Road freight rates hit record high with further spikes likely

Freight rates are expected to remain high for most of this year due to a potent mixture of reduced cross channel capacity, business uncertainty, soaring fuel prices and the war in Ukraine, according to analysts.

Data from Transport Intelligence, Upply and the IRU showed that the road freight rates index for Europe hit an all-time high in Q1 2022, thanks to rising cost pressures, supply and capacity disruptions, regulatory change and Russia’s invasion of Ukraine.

The group said there appeared to be no short-term alleviation in diesel costs; in fact, the problem may worsen as carriers previously insulated by bulk purchasing agreements find the mechanisms for buying fuel for use in the future no longer provide protection.

As far as the UK is concerned, the extra documentation needed by exporters and checks on goods piled on the costs for crossing the border into the EU.

In its report, the group said: “Cross-channel transportation capacity has also helped push rates higher on UK import lanes.

“At various points throughout the quarter, cross-channel capacity has been lost, most notably with the suspension of services at P&O Ferries.

“Looking ahead to Q2 and beyond, the outlook for rate development is mixed but indications point to further upwards pressure,” it said.

The report added: “The worst effects of this fuel price increase may be yet to be registered in the quarterly index, as the price spike did not occur until after the invasion of Ukraine on the 24th of February, and carriers were able to make use of fuel purchased in advance at lower prices through the end of February and early March.

“With lower cost fuel now depleted, and fuel prices expected to remain elevated, greater upward pressure from fuel prices is expected on rates in Q2 2022.”