Germany's Transport Sector Faces Capacity Crunch Despite Low Demand
Market Monday - Week 43 - Germany decouples from other European countries’ capacity evolution
This week, I will focus on a fascinating development within the rejections segment over the past few months, particularly as it contradicts the classical theory of supply and demand.
As a background, a rejection is recorded if a transport is either actively rejected by its carrier despite the contractual agreement, or if a confirmation wasn’t received in time for the transport. Rejections therefore are critical indicators of market conditions and capacity constraints. High rejection rates often signal a shortage of available trucks, leading to increased spot market rates as shippers scramble to find alternative carriers. Conversely, low rejection rates suggest ample capacity and competitive pricing.
In recent conversations, I frequently heard that Germany is behaving unusually—not the government with its decisions, which is nothing new, but rather the transportation market. Despite widespread reports of economic downturn and an impending recession, there is a prevailing sense in the market that capacity is scarce.
How does this scarcity align with the perception of a struggling economy?
As pessimistic Germans, we might dismiss this as a baseless feeling. However, given the latest high spot rates monitored in Germany, it is worthwhile to evaluate this in detail. Rejections can explain both developments, so I started to examine this metric and compared it with other domestic markets in Europe.
Contracted Load Rejections on domestic markets
Source: Transporeon Market Insights, own Evaluation and Illustration
This chart reveals two interesting developments. First, the decoupling of Eastern European countries from Western European countries starting in 2021. Second, another decoupling beginning in 2024, this time with Germany diverging from all others.
The levels reached in Germany are particularly concerning, as 2024 shows exceeded levels compared to the most challenging phase in the first half of 2022. Germany is the only market showing such a significant increase in rejections, even when compared to Spain—currently Europe's most thriving large economy.
What does this mean?
Unfortunately, this is bad news for the involved players, as the market is experiencing this effect during a period of low demand. The mere thought of rapidly increasing demand (which, fortunately, is not expected to materialize soon) is alarming. The single European market offers possibilities to mitigate such effects, and truck capacity should be seen as a fluid network within this market, capable of adapting within boundaries.
While net new capacity, due to driver shortages, is unlikely to materialize. This situation and its associated risks as well as the possible reasons need to be closely monitored.
Possible reasons include:
Withdrawal of fleets from service in Germany
Increased number of insolvencies of hauliers (both domestic and foreign)
Reduced operational efficiency due to waiting times at borders, docks or congestion
However, these reasons, in their currently discussed forms and data-derived dimensions, don't paint the full picture, yet.
What other factors might be at play? Do you see additional reasons contributing to this situation and explaining the figures shown? If so, share your thoughts and leave a comment below and discuss.
Christian Dolderer
Lead Research Analyst
Transporeon