BAROMETER. With a further 0.8% increase in June according to the Upply Freight Index, road transport prices in France are soaring higher and higher, boosted by diesel prices. But inflation and the downward trend in purchasing power are worsening the economic situation.
The war in Ukraine has now been raging for a considerable period of time, totalling 100 days on June 3. In addition to its accumulation of terror and suffering, it fuelled the explosion in energy prices, which has played a large part in inflation. Consumer prices are estimated to have risen by 5.8% in June, according to INSEE's latest estimates. This inflation is eroding the French population’s purchasing power, which, according to the newspaper Les Échos, could see its second biggest fall in 30 years in 2022. This was also a key issue in the parliamentary elections. The fracturing of the National Assembly and the absence of an absolute majority is certainly a consequence of this situation.
An inflationary mechanism in transport
It was in this context that road freight transport prices recorded their 9th consecutive month of increase, with a rise of 0.8% in June compared to the previous month according to the Upply Freight Index. Nothing seems to be able to stem the inflation of transport prices for the moment, not even the slowing down or even the stopping of its main natural driving forces, namely consumption and the automobile sector. Automobile sales were known to have come to a standstill due to supply chain disruptions. The decline in purchasing power is now attacking French household consumption; summer sales started very badly in June and online sales are also starting to decline after 2 years of spectacular growth.
It is therefore another mechanism that is driving transport prices upwards, and this mechanism has a name: diesel indexation. Diesel prices have jumped by almost 70% over 1 year (see table at the end of the article) and are steadily rising from month to month, which has an impact on the mechanism of passing on the increases.
Source: Upply Freight Index – Road France
Lose-lose relationship
On a year-on-year basis, prices rose by 14.4% in June. This sharp increase is to be put in perspective with the increase in transport costs. The LD EA (Long-Distance Tractor-Trailer) index of the National Road Committee (CNR) shows an increase of 22.8% over the same period, suggesting that carriers' operating margin has deteriorated by more than 7 points on average over one year. There is therefore the emergence of a lose-lose situation, where both shippers and carriers are suffering from the rise in transport costs (...).
Already a subscriber?
