Rate Cuts and Acquisitions Shape Moving and Freight Sectors

 

Hope for Moving Industry as Interest Rates Set to Fall

Both local and long-distance moving companies are set to benefit by expected falls in interest rates within the Eurozone, United Kingdom and the United States with home sales expected to rise.

Elevated interest rates have impacted home sales across the developed economies due in part to issues accessing a loan or high mortgage rates.

While the US Federal Reserve left its key interest rate unchanged at the most recent Federal Open Market Committee (FOMC) meeting, the Bank of England (BoE) reduced its rate from 5.25 to 5 per cent.  Mortgage rates across the UK have lowered as lenders intensify competition in anticipation of further rate cuts.

Fed chair Jerome Powell indicated a US rate cut is likely in the not too distant future: “The broad sense of the [Fed’s interest rate-setting] committee is that the economy is moving closer to the point at which it will be appropriate to reduce our policy rate.”

While the housing market may rebound in some places France is experiencing a crisis in its housing market.

According to a report from Notaires de France only 739,000 existing home sales took place in the twelve months ending May of this year – an over 20 per cent year-on-year decrease. This represents the lowest level since 2015.

Construction activity is also down with housing starts falling by just over 20 per cent and new home sales collapsing by 38 per cent.

Home values are also down across the country with existing home values falling by an average of 4.9 per cent with apartments down more by 5.5 per cent. This has been attributed to high mortgage rates, a worsening macroeconomic environment and a decline in household purchasing power.


European Union Pledges More Tuck Parking

In what has been described as a “severe lack of parking and rest facilities” for trucks across Europe the European Commission recently announced plans to invest 60 million in funding to help construct and renovate truck parking across the bloc.

Originally reported by Trans.iNFO the investment will go towards developing a network of safe parking areas.

Having already devoted over 100 million earlier in the legislative term the Commission is expected to announce another 300 million in funding by September.

“By providing safe and secure truck parking options, we can improve working conditions for drivers and encourage more people to enter the profession,” said IRU EU Advocacy Director Raluca Marian.


German Freight To Purchase Major European Transportation Assets

The German freight forwarding company Sennder is set to buy the European ground transportation assets of C.H. Robinson in a move that will double the freight’s annual revenue and workforce.

The acquisition comes following the purchase of Dutch-based Cars and Cargo in 2021.

If approved Sennder will double its workforce of 1,700 to 20 markets with revenue expected to double to over 1 billion.

“This acquisition will be pivotal in advancing Sennder’s roadmap. With its vision to accelerate global trade to deliver products and goods that drive the world’s economy, C.H. Robinson aligns strongly with Sennder’s mission and values to create an efficient and sustainable road freight network in Europe,” said Chief Executive Officer and co-founder David Nothacker.


European road freight rates down, spot rates up

The European Road Freight Spot Rate Benchmark Index rose to 127.7 in Q2 of thus year, 3.5 points higher than the previous quarter and 0.8 points up year-on-year according to IRU’s latest quarterly report.

The report also notes that close to half of European companies are expected to face more difficulties in filling truck driving positions next year. With over one third of truck drivers over 50 years old or older many will be expected to retire in the next ten years, while only 5 per cent are under 25. Despite this, road freight demand is expected to increase in 2025. The report warns that “without significant action to improve the attractiveness of the profession and/or increase driver productivity, such as by allowing the use of longer and heavier trucks, the truck driver demographic gap will grow in the coming years and potentially put upward pressure on driver costs.”

The end of June also saw diesel prices fall following a slight rise earlier in the month.

Spot rates across Europe are expected to moderately increase as the economic environment stabilises this year. The report notes that, “Low levels of consumer demand have pushed down spot rates since Q2 2023. However, spot rates have begun to normalise, as the demand environment is now less negative.”

Ti Head of Commercial Development Michael Clover said, “Though the pace of road freight cost increases has slowed, notably falling in terms of fuel, we still expect to see costs rising for the year ahead.

“With volumes returning and capacity tightening again, we expect to see carriers be more successful in passing on cost increases to their customers. In that sense, we are expecting market conditions to return to their long-term trend of gradual increases in line with costs for the remainder of 2024.”

Upply Chief Executive Officer Thomas Larrieu commented, “The road transport sector continues to evolve in a complex economic landscape. Our data for the second quarter of 2024 shows a slight increase in spot rates, contrasting with a modest fall in contract rates.

“Despite persistently high operating costs, the first signs of stabilisation in consumer demand are beginning to appear. Lower fuel prices and improving consumer confidence offer a positive outlook. Market conditions should gradually improve as the year progresses.”

Meanwhile, Sweden has announced its plan to introduce a CO2 component to its toll taxes which will apply to vehicles with a gross combination exceeding 12 tonnes beginning early next year. Denmark will also follow suit followed by the Netherlands in 2026.

Named the Eurovignette Directive sixteen other EU countries including Ireland have received formal notice from the European Commission to advance with the tolling scheme.

Normal tolls have also increased in recent months with fees for heavy-duty vehicles up by 6.8 per cent in Slovenia since mid-July of year with similar increases in Belgium.

IRU Senior Director for Strategy and Development Vincent Erard added, “Road transport companies, key drivers of economic growth, are facing the dual pressing challenge of meeting demand for transport services amid soaring costs – fuel prices are projected to increase, labour costs are on the rise, and now we also have the new CO? tolls – while also decarbonising. This is likely to increase freight rates, as growing demand for transport services is putting pressure on the available capacity. With much of the sector consisting of small and medium-sized enterprises, operators have razor-thin margins.

Policymakers must support operators and the sector to meet demand, including by quickly investing in both efficiency measures – for vehicles, drivers and the wider logistics system – and alternative fuels implementation. This would serve our planet and economy.