Pricing signals show demand increasing

Road transport price signals point to a return of demand in the Western Hemisphere

By Rob McKay | September 30, 2010

Road transport price signals point to a return of demand in the Western Hemisphere, with Europe joining the US in reflecting levels approaching but still below those seen before the global financial crisis.

Europe has been at least as badly affected by the economic downturn as the US - on some measures, more so.

But Transporeon and Capgemini Consulting have reported in the August edition of their quarterly Transport Market Monitor (TMM), which is aimed at transport buyers, shows European price levels just short of those seen in the first quarter (Q1) of 2008.

This has been driven by a "significant increase in demand for transport services".

According to the latest TMM, transport prices increased by 13.5 percent in the second quarter of 2010 compared to the first quarter. However quarterly price levels are still 2.2 percent lower than the second quarter of 2008.

The capacity index fell by 44 percent in in the second quarter of 2010 compared to the first quarter, which helped drive price increase. The decreased capacity index is caused by a positive economic trend: higher sales, increasing production volumes and shippers re-stocking their supply chains.

The good news for European operators was tempered slightly by a reduction in the level of the rebound in June.

"Taking into account today’s market dynamics, traditional sourcing strategies may not bring the expected financial benefits that logistics managers are aiming for," Transporeon Managing Director Peter Förster says.

"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.

"Clearly, new sourcing strategies along with the right IT tools are needed to maximise the benefits of this dynamic market."

These transformations were likely to accelerate in light of the economic outlook but also by the sustainability polices that were now firmly fixed in company policies, according to the firms’ analysts.

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