News / Fuel costs reshape Europe's road freight as contract-spot split widens 

European road freight is entering a new, cost-driven phase, as surging fuel prices push rates higher despite softer demand.

According to the latest Ti/Upply/IRU report, in Q1 26, contract rates rose to 140.1 index points, up 3.2 points quarter on quarter, and 8.9% year on year, while spot rates fell to 132.3 index points, down 2.8 and 2 points, respectively. 

The divergence reflects what the report describes as “a cooling-off period” in spot markets following the peak season, even as contract pricing continues to climb on previously secured volumes. 

But the more significant shift is on the cost side. 

EU diesel prices jumped 26%, from €1.56 per litre at the end of Q4 25 to €1.96 by the end of Q1 26, after disruption in the Middle East pushed oil prices above $100 per barrel. 

“The Q1 picture reveals a market entering a new phase where cost pressures are overtaking demand as the primary driver behind rate movements,” said Upply CEO Thomas Larrieu. 

With fuel inflation accelerating, the link between demand and pricing is weakening. After freight volumes declined 8% year on year in Q1, operators are expected to pass the rising costs on. 

“Fuel is expected to be the dominant driver of road freight rate changes in Q2 and beyond,” says the report, warning that operators “will be unable to absorb costs of this magnitude without passing them through to rates”. 

That shift raises questions over how long rates can continue to rise if demand deteriorates further. 

Ti’s head of commercial development, Michael Clover, said: “The real question… is how the upward pressure on freight rates from high fuel costs will balance against lower volumes as the economic situation worsens.”

While manufacturing offered some support in Q1, the Eurozone PMI rising to 51.6 in March to its strongest level since June 2022, the report warns that rising input costs and weakening confidence typically precede a slowdown in orders. 

At the same time, structural supply constraints are tightening. Driver shortages remain significant, with 12.1% of positions unfilled across the EU, while new truck registration fell 6% last year, limiting capacity growth. 

The result is a market increasingly driven by cost inflation rather than freight volumes. 

This is already reflected in sentiment. The European Road Freight Rates Sentiment Index rose 6.2 points in Q1, to 16.9, with expectations “firmly leaning towards a further increase in rates”. 

With diesel prices continuing to climb and supply pressures building, the report suggests Europe’s road freight market is shifting into a new cycle, where rates are set less by demand swings and more by the rising cost of keeping trucks moving.  

Yet again, it’s not good news for shippers. 

Inside the industry’s AI shift

Complete The Loadstar’s ‘State of AI in the Supply Chain’ survey — and receive the full report and data before release.

Take the 2-min survey

This article is © The Loadstar. Reproduction, rewriting, or derivative use requires a license. Contact [email protected] for licensing enquiries.