The first edition of this joint report shows that rates remain historically high for Q3 2019, despite falling by 1.1% year-on-year. - Q3 2019 average international European road freight rate €1,180, down 1.1% y-o-y - Down from historic Q3 2018 peak of €1,193 - Granular data shows relatively flat picture at European level masks volatility on individual lanes

1. European Road Freight Rate Development Benchmark from Ti Research and Upply
December 2019 © Ti and Upply of1 16

2. European Road Freight Rate Development Benchmark from Ti Research and Upply
December 2019 © Ti and Upply of2 16
Table of contents
The European Road Freight Rate Benchmark – Q3 2019
Ti - Upply European Road Freight Rate Benchmark Map
Rate development on Europe’s largest trade lanes by volume
Europe’s Import and Export Hubs
Brexit – Impacts on Cross- channel Road Freight Rates
One Lane to Watch – Rotterdam to Warsaw
Methodology
About Ti and Upply
3
4
5
8
11
13
15
16

3. European Road Freight Rate Development Benchmark from Ti Research and Upply
December 2019 © Ti and Upply of3 16
THE EUROPEAN ROAD FREIGHT
RATE BENCHMARK – Q3 2019
The Ti & Upply European Road
Freight Benchmark for Q3 2019 was
flat, with average freight rates in the
region unchanged from the previous
quarter at €1,180. The benchmark
rate has trended steadily downwards
since peaking at €1,193 in Q3 2018,
a figure 1.1% higher than the current
benchmark rate.
The generally downward trend seen
since Q3 2018 follows a period of
rapid expansion in the preceding 18
months. The recent trend reflects
weaker demand as major economies
in Europe struggle to find growth
leaving the region’s Q3 2019 GDP
expansion at just 0.3%.

4. European Road Freight Rate Development Benchmark from Ti Research and Upply
December 2019 © Ti and Upply of4 16
TI-UPPLY EUROPEAN ROAD FREIGHT RATE BENCHMARK MAP Q3 2019
Rates remain historically high,
however, propped up in large part by
a combination of supply restrictions
that result from the ongoing driver
shortage in the region, as well as
diesel costs. Since Q1 2017, the
change in average diesel price in
Europe has a 0.88 correlation with
average freight rates (a correlation of
1.0 would indicate a perfect
relationship).
European road freight rates for major country-to-country lanes based on
average FTL rates between major transport hubs. Quarterly averages
computed from weekly median rates on each lane. See methodology on P.14.

5. European Road Freight Rate Development Benchmark from Ti Research and Upply
December 2019 © Ti and Upply of5 16
Germany-Poland, France-Spain and
Germany-France represent the three
largest trade lanes in Europe in
volume terms when measured by
tonne-kilometers. According to
Eurostat data, the three lanes
accounted for 15.9% of international
road freight tonne-kilometres driven in
Europe.
In Duisburg-Warsaw, inbound and
outbound lanes have shown different
patterns this quarter. Duisburg
outbound rates fell 4.0% year-on-
year, or 4.6% quarter-on-quarter.
However, inbound rates from Warsaw
grew 2.9% year-on-year and 2.2%
quarter-on-quarter.
In Germany, average diesel prices
were 4.6% lower year-on-year, and
with manufacturing exports weak,
road freight providers in the country
may be facing stiff price competition
and having to pass savings on to
secure volumes. Rate growth
between Warsaw and Duisburg has
followed a steady upward trend since
Q1 2017, reflecting both higher driver
wages and an acute driver shortage
in the market.

6. European Road Freight Rate Development Benchmark from Ti Research and Upply
December 2019 © Ti and Upply of6 16
On the Madrid-Paris lane, rates have
fallen steeply in the last three months,
down 10.1% on the rate seen in Q2
2019. The fall is much shallower year-
on-year, however, with rates down
just 0.3% compared with Q3 2018.
Demand for road freight services has
been high in Spain where export
growth and economic activity have
been healthy. Rate growth collapsed
in Q3 2019, however, in part as a
result of diesel prices (-6.2%
compared with the previous quarter)
and exports (-0.8%) both slowed.
Paris outbound prices to Madrid grew
0.4% compared to Q2 2019, while
annual growth is -2.2%.

7. European Road Freight Rate Development Benchmark from Ti Research and Upply
December 2019 © Ti and Upply of7 16
On the Duisburg-Paris lane,
Duisburg outbound price growth
picked up momentum in Q3 2019,
whilst Paris outbound prices
remained stagnant. Overall, however,
rates in both directions have followed
similar patterns since Q1 2017.
Duisburg outbound prices grew mildly
at 0.6% quarter-over-quarter,
however, rates were down 1.9% year-
on-year. Paris outbound prices were
down more sharply year-on-year at
2.8% but remained unchanged
quarter-on-quarter.

8. European Road Freight Rate Development Benchmark from Ti Research and Upply
December 2019 © Ti and Upply of8 16
Antwerp and Rotterdam are home to
Europe’s two busiest container ports.
As such overland trade lanes to and
from the ports are key in facilitating
Europe’s global trade.

9. European Road Freight Rate Development Benchmark from Ti Research and Upply
December 2019 © Ti and Upply of9 16
Rates outbound from Antwerp are
higher than inbound rates, in part
reflecting the import-oriented nature
of the European economy. However,
while inbound rates form Duisburg to
Antwerp tend to follow much the
development pattern as the reverse
route, price development between
Antwerp and Paris has not, with the
price gap steadily widening from
17.5% in Q1 2017 to 41.3% in Q3
2019.

10. European Road Freight Rate Development Benchmark from Ti Research and Upply
December 2019 © Ti and Upply of10 16
Rate development to and from
Rotterdam from Duisburg, Paris and
Warsaw each follow different
development patterns. Rates from
both Duisburg and Warsaw to
Rotterdam surpass inbound rates to
those cities at various points during
the period under review. For the
Warsaw-Rotterdam lane, outbound
rates pick up noticeably in Q2 2018
with a 14.2% quarter-on-quarter rise.
Indeed, when rates hit their peak in
Q2 2019, they were 46.5% higher
than the rate at the start of 2018. This
again reflects the key dynamics in the
Polish market of rising driver wages
and driver shortages.

11. European Road Freight Rate Development Benchmark from Ti Research and Upply
December 2019 © Ti and Upply of11 16
Note: Average UK Inbound & Outbound Road Freight Rates are derived from Birmingham
– Duisburg, Birmingham – Madrid and Birmingham – Paris roads average rates

12. European Road Freight Rate Development Benchmark from Ti Research and Upply
December 2019 © Ti and Upply of12 16
Both inbound and outbound UK
freight rates across the lanes included
here have been relatively stable,
typically showing modest quarter-on-
quarter growth. Inbound rates are
considerably higher reflecting both
the import-oriented nature of the UK
market and price competition in
securing backhaul loads. Despite the
different levels of rate values, inbound
and outbound growth patterns are
almost identical.
Rates peaked during Q3 2018, having
risen 6.3% when compared with the
same period in the previous year, but
have since fallen and Q3 2019 data
shows rates down 2.2% year-on-year.
It is possible to at least partially
attribute this rise to Brexit. Evidence
from the UK Warehousing
Association, for example, shows 75%
of its members were operating at full
capacity and 85% had received
Brexit-related enquiries in Q4 2018.
The increased demand for
warehousing space during the quarter
suggests stockpiling of inventory by
the UK’s retailers and manufacturers
which may have boosted demand for
imports by road. However, with only
modest growth showing up elsewhere
in the UK’s economic data for the
period, the stockpiling boost may
have been offsetting weak underlying
activity.

13. European Road Freight Rate Development Benchmark from Ti Research and Upply
December 2019 © Ti and Upply of13 16
In Q3 2019, Rotterdam to Warsaw
freight rates increased by 7.2%
quarter-over-quarter. Rate
development on the lane, however,
remains volatile. Looking at the
quarterly growth rate reveals a
volatile picture.
Poland, like other Central and
Eastern Europe (CEE) economies,
has seen a continuation of solid
economic growth in 2019, unlike
several key western European
economies. In Q3 2019, seasonally
adjusted GDP in Poland expanded
1.3% quarter-on-quarter after a 0.8%
expansion in the previous quarter.
Private and public consumption have
remained heathy, meaning import
demand has remained robust and
helped maintain upward pressure on
rates into the country. Also
contributing to increased rates is the
higher Eurovignette cost in the
Netherlands. From July 1, 2019, the
yearly rate for Euro 4 vehicles
increased from €1,250 to €1,400,
while the increase for Euro 3 vehicles
rose from €1,250 to €1,543 per year.
Under the new vignette, the daily rate
was to increase from €8 to €12 for all
categories.

14. European Road Freight Rate Development Benchmark from Ti Research and Upply
December 2019 © Ti and Upply of14 16
Rates are also driven by increased
costs for Polish road freight providers.
Wage growth is pushing up costs,
while the shortage of drivers in the
Polish market is restricting supply.
The higher cost base appears to be
driving up rates.

15. European Road Freight Rate Development Benchmark from Ti Research and Upply
December 2019 © Ti and Upply of15 16
The rates are the result of Upply's
own econometric and statistical
modeling, which is based on the
analysis of more than 80 million
transactional prices. Upply provides
Full Truck Load (22 000 kg) weekly
rates estimations for each major
European trade lanes, associated
with a confidence rate. These rates
are computed from Upply’s key
partners and users transactional
data. To complete the analysis
presented here, Ti selected a
representative sample of the largest
European road freight corridors by
volume. Ti then used the median
rates provided by Upply on each
corridor, averaging weekly rates over
each quarter. Ti’s team of senior
analysts provide additional insight
into the drivers and trends behind
price movements with support from
Upply.

16. European Road Freight Rate Development Benchmark from Ti Research and Upply
December 2019 © Ti and Upply of16 16
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