Brexit adding to European road freight pricing instability

The UK vote to leave the EU is one of several factors significantly affecting European cross-Channel road freight pricing and competitiveness, with the effects expected to continue over the coming months.

Tim Phillips, CEO of UK-based European road freight specialist Freightex, told that significant swings in Euro-Sterling exchange rates since the UK vote to leave the EU were already affecting the competitiveness of some product lines in and out of the UK. And fuel prices, which had been gently rising in the last quarter, were also adding to haulier costs, particularly those filling up in the UK.

“Add to this the noise over the legality of French government proposals that foreign carriers operating in or through France must meet minimum wage levels, and there is plenty to consider.”

While potentially making UK exports more competitive, the outcome from the Brexit vote “is almost certainly going to cause a rise in transport prices for GBP-paying customers. A 14% drop in the exchange rate since this time last year will drive up prices, which are mostly Euro-based due to the high volume of continental carriers on UK routes”.

He said it could help UK carriers to recover some market share in international road freight movements. But with international prices generally still lower than UK domestic haulage pricing, he only expected a small change in that market-share balance.

He said Euro-paying customers may avoid the exchange rate turmoil, but would be affected by other factors, including the slight rise in fuel over the last quarter and some rebalancing of prices after the significant falls in the first quarter.

“The French government proposals on driver wage guarantees for movements within France is likely to specifically add pressure to movements in and out of this market,” he added. “Some eastern European carriers are now choosing to stay away from France until there is clarity over what is enforceable under EU law, as this is seen as a protectionist measure by some markets. Their absence will affect capacity, and therefore mean upward price pressure.”

Source: LloydsLoadingList