But shippers relying on road freight services should not relax just yet. A variety of localised and more broad factors are creating a dynamic market that shippers will need to manage for the foreseeable future, the report, titled ‘A Bumpy Road for Europe’s Freight Shippers’, said.

Those that successfully navigate the challenges can improve their supply-chain performance, with a measurable impact on operations and the bottom line, it noted.

BCG recently partnered with Alpega, a logistics software company offering end-to-end solutions that cover all transport needs, including transport management services and freight exchanges. Using Alpega’s data, it analysed the spot and contract European road freight market from 2019 till early 2024.

For both international and domestic routes, road freight demand grew in the first half of 2024, fuelled by improved economic conditions.

In addition, major regional disruptions—for example, a rail strike in Germany (now resolved) and ongoing attacks on cargo ships in the Red Sea—have pushed shippers to use road freight over other channels.

Capacity has slightly decreased but will likely recover soon, the report said. Available spot capacity decreased in the first quarter of 2024 due to short-term factors such as a driver shortage, still-elevated inflation and interest rates and regional transportation strikes like the ones in Poland and Spain.

Additionally, lower fuel prices are reducing operating costs for operators, leading to an increase in available spot capacity.

Overall, the market is growing more balanced in the short term. Over the last several quarters, better alignment between supply and demand is leading to a more balanced road freight marketplace.

The load-to-truck ratio—which measures the number of loads for every truck posted on Alpega freight exchanges—is moving closer to 1.0 for both international and domestic routes. Currently the ratio is still less than 1.0, suggesting excess capacity, but as that gap closes, spot trucking rates could rise, BCG said in a release.

Shippers are increasing their contracted shipping volume. Given the currently favorable conditions, shippers are contracting more of their overall freight volume to limit their exposure to the spot market, lock in favorable rates, and avoid potential disruptions.

Fibre2Fashion News Desk (DS)