An increase in German tolls or a revival of the economy? Something has shifted road transport rates

In the first quarter of 2024, spot rates in Europe continued to increase compared to the previous quarter, according to data from the platform. Is it a matter of German toll increases or perhaps the revival of the European economy?

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The first quarter of 2024 is already behind us and it remains difficult to speak of the economic rebound everyone had anticipated. Industry and consumption in most European countries are still sluggish, which also affects the historically low levels of demand for transport services. This, in turn, suppresses freight rates.

Transport rates, although they have increased in some areas, are still lower than at the end of 2022. The end of that year and the entire year 2023 were marked by a decline in demand for transport and a consequent decrease in transport prices.

Poland – Germany

Let’s look at the most popular route, from Poland to Germany. In the first quarter of 2024, the median rate on the exchange from Poland to Germany was EUR 1,050, the same as the previous quarter. However, it is worth examining these numbers more closely. In the last quarter of 2024, the quarterly median was boosted by a December spike, when rates reached up to EUR 1,150. In January, there was a return to EUR 1,000, the prevailing rate for much of the second half of 2023. From January this year, we have seen a gradual monthly increase in transport prices.

There may be several reasons for this February-March increase. Increased market activity in spring, even if historically subdued, is one factor. The rise in German tolls in December is another significant factor. As much as 83 percent of the increase in tolls must be reflected in carriers’ costs. Even if there are still issues with dishonest transport companies offering rates below real costs on the spot on the route to Germany.

Other routes

Looking at other important east-west routes between Poland and other European countries, rates behaved differently in the first quarter. For the route to France, we observed a minimal quarterly median increase (from €2,050 in Q4 2023 to €2,063 in Q1 2024). Meanwhile, destinations to Italy, the Netherlands, and Great Britain saw lower rates in the first three months of the year than in the last quarter of 2023.

However, if we consider the monthly readings, the situation appears slightly different. As in the case of Germany, the December price increase distorts the overall picture. In the direction of France, each subsequent month in 2024 brought a minimal but consistent increase in spot rates. The March median of EUR 2,100 surpasses the pre-holiday levels of October and November.

Similarly, on the route to the Netherlands, the demand for transport of goods consistently increased in January, February, and March. Currently, at the end of March, the median rate is higher than in the autumn.

In contrast, on the route to Italy, after an increase in transport prices in February compared to January, there was a decrease in March. Currently, the rates are at the November level.

Poland – UK

The situation towards Great Britain is similar. In March, the median spot rate on the Islands was EUR 2,900. Excluding the December price jump, this has been a relatively constant price since the beginning of the fourth quarter of the last year.

Therefore, we cannot see any spectacular effect from the introduction of higher road tolls in Germany. It is worth emphasising that German tolls are not only a problem for carriers traveling on routes to Germany. Most of the export destinations analyzed here require transit through Germany (the exception is Italy, which can also be reached via the Czech Republic and Austria). After the December rate increase, transit through the territory of our western neighbors has become on average over EUR 100 more expensive.

Low demand is taking its toll

The effect of increased tolls in Germany is dampened by low market demand. Not only is the beginning of the year always characterised by not only cold temperatures in the air, but also in the economy, we are still grappling with the effects of the economic slowdown in Europe.

Low demand for transport services means a greater supply of vehicles, making it easier to find carriers operating below costs. Various reasons motivate them – to stay in the market, to cover even leasing installments. Of course, there are also dishonest carriers.

Europe has been struggling with economic slowdown since the second half of 2022, particularly evident since the last quarter of that year. This is reflected in the rates, especially when comparing their current level with the median from the fourth quarter of 2022. Although the rates described above for recent months may appear optimistic, they are still at a lower level than in 2022.

As mentioned above, in the first quarter of this year, the median spot rate on the route to Germany was EUR 1,050. For comparison, in the last quarter of 2022, it was still EUR 1,166, representing a decrease of 10% in just over a year. In the case of the route to Germany, this decline is relatively limited anyway. The situation is much worse in other directions.

On the route to France, the decline was 10.9% (from EUR 2,316 in Q4 2022 to EUR 2,063 in January-March 2024). The most expensive routes were to the Italian Peninsula and the British Isles. Travel to Italy became 15% cheaper, to Great Britain – by 13.5%.

Price increases were slightly smaller than on the route to Germany for the route to Benelux. Travel to the Netherlands was 9.7% cheaper (from 1,413 euros to 1,276 euros).

It is worth emphasising that with such significant declines in the prices demanded by transport companies, higher road tolls and constantly increasing costs of running a business (not to mention the cost of living), the situation of many carriers is truly dramatic.

Hoping to bring some optimism to our quarterly analysis, it is worth noting again that in three of the five analyzed directions, which are extremely important for Polish transport, rates consistently rose in the period January-March.

Of course, this may be a manifestation of a typical seasonal increase in demand, but also the first timid signal of the rebounding European economy.

In the case of the Netherlands, the PMI index in this country is already approaching the 50-point mark, indicating an increase in industrial activity. Hence perhaps the increase in rates to this country.

The performance of the French industry remains at the average level in the euro zone, while the German ones are dramatically low. However, this low level cannot continue indefinitely in the case of the Federal Republic. And finally, the long-awaited recovery will arrive.

It will be interesting to see how the rates will behave in the coming months. The effect of December toll increases will no longer be noticeable as in the first weeks of the year. So if the upward trend continues, this will indicate improving demand. This will give some respite to carriers who are repeatedly plagued by plagues. German Maut and rising fuel prices are just the last of them.