ROAD transport rates in Europe rose in the second quarter to index 100.9, an increase of 13.5 per cent compared to the previous quarter of this year, according to Transport Market Monitor published by European consultancy Cap Gemini Consulting and Transporeon.

The authors of the report attributed the rate increase to a "significant" drop in available capacity, with the available capacity index falling by 44 per cent when comparing the second quarter of 2010 with the first quarter.

The authors said the second quarter capacity index figure of 61.3 is the lowest level measured since January 2008. In spite of fuel and labour costs also rising, their impact has been less significant.

The decrease in available capacity was due to greater demand for transportation services: "Caused by the positive economic trend and a clear seasonal pattern. A third factor may be that the modal choice trends changed during the economic downturn. The authors believe that shippers may have switched volumes on to road, due to competitive pricing, resulting in additional demand," reports the UK's Transport Intelligence.

On the supply side carriers reduced their fleets "significantly" during the economic downturn, and have yet to re-invest in new capacity to any major extent. The authors point to modest sales of new trucks, showing that confidence has yet to fully return to the market.

The outlook for the market is uncertain as the price index may not remain above the 100 mark for the remainder of the second half, with the authors of the report warning that prices may have peaked in the second quarter.

"However, input cost levels are expected to become more of an issue both for diesel and labour, with the latter being affected by a shortage of skilled workers," the report added.

Source: shipping online