European road freight rates index hits new record

20 May 2022

The road freight rates index for Europe, produced by Upply and the International Road Transport Union (IRU), hit an all-time high in the first quarter (Q1) of 2022 as rising cost pressures, supply and capacity disruptions, regulatory change and war in Ukraine created, “a potent mix of rate drivers”.

This was the seventh consecutive quarter of rate increases across Europe with the benchmark index standing at 110.9, 4.3 points higher than in Q4 2021 and 7.5 points higher than in Q1 2021.

“The unprecedented increase of transportation costs in Europe, notably due to rising diesel costs, supply and capacity disruptions is currently putting logistics operators and the whole supply chain under high pressure,” IRU Director of Corporate Services Vincent Erard said.

The worst effects of the fuel price increase may be yet to be registered in the quarterly index, he warned, as the price spike did not occur until after the war started in Ukraine on 24 February, and carriers were able to make use of fuel purchased in advance at lower prices through the end of February and early March.

While the most apparent effect of the war in Ukraine has been to increase fuel prices, the conflict has also worsened the European driver shortage, driving up labour costs and applying more upward pressure on rates.

New data from the IRU shows driver shortages across Europe increasing to up to 425,000 unfilled positions in 2021. These shortages have been worsened by the war, with over 228,000 non-EU truck drivers operating in Europe in 2021, many from Ukraine and Belarus.

Chief Executive Officer at Upply Thomas Larrieu said: “In the coming months, we can expect further increases in transport costs, which could fuel a subsequent rate increase. However, the price surge could be contained by a lull in European demand in response to widespread inflation in goods and services.”