Reading the Future of Europe in Construction Freight
Market Monday - Week 26 - How transport demand in construction industry can serve as a health indicator of European economy
Cranes on the skyline have long been the traditional symbol of a booming construction sector and, by extension, a healthy economy. They are visible, tangible markers of progress, but it takes time to notice new developments in person and even longer time to have a hand on updated statistics data on the actual performance of the industry. By the time official figures on construction output are published, the market could have already pivoted.
In this article we will establish how a forward looking indicator like Eurostat's building permit index can predict construction transport demand evolution within the data on Transporeon’s platform. This is a way to estimate the general trend for demand for construction industry freight and, to some extent, the whole transport market.
Building permit data, a key European economic indicator, signals future construction intentions by measuring evolution of the total floor space for which building permits are granted, covering all residential and non-residential buildings like homes, offices, and industrial spaces. For the purpose of this study, we specifically selected “Building permits - m2 of useful floor area”, seasonally and calendar adjusted dataset from Eurostat. One of the ways to measure building activity is to look at transportation of building materials. The flow of cement, steel, insulation and prefabricated components represents the moment when blueprints are translated into physical reality. These movements, captured in real-time, offer a powerful lens on actual economic activity happening.
The visual evidence of correlation is compelling. Both indices show a relatively strong 2021, a peak in activity in early 2022, and a subsequent, sustained downturn through 2023 and flattening into 2024. This shared trajectory confirms that both datasets are capturing the same underlying macroeconomic story, with transport demand indication currently lagging about 3 months behind permits issued data.
The uptick in transport demand in our data in spring 2025 is a good signal to see to confirm the recovery of the European economy, several months after increases in building permits issues noticed at the end of 2024, but weeks or even months before official quarterly GDP or construction output figures become available. A rise in permits followed by an increase in transport demand points to future economic growth, whereas a synchronized decline, like that seen from 2022-2023, reflects broader economic slowdowns driven by factors like high interest rates and cost pressures. Specific economic reports highlight significant regional disparities, with Germany and the Nordic countries facing a slower rebound in construction, while nations like Spain, Greece, and Poland exhibit stronger growth prospects, often fueled by infrastructure investments and governmental spending.
In essence, the construction sector is a powerful economic health indicator because it accounts for a significant portion of GDP and investment. Substantial, long-term construction projects signal business confidence in future growth. Increases in construction activity create a ripple effect of demand across supply chains, including transportation. Every new building or infrastructure project commencement translates into demand for logistics services to move vast quantities of materials and equipment, making transport a direct pulse of this economic activity.
The tendency of the construction industry to follow economic cycles directly impacts overall transport demand, causing fluctuations in freight volumes and affecting carrier capacity utilization with long-term and non-seasonal effects. Current construction industry transport demand rise could be a precursor to a more significant overall transport demand increase and, if true, further available capacity reductions.
Oleksandr Kulish
Senior Consultant