Exports of fruits and vegetables and other perishable goods from Spain to Europe, especially to Germany, have meant that the prices of road transport services have remained at a high level during the second quarter of 2020.
In the midst of the pandemic, the price has risen to 1,813 euros, the highest quarterly figure since 2017, according to the analysis of Transport Intelligence and Upply on road transport tariffs in Europe (Fig. 1). "Spain is one of the biggest players in the fruit and vegetable sector and because of this its fleet has more than 40% of refrigerated trailers", said William Béguerie, an expert in road transport on the Upply digital platform. "This is the first European country in refrigerated transport".
Fig. 1. Price evolution on the Madrid-Duisburg route and vice versa
In relation to the latter, the new situation created by the coronavirus has led, in some cases, the price has exceeded 40% of normal levels, according to the expert. In addition, a third factor is that uncertainty about return cargo or returns due to the current macroeconomic context has led shippers to increase prices to Germany to compensate for losses.
In fact, the goods transported by road between the German city of Duisburg and Madrid have experienced the greatest fall in prices in Europe in year-on-year terms, with a variation of 9.6% from April to June, to reach 1,600 euros. The British consulting firm has justified these results by the slowdown in the car industry, which is key to the route, as it accounts for 20% of bilateral trade in terms of value.
Therefore, the greater imbalances in the demand for transport services have affected price variation, as the pandemic has had and continues to have a greater incidence in Spain than in Germany. In this sense, Transport Intelligence has identified a general trend throughout Europe: those countries most affected by Covid-19 have imported fewer goods. Therefore, the faster recovery in Germany has kept export prices high on the Madrid-Duisburg route, while the weaker recovery in Spain has driven imports down.
Madrid-Paris route remains relatively stable
However, one of the main routes that has remained relatively stable from April to June has been the Madrid-Paris route, despite having experienced continuous falls in recent quarters. Freight rates to France fell by 0.3% to 1,350 euros compared to the first quarter, while to Madrid they increased by 0.3% to 1,234 euros. Nevertheless, Transport Intelligence has warned that this development should not be attributed to a stable macroeconomic situation, because although certain signs of recovery have been shown, trade remains weak between the two destinations (Fig. 2).
Fig. 2. Price evolution on the Madrid-Paris route and vice versa
European average in freight prices
At European level, shippers paid an average rate of 1.58 euros per kilometer in the second quarter, down 0.3% from the beginning of the year. The variation in cost between routes has depended largely on their length: longer routes have created efficiencies, reducing the fixed and variable costs associated with road transport operations and, consequently, the price per kilometer. Meanwhile, the opposite effect has occurred on shorter routes. Transport Intelligence has described as “stable in the market” this feature. In this respect, the Birmingham-Madrid route has remained the cheapest in relative terms according to distance, with 0.8 euros per kilometer, at the same level as in the first quarter.
The study also revealed that the average in freight prices was 1,083 euros, 0.3% less quarter-on-quarter and 1.8% less year-on-year (Fig. 3). According to the study, the fall in demand has led to high levels of available capacity, while carriers have been forced to face higher operational costs due to factors such as increased border controls.
Fig. 3. European average price of road transport
Only a few sectors, such as pharmaceuticals or ecommerce, have maintained or increased their demand for road transport in recent months. Confinement, factory shutdowns and retail closures have led to a collapse in volumes, with drivers recording half of the operational hours from mid-February to early April, according to the study. This decline in activity has been reflected in lower energy demand, leading to an 8.2% decline in diesel prices in the second quarter of 2020 compared to the first. However, the Transport Intelligence and Upply report maintains that this cost saving has not been reflected in the transport prices paid by shippers.
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August 24, 2020 at 06:28PM
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Fruit & vegetable exports driving prices up on Spain-Germany route - hortidaily.com
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