Life on Asia-Europe tradelanes: longer transits, fewer sailings, reduced capacity
Further evidence that Asia-North Europe shippers now have fewer booking options and must live with ...
Road transport freight rates in continental Europe declined in the fourth quarter last year, as hauliers injected more capacity into the market.
According to the latest market index produced by Transporean and TIM Consult, road transport capacity steadily increased during 2018, after being heavily constrained the year before, which resulted in spot freight rates declining.
TIM Consult managing director Oliver Kahrs said: “We have observed prices below the level of 2017 here for the first time, when capacity bottlenecks characterised the market.”
The Transport Market Monitor recorded a capacity increase of 18.6% over the third quarter of 2018 and was 34.1% higher than in the fourth quarter of 2017.
The fourth-quarter pricing declined 3%, quarter on quarter, and 5.7% year on year, which could spell trouble for carriers, given that diesel prices have climbed and are 4.9% up on the third quarter of 2018.
However, Mr Kahr believes large European shippers that tend to favour annual contracts will fail to take advantage of weaker pricing.
“In view of capacity developments, the price decline appears in contrast with the diesel price, which rose again in the fourth quarter, only at first sight. But in practice, many industrial and commercial shippers hardly noticed the easing of prices, as they assign transports almost exclusively based on long-term contracts. Current trends have not affected these yet.
“This shows once again it is better to follow a mixed transport assignment strategy to flexibly take advantage of the lower prices in the spot market to achieve cost reductions,” he added.
Transporean’s director of business consulting, Jan Rzehak, argued that shippers should consider a greater mix of long- and short-term contracting with hauliers, as more capacity is expected to become available in the coming quarter.
“Traditionally, there has been more available freight capacity the first quarter of each year. And so we expect the price difference to increase further in the first-quarter 2019, which makes transport assignments in the spot market even more attractive,” he said.