The situation in the Middle East is quickly translating into real operating costs for transport in Europe. In Germany – the European Union’s largest economy and one of the continent’s key logistics hubs – the industry is already sounding the alarm that a sudden spike in diesel prices and rising freight rates could, in a short time, push some companies into serious financial trouble. Similar signals are coming from other European countries.
Germany: diesel prices rising fastest in the region
German transport companies have asked the antitrust authority for an urgent analysis of the fuel market. The industry points out that the pace of diesel prices increases in Germany significantly exceeds the dynamics seen in other European countries.
In a statement to “Handelsblatt”, Dirk Engelhardt, President of the Bundesverband Güterverkehr, Logistik und Entsorgung, drew attention to the scale of the increases.
Germany recorded the highest price increase among the countries analysed – and at a rate that cannot be explained solely by changes in crude oil prices” – Engelhardt wrote in a letter to the head of the antitrust authority.
According to data cited by the organisation, between 27 February and 4 March diesel prices in neighbouring countries rose from 1.4% in Luxembourg to 14.6% in Austria, while in Germany the increase was 17–18%.
The industry warns that even short-lived increases can quickly translate into operating costs for transport companies. According to the organisation’s calculations, a 10% increase in diesel prices raises carriers’ total operating costs by around 3%, and with a 20% increase, costs rise by around 6%. With low margins in the sector, this means a real risk of losing financial liquidity.
Drastic price spikes are pushing many companies to the limits of their economic capacity and threatening their continued existence” – warn representatives of the organisation.
Other German industry organisations are also drawing attention to the problem. Bundesverband Möbelspedition und Logistik, Bundesverband Paket- und Expresslogistik, Bundesverband für Eigenlogistik & Verlader and BGL jointly appealed to the federal government for “short-term measures to relieve the logistics sector”..
In their view, current diesel prices are putting enormous pressure on companies across the entire logistics chain, and the situation is particularly visible in Germany compared with other European countries. The organisations stress, however, that this is not about permanently subsidising the sector, but about temporarily limiting fuel costs in a crisis situation, which would allow companies to survive a period of sharp price volatility.
Rising costs and chaos in supply chains
The conflict in the Middle East is affecting more than just road transport. The German Freight Forwarding and Logistics Association (DSLV) points to growing problems in global supply chains.
Disruptions in the Persian Gulf region are causing route changes and a sharp rise in sea and air transport costs. Shipping lines have begun levying extraordinary surcharges.
Shipping companies are charging freight forwarders up to USD 4,000 per container transported through the Persian Gulf – several times the standard freight rate.
Some vessels are also bypassing the Suez Canal and routing around the Cape of Good Hope, which further extends transit times and increases costs.
Problems are also emerging in air cargo. Dubai, Abu Dhabi and Doha – the region’s key logistics hubs – are facing operational constraints, and airlines are cancelling some flights or suspending acceptance of bookings.
DSLV President Frank Huster points out that rising costs will quickly feed through into goods prices.
These are costs that now have to be passed on to logistics customers. Consumers will ultimately feel the impact of these supply chain disruptions on store shelves” – he emphasises.
The organisation also criticises the high level of energy taxes in Germany.
Energy taxes and CO₂ emission charges are generally too high in Germany. This hits particularly hard in times of crisis” – Huster warns.
Freight forwarders could quickly lose liquidity
Entrepreneurs themselves are also pointing to growing financial tensions in the sector.
Lukas Petrasch, CEO of the forwarding company Cargoboard, stresses that transport has to pay for fuel immediately, while price adjustments in contracts with customers often appear only with a delay.
Rapidly rising diesel prices directly affect carriers. Every litre of diesel has to be paid for immediately – yet price adjustments are often delayed. In the meantime, transport companies have to bear the additional costs themselves” – he notes.
According to Petrasch, with the current pace of increases, this can quickly lead to serious cash-flow problems and, in extreme cases, even to the bankruptcy of transport companies and disruptions in supply chains.
“The price spikes are absurd”
The effects of rising fuel prices are already visible at the level of local transport businesses. As reported by the “Trierischer Volksfreund” portal, logistics companies in the Rhineland-Palatinate region are sounding the alarm about sharp cost increases.
Nadja Geiter, owner of the Johann Müller forwarding company in Mülheim an der Mosel, uses around 1.2 million litres of diesel per year in her business. Every cent of an increase therefore has a direct impact on the company’s financial result.
Within a week, the diesel price rose – as she emphasises – by around 20%, and fuel accounts for nearly 30% of the company’s total operating costs.
Some companies are partially protected by so-called fuel clauses in contracts with customers. However, in many contracts – especially those with fixed rates – a price adjustment is impossible.
This is an extreme burden on us. These are price spikes beyond any scale” – says Jerry Bodry, director of GTS Logistik in Traben-Trarbach, whose fleet numbers 35 vehicles.
Polish carriers count losses, government constrained by EU rules
Rising diesel prices are also affecting Polish carriers. Some companies are deciding to temporarily suspend operations in the coming days in an attempt to limit operating losses. As Maciej Wroński, President of the Transport and Logistics Poland association, points out, the industry expects state support, but Poland’s options are limited due to applicable EU regulations.
It is obvious that in a situation where the price of diesel – one of the main components of transport companies’ operating costs – rises drastically from one day to the next, the industry expects support from the Government. However, of course, the existing restrictions in this area must be taken into account. Therefore, it is difficult to expect a noticeable reduction in excise duty in Poland, because the EU Energy Taxation Directive (2003/96/EC) allows Member States to refund the tax, but only down to the EU minimum level, which is 330 euros per 1,000 litres of diesel. Since Polish excise rates have traditionally hovered around this absolute EU minimum, the room for a refund in Poland is practically zero. A similar situation applies to the VAT rate, the reduction of which is prohibited by EU regulations” – comments Maciej Wroński, President of the Transport and Logistics Poland association .
According to Maciej Wroński, a good solution could be the emergency release of strategic reserves (RARS) to balance supply with demand, but in the case of IEA reserves (International Energy Agency) this would require international coordination.
In my view, however, there is real scope for actions such as suspending the fuel surcharge (which funds the National Road Fund) and the emissions fee (which funds NFOŚiGW). Such action would be a sovereign decision of our state, not requiring Brussels’ approval and not violating EU law. The government can also practically immediately reduce toll rates for motorways and expressways (in the e-TOLL system) for heavy goods vehicles, e.g. by rolling back the February increases in these charges. Suspending and/or reducing these levies would significantly offset the rise in fuel prices”– adds the President of TLP.
The industry calls for lower taxes on fuels
In response to rising costs, transport organisations in Europe are calling for government action. The demands primarily concern reducing the tax burden on fuels.
German industry organisations point out that any support should primarily involve compensating for additional state tax revenues resulting from higher energy prices, including from taxes and charges related to CO₂ emissions. As sector representatives emphasise, the state should not become a beneficiary of the crisis at the expense of businesses and taxpayers.
Similar demands are also emerging in Spain. The local transport federation Fenadismer points out that the diesel price for professional transport has increased by more than 15 cents per litre within a few days, and part of the increases – according to the organisation – is speculative.
The Spanish industry is calling for a return to the measures introduced after the outbreak of the war in Ukraine in 2022, when a 20-cent per litre fuel subsidy and direct financial support for transport companies were introduced.
Portugal is already responding
The first fiscal decisions in Europe have already been made. The Portuguese government decided on a temporary and extraordinary reduction of the tax on petroleum and energy products on diesel.
According to sector data, without this decision the diesel price would have increased from 9 March by 23.4 cents per litre. The introduced tax relief means a reduction of 3.55 cents per litre, which – after taking VAT into account – results in real savings of 4.37 cents per litre.
The government in Lisbon also announced continued monitoring of the fuel market situation and the possibility of further interventions if prices continue to rise.
For European transport, this may be a signal that similar fiscal decisions will, in the coming weeks, be one of the main tools to mitigate the effects of the energy crisis triggered by tensions in the Middle East.
