1:27am 1st September 2021
Capacity shortages have driven up European road freight spot prices close to a three-year high, according to the latest Transport Market Monitor (TMM) published by Transporeon, the German cloud-based logistics software provider.
The analysis is based on road transportation data of more than 1.8 million freight loads on the spot market per year which was updated earlier this month.
In July, Transporeon's index of available capacity decreased slightly (-1.4%) on the previous month but was down 26.9% when compared to July 2020.
The price index "demonstrated little fluctuation at a high level" and was only 2.6% behind the three-year high recorded in June this year, it noted.
However, it registered a significant increase (+21.1%) compared to July 2020.
"The truckload capacity shortages in Europe continue, which results in high spot market rates while available capacity remains on a low level,especially in the automotive sector. This development has been driven by many factors and it creates inflationary pressure on the economy, potentially slowing down its recovery,” commented Transporeon's executive director, Freight Procurement & Audit, Nikolay Pargov.
He continued: “On the supply side, we expect more capacity will become available on the market again. However, the demand side is equally important. The main question here is how much of the current demand is based on recovery and long-term growth and what share is driven by the so called ‘bullwhip’ effect!”
This is defined as the demand distortion that travels upstream in the supply chain from the retailer through to the wholesaler and manufacturer due to the variance of orders which may be larger than that of sales.
Highlighting trends in specific industrial verticals in Europe, Transporeon said that available road freight capacity in automotive fell by 8.3% in July compared to the previous month and was 22.9% below the level of the corresponding month last year.
There was a slight increase in prices (+0.9%) compared to the previous month but on a year-on-year comparison, they were significantly higher than in July 2020 (+18%).
In contrast, there has been recovery in available capacity in packaging materials which rose 17.5% last month versus June 2021 when it had reached a two-year low, Transporeon observed. However, the increase in capacity has not triggered any downward movement in rates.
Price levels in the vertical have gone up sharply in the last five months and in July alone increased 2.6% on the previous month while a year-on-year comparison shows a rise of 15.4%.
By Stuart Todd
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