Contracted Load Rejections Signal Widening Capacity Gap Between Western and Eastern Europe
Market Monday - Week 30 - Significant change in contracted load rejections monitored
Almost record-high spot prices this summer, compared to contracted prices, and recent customer discussions prompted me to revisit capacity. Today's focus is on contracted load rejections, which show an interesting development indicating a potential structural shift in capacity supply across European regions.
Contracted load rejections serve as a crucial KPI in our analyses, reflecting available transport capacity. A surge in rejections signals reduced capacity, potentially leading to increased transportation costs and inefficiencies. By closely monitoring these rejections, market participants can anticipate shifts and refine their logistics strategies.
The following chart illustrates the rejection trends for domestic transportation. Both regions experienced a soft period in 2023, followed by moderate rejection increases in 2024. Typical seasonal patterns are visible with high rejections during summer and more relaxed periods in February and March. The last and first weeks of a year mark a second, shorter peak season.
The shift in available capacity is evident. The chart highlights that rejections in western Europe have not realigned with the situation in 2024. The colored areas visualize the differences compared to June and July 2024, strongly suggesting a structural shift in recent weeks. This development isn't limited to a single country; however, France leads a significant increase in rejections compared to 2024. Almost all Western European countries follow this trend, with Germany, Italy, Spain, and the United Kingdom all significantly above previous years' levels.
Eastern Europe, in contrast, shows an easing trajectory compared to 2024, with consistent patterns for Poland, Romania, Czechia, and Slovakia. Hungary, however, follows the Western European trend.
What are potential reasons or explanations behind this movement?
Unfortunately, no single concise answer explains all these movements. Various factors impact current rejection values, and their interplay contributes to the described market sentiment:
High spot prices, particularly in western Europe, prompt shippers to leverage lower contracted rates whenever possible
Shippers’ carrier portfolio adjustments and altered assignment strategies, aimed at minimizing transport costs in recent years, facilitate higher rejections, particularly in a growing market environment
Reduced service provisions to western Europe by eastern European fleet owners due to administrative burdens and regulations
Decreased efficiency and reduced operational truck utilization due to network changes, wait times (at docks and borders), and infrastructure maintenance on key routes in western Europe
While this list doesn't cover all possible explanations, it highlights key factors contributing to the capacity challenges, especially as some western European economies show first signs of recovery. We will continue to analyze this structural shift in European capacity distribution to determine if it represents a lasting market transformation.
Christian Dolderer
Lead Research Analyst
Trimble Transportation (Transporeon)