Haulage Rates Across European Supply Chains Expected To Rise
When it concerns emissions, shipping is always under scrutiny. And at the tail end of 2023 we saw the launch of yet another green initiative designed to cut the sector’s CO2 levels.
This latest legislation was launched by Germany, who in December last year introduced an increase to their road tax for all non-electric commercial vehicles that weigh over 7.5 tonnes and use the toll roads. As a result, we’ve seen an average €100 increase in our haulage rates as hauliers aim to recoup the extra costs from their customers.
Unlike ocean, road freight rates are currently stable. However, this additional cost and potentially others like it, are expected to push fees up later in the year. Here we explain why…
Why are Germany introducing this tax?
There are two major incentives from a German perspective for introducing the charge, the first being environmental. The introduction of a toll increase is designed to both encourage hauliers to invest in electrifying their freight and also create a ‘modal shift’ whereby shippers generally choose more environmentally friendly modes of transport moving forward.
The second is economic. Just by increasing charges on toll roads, Germany could see additional revenue of over $26 billion. This money will then be reinvested into the nation’s infrastructure.
But make no mistake, this decision does come with a risk. Higher logistics costs have a price-driving effect on exported goods, including goods being transported by ships. Even in ocean freight we’ll see similar pre-carriage and on-carriage cost increases, making Germany less competitive in international markets.
But they aren’t the only country introducing legislation taking aim at the logistics industry. With the EU Mobility Package continuing to be rolled out across the continent, hauliers are already starting to pay premium costs across Europe.
What’s the EU Mobility Package?
Since February 2023, all EU countries and the UK will have matching guidelines for cabotage activities and hauliers working internationally. This means that salaries, resting times and periods during which the drivers are allowed to be out of their residency country will be the same across Europe.
While from a workers’ rights perspective this legislation is a step forward, it also comes at a cost to the end customer. Moving forward we can expect to see a greater shortage of capacity and drivers, more complex administration and higher shipping prices as a result of haulage employers looking to recoup costs.
And this isn’t just limited to trucks either. Operators of light vehicles up to 3.5 tonnes are now obliged to have an International Operators license in order to conduct international or cross-border transport of goods.
It’s hard to argue that the improvements to worker welfare are needed, but the financial impact these sweeping changes will have on the sector are being under-discussed and could well disrupt shippers’ plans in 2024.
How are these changes impacting Q1 rates?
Right now, road freight remains steady. We are yet to see the full impact of the Red Sea crisis and the current fuel surcharges appear manageable. However, we are predicting there could be a decrease in exports in both Q1 and Q2 due to extended ocean sailing times into the UK.
We are confident that with our European network we can continue offering great availability, we are also hopeful to continue to provide competitive pricing whilst hauliers adapt to protect their fleet running costs.
We continue to monitor the everchanging legislation which impacts the European market. As Europe goes green, we will provide further updates on Carbon Border Adjustment Mechanism that concerns imports into the EU, with our one stop shop for customs and CBAM reporting.
How exactly this will impact the logistics space remains unclear, rest assured Cardinal will continue to provide updates.
If you have any questions regarding your supply chain, or how the above information could impact your operation, please get in touch with our Road Operations manager Beth, firstname.lastname@example.org or speak to our team on 0161 491 8672.