Spot Prices Rise as Easter and Public Holidays Drive Market Pressure
Week - 14 - road transport spot rates embark for their peak time
Today, we revisit and refine our perspective on the current sentiment in the spot market, setting the stage for the upcoming busy period marked by Easter and numerous public holidays across Europe.
Let's delve into recent market trends. The accompanying chart illustrates the dynamics between spot and contracted price levels across all monitored markets. The soft cycle observed in February and March aligned closely with our projections, as spot prices briefly converged with contracted rates. Worth mentioning, December 16th recorded an unprecedented peak in the spot-to-contract price ratio, while March 3rd marked the lowest spot price in the past year.
Hover and/or click the chart for more details and figures
Each data point represents the variance between spot and contracted prices for a specific week (Index 100). Notably, in week 51 of 2024, spot prices surged to 22.7% above contracted levels.
The year 2024 has posed significant challenges. Post-Easter, capacity constraints propelled spot prices beyond 2023 levels, maintaining this upward trajectory. This was primarily due to high carrier rejections, which forced contracted shipments into the spot market.
Currently, the market is caught in a self-reinforcing cycle. Shippers, in an attempt to circumvent the spot market, are shifting volumes to contracts. However, the contracted segment's prices fail to mirror current production costs due to limited capacity and rising expenses. Consequently, many shipments are relegated to the spot market as urgencies, further inflating prices.
For potential mitigating factors, please refer to our previous discussions on this topic.
While the overall market sentiment and assessment have remained relatively stable in recent weeks, an update on my expectations for the coming weeks is warranted, as they indicate a clear upward trend.
Hover and/or click the chart for more details and figures
We expect spot prices to rise during Easter and as we approach the festive season. Although the exact levels are uncertain, current market sentiment points to a significant rebound that may exceed 2024 rates.
In summary, the spot market appears ready to emerge from its soft cycle, return to previous price levels, and resume the strong upward pressure that began last year.
Christian Dolderer
Lead Research Analyst
Transporeon