Sharp rise for European transport prices

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Road transport prices in Europe have risen by 13.5 per cent between the first and second quarters of 2010, according to the Transport Market Monitor produced by Transporean and Capgemini.

This is the first time that price levels have equalled those in the first half of 2008 – before the recession. Even so, quarterly price levels are still 2.2 per cent under the level of quarter two in 2008.

The Price Index shows that the rates hit rock bottom early 2009 and have been increasing since then.

Steve Wilson, UK vice president of supply chain and logistics at Capgemini Consulting, said:  “Transport cost rates have risen sharply in Q2 2010 over Q1 2010 and even though the rate of increase slowed somewhat in the final month of Q2, we expect rates to continue to rise, partly in response to tightening supply and partly from input cost inflation percolating through, principally from driver wage increases and fuel cost inflation.

The index shows that in parallel with the rising prices the amount of empty capacity has been falling. The capacity index fell by 44 per cent between the first and second quarters of 2010.

Transporeon is a web-based system that enables shippers to buy road transport capacity online and information from the system is used to calculate the indices. The Price Index is calculated by comparing the average price per kilometre over time. The Capacity Index is calculated by comparing the average number of bids in response to a transport request over time.

Wilson said: “Increased transport costs from third party logistics firms will raise prices for firms shipping goods without a dedicated fleet. We’d expect to see a particular effect on construction companies and air freight – both sectors under intense economic pressure at present. After years of falling costs, reduced capacity from third party shipping firms could see the price per tonne of goods shipped in the UK rise by as much as four to six per cent by the end of the year.”

The Transport Market suggests that new strategies are needed to realise benefits in the current market dynamics.

Peter Förster, managing director of Transporeon, said: “Taking into account today’s market dynamics, traditional sourcing strategies may not bring the expected financial benefits that logistics managers are aiming for. In 2006 we had a similar situation, many tried to fix the prices for a longer period as they had expected prices to increase even more in the following year. In 2007 they realised the opposite: they were stuck in high 2006 prices whereas the market prices had decreased significantly in the meantime.”

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