From a supply-and-demand standpoint, this indicates a resurgence in consumption, which bodes well for the European economy, but also a more constrained capacity situation.

The capacity tightening we’re seeing may be driven by inventory restocking after inventories were widely reduced in 2023 following the order rush of 2022. Moving forward, lack of capacity coupled with an increase in consumer demand may further drive up spot and contract prices.

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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