Nov 19,2021
The European Ti / Apply road transport price index set a new record in the third quarter of 2021 at 107.6. Compared with the previous quarter, it increased by 1 percentage point and increased by 3 percentage points year-on-year. It also increased by 4% compared to the second quarter of 2020, that is, the period when the disruption related to the Covid 19 pandemic reached its peak.
Note: Our price estimates are based on actual transactions. The Covid-19 epidemic and its impact on activity levels have made data collection more complicated. Therefore, as new data is included in the Apply database, the index may be revised.
Strong demand in the context of driver shortage
This upward trend is expected. This is mainly the result of dynamic demand, whether in retail or manufacturing, this demand is ruthless. This is obviously the main driving force for rising freight rates.
Most importantly, the road transport sector is beginning to face the problem of capacity shortages. There is no shortage of transportation, although the shortage of semiconductors has slowed down the production of new cars and in the process has contributed to the inflationary trend in the used car market. But the lack of drivers is becoming desperate. As a partner of the new Ti/Apply report, IRU recalled that in Spain, according to its 2020 annual survey, the gap is expected to increase from 7% in 2020 to 10.2% in 2021. The freight forwarder china to germany has also been greatly affected, and the impact of Brexit has exacerbated this phenomenon.
At the same time, road haulers are facing significant increases in several major cost items. The labor shortage, primarily, is putting pressure on wages. It is not yet palpable everywhere, but in the United Kingdom, where the deficit was particularly blatant, companies have offered bonuses and/or increases to attract candidates.
Carriers are also experiencing a very significant increase in fuel costs. According to data from Ti and IRU, diesel prices in Germany were 38.5% higher in Q3 2021 than in Q3 2020. The increase is also very noticeable in all the other major road transport markets, and in particular in the United Kingdom (+ 26.6%), Spain (+ 25.2%), France (+ 23.5%) and in Italy (+ 20.6%).
Finally, road transport professionals are also penalized by the bottlenecks which are disrupting global logistics chains at the moment. Congestion, production delays that undermine projections, etc ...: all these uncertainties lead to a potential increase in operating costs, in a sector where margins are not traditionally high. In a favorable supply/demand context, carriers, therefore, endeavor to pass on at least part of the additional costs they incur.
"As the peak season approaches and with rising costs, especially diesel prices, all the ingredients for a period of sustained rate inflation are in place," said Nick Bailey, research director at Ti. “A 5% increase over 15 months should be confirmed at the end of 2021 and the beginning of 2022. From the carrier's point of view, this rise is necessary to cover the increase in their operating and recruitment costs”, confirms Thomas Larrieu, general manager of Apply.
However, preserving margins will be a real challenge for carriers over the coming months, given the soaring costs. The context linked to the pandemic continues to make the economic outlook very uncertain, with in particular the hypothesis of the 5th wave which seems to be confirmed in several European countries, however, it is not possible at this stage to measure the consequences on demand.
● What Services Are Mainly Provided by China Freight Forwarders
Aug 05,2022● What Is Causing Global Shipping Delays?
Sep 06,2022● What is the meaning of double clearing by sea from China to the USA?
Sep 06,2022● US suspends 26 flights operated by Chinese carriers
Aug 29,2022● What Is EXW Shipping?
Aug 26,2022