European Spot Rates reach new Heights
Market Monday - Week 20 - spot road transport rates exceeded seasonal increases, causing surprise
In February, I shared my view and predictions regarding the development of spot prices compared to contracted price levels. Now, after Easter and halfway through May, during the public holiday season, it's the perfect timing to reflect on how rates have evolved and to share my expectations for the upcoming weeks.
The analysis below focuses on the general distribution of spot price levels compared to contracted price levels across all markets we monitor. To ensure meaningful results, we used a truncated mean to ignore outliers.
Difference in European spot and contracted rates for the past 19 months
Source: Transporeon Market Insights, own illustration
Each value represents the difference between spot prices to the contracted prices within a specific week (Index 100). For instance, in week 18 of 2024, spot prices peaked at 12% above contracted price levels. However, in 2023, the market situation was entirely different, with spot rates around contracted levels.
What will happen in the coming weeks?
In blue, I’ve added my expectations on how the spot vs. contract graph could evolve until mid-June. If my expectation holds true, we will see a prolonged period of spot prices above contracted levels. I predict that spot prices will decrease again, but they will likely remain above contracted levels, even throughout July. This trend puts pressure on the contracted market for prices and rejections, reflecting the changed capacity situation compared to 2023. The interesting question is, how long will contracted rates remain stable before they start to increase again?
I will keep an eye on this situation. Will we see decreasing spot rates, increasing contracted rates, or both? It's currently difficult to predict when we will likely see a new equilibrium balancing spot and contracted prices with capacity and demand. Many market forces are changing and adjusting to the past effects impacting the transportation market, while new topics (sustainable transformation & regulations) are already knocking on the door.
Christian Dolderer
Lead Research Analyst