Fuel, not freight demand, to drive European road rates in Q2

The Q1 2026 benchmark shows a widening gap between contract and spot markets. Contract rates rose to 140.1 index points, up 3.2 points quarter on quarter and 8.9 points year on year. Spot rates moved in the other direction, falling to 132.3 index points, down 2.8 points quarter on quarter and 2.0 points year on year.

That split points to a market where contracted capacity is being repriced upwards, while short-term freight demand has cooled after the seasonal peak. The report says the upward momentum seen through mid-2025 has stalled in the spot market, with Q1 following the usual post-Christmas slowdown.

However, the outlook for Q2 is shaped less by freight volumes and more by operating costs. The benchmark says fuel will be the dominant driver of rate changes in the coming months, with operators unable to absorb the scale of diesel increases without passing them through to customers.

Diesel shock changes the rate picture

According to the report, EU average diesel prices rose from €1.56 per litre at the end of Q4 to €1.96 per litre at the end of Q1, a 26% increase. French and German diesel prices were among the main drivers, rising by 27% and 35% respectively between December and March.

The benchmark links the increase to the oil shock caused by disruption in the Middle East and the closure of the Strait of Hormuz. EIA data supports the broader market context: Brent crude began 2026 at $61 per barrel and ended Q1 at $118 per barrel, the largest inflation-adjusted quarterly rise in records going back to 1988.

IRU has also warned that fuel prices remain high and volatile for road transport operators. In an April update, the organisation said Brent was still trading above $105 per barrel despite an extended US-Iran ceasefire.

The report says the price increase has wiped out much of operators’ cash reserves, especially where fuel-indexation mechanisms are absent or too slow to reflect rapid market changes. Spain, France and, to some extent, Italy have national fuel-indexation systems that allow transport companies to pass fuel costs into rates. Yet the benchmark notes that even these mechanisms struggled to keep pace with the speed of the diesel surge.

Spain strengthens fuel pass-through rules

Spain has already responded with stricter rules for fuel-cost pass-through. The Spanish government said Royal Decree-Law 9/2026 reinforces the mandatory review of transport prices when fuel costs change, with the adjustment applying automatically once the fuel-price movement reaches 5%.

The Spanish haulier association CETM said the decree also introduces penalties for non-compliance, with fines reaching €6,000 or more and higher sanctions for serious repeat cases. The move gives the Spanish market a clearer legal mechanism at a time when the report says operators have struggled to pass on diesel costs despite existing rules.

Other EU governments have also moved to cushion the fuel shock. The European Commission’s Weekly Oil Bulletin noted temporary fuel-tax measures in several countries, including Spain, Ireland, Croatia, Poland and Slovenia, from late March.

Demand is improving, but confidence is fragile

The demand side of the report is more mixed: Eurozone manufacturing PMI rose through Q1, crossing into expansion in February and reaching 51.6 in March, its strongest reading since June 2022. New orders expanded at their fastest rate in 46 months, and output reached a seven-month high.

Cost pressure is building at the same time. The report says input-cost inflation reached its highest level since October 2022, factory-gate prices rose at their fastest pace in more than three years, and business confidence weakened amid Middle East tensions.

That combination limits the strength of the recovery. The benchmark warns that rising costs and weaker confidence have historically preceded a slowdown in orders one or two quarters later, making Q2 a likely inflection point.

Freight volumes also remain soft. Road trade volumes between major EU economies fell in Q1 compared with Q4, and goods exchanged by road were down 8% year on year. The report notes that Q1 is usually the weakest quarter by tonnage, but the broader volume picture remains exposed to inflation, energy prices and weaker consumer spending.

IRU forecasts total European road freight volume, measured in tonne-kilometres, to grow by 1.3% year on year in 2026, although the report says this depends heavily on the duration of the Middle East disruption, fuel availability and consumer behaviour.

Paris–Birmingham sees strongest international rise

Among the international lanes tracked in the benchmark, Paris-to-Birmingham recorded the strongest contract-rate movement. Rates reached 151.7 index points, or €3.00/km, up 8.4 points quarter on quarter and 17.0 points year on year.

Spot rates on the same lane also increased, reaching 165.4 index points, or €3.18/km, up 7.2 points quarter on quarter and 12.6 points year on year.

The report links the rise to strong cross-Channel import demand, particularly chemicals, machinery and pharmaceutical-related products entering the UK from the EU. Costs are adding further pressure, with French non-fuel road freight operating costs also rising.

Warsaw-to-Duisburg contract rates increased by 3.1 points quarter on quarter and 11.6 points year on year, partly reflecting renewed German manufacturing activity and demand for raw and intermediate goods. Duisburg-to-Lille and Madrid-to-Duisburg also saw contract-rate increases.

Spot markets were more uneven. Madrid-to-Duisburg rebounded sharply after a weak Q4, but Warsaw-to-Duisburg and Duisburg-to-Lille both fell quarter on quarter.

Spain stands out in domestic markets

Spain was the strongest domestic spot market in the benchmark. Spanish domestic spot rates rose to 155.6 index points in March, up 10.6 points month on month and 14.4 points year on year.

The report points to stronger domestic demand, private consumption and investment, as well as Spain’s improved energy efficiency. Diesel costs are also pushing rates higher, with Madrid diesel prices rising from €1.43 per litre in January to €1.95 in mid-March.

Germany, France and Italy showed a weaker domestic spot picture. German spot rates rose month on month in March, although they remained lower year on year. French domestic spot rates fell quarter on quarter and year on year, while Italian spot rates also declined despite signs of recovery in manufacturing.

Driver shortage and tolls add to the squeeze

Fuel is the immediate driver, but the benchmark also highlights other supply-side pressures. Preliminary results from IRU’s annual driver-shortage survey show 12.1% of driver positions were unfilled in the EU in 2025, with shortages most acute in eastern EU countries, especially Poland. Spain and Germany are also facing significant skills gaps and retirement exposure.

Toll costs are rising as well; Poland recorded the largest increase, with tolls for a standard Euro VI tractor and semi-trailer combination up 33% in February, taking the year-on-year rise to 40%. Its toll network also expanded by 645km. France increased tolls by 0.86% on average, and the Netherlands is preparing to move from a time-based to a distance-based truck toll in July.

The report also flags AdBlue as a potential supply risk if Middle East disruption continues. IRU said global urea prices had risen sharply since the start of the conflict, and warned that shortages would be serious for Euro 6 fleets because AdBlue is required for legal operation.