Contract rates climb as fuel costs drive divergence in European road freight market

The latest IRU x Upply x Ti European road freight rates report shows contract rates reached 140.1 index points in Q1, up 3.2 points quarter on quarter and 8.9 points year on year. In contrast, spot rates fell to 132.3, declining by 2.8 points compared with the previous quarter and sitting 2.0 points lower year on year.

The decline in spot rates reflects typical seasonal trends at the start of the year, with post-peak demand easing and European consumers remaining cautious amid ongoing cost pressures. However, analysts warn that this trend is unlikely to persist as rising fuel costs begin to feed through.

Michael Clover, Ti head of commercial development, said: “The decline in spot rates in Q1 is already a historical trend, as rising diesel prices push up freight rates and we now expect spot rates to rise sharply. Contract rates were already rising steadily, but with fuel prices increasing we expect to see this trend continue and strengthen.”

Fuel prices have emerged as the dominant driver of market conditions. EU diesel prices rose from an average of €1.56 per litre at the end of Q4 2025 to €1.96 per litre by the end of Q1 2026, a 26% increase, driven by geopolitical disruption and the closure of the Strait of Hormuz, which pushed oil prices above $100 per barrel.

National responses across the EU have varied, with some countries introducing price caps, tax reductions or VAT cuts to mitigate the impact. However, these uncoordinated measures have led to price discrepancies of up to €1 per litre between member states, encouraging fuel tourism and adding further pressure to supply.

Looking ahead, diesel prices continued to rise into Q2, with the EU average for April reported to be 10% higher than in March. Concerns are also emerging over diesel availability, as refineries may shift production towards jet fuel amid shortages in the aviation sector.

Alongside fuel, structural pressures persist. New truck registrations fell by 6% year on year in 2025, while 12.1% of driver positions remained unfilled across the EU, according to preliminary IRU data. Poland also recorded the largest toll increase in Q1, with charges rising by 33% for a standard EURO VI combination.

Despite weaker spot demand, underlying industrial activity has shown signs of recovery. The Eurozone manufacturing PMI reached 51.6 in March — its strongest level since June 2022 — indicating expansion, with output at a seven-month high and new orders stabilising. This has supported continued growth in contract rates, which are closely tied to industrial production.

IRU senior director for strategy and development Vincent Erard said: “Fuel price volatility, compounded by the war in Iran and geopolitical disruption, has laid bare our industry’s fragile operating conditions. European governments have put in place emergency measures. But uncoordinated action can distort markets, leaving operators exposed where national room for manoeuvre is limited.”

He added: “Transport is not a buffer to be squeezed when energy markets falter; it’s a strategic resource that needs stable, predictable and forward-looking conditions.”

The report also highlights emerging risks around AdBlue supply, a key diesel additive produced largely in the Middle East, which could be affected if the crisis continues.

Market sentiment points to further upward pressure on rates. The European Road Freight Sentiment Index rose by 6.2 points to 16.9 in Q1, indicating stronger expectations that prices will increase over the next three months.

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

With fuel costs expected to remain elevated, the report concludes that upward pressure on both contract and spot rates is likely to persist through at least the first half of 2026, regardless of demand conditions.