European contract and spot rates accelerate as fuel costs are passed on

The IRU x Upply x Ti Q2 2026 report shows that European contract and spot markets have accelerated sharply, breaking with the softer conditions seen through late 2025 and in Q1 2026. Contract rates rose to 148 index points, up 7.9 points quarter on quarter (QoQ) and 15.2 points year on year (YoY). Spot rates climbed even more steeply, reaching 146.8 index points, up 14.6 points QoQ and 13.9 points YoY, nearly double contract rate's quarterly pace. After three quarters of divergence, both markets are now moving up together, driven primarily by cost rather than demand.

• EU diesel prices averaged EUR 1.94 per litre in Q2, up 12% QoQ and 27% YoY, peaking at EUR 2.19 in April before falling back to EUR 1.76 in the last week of June, 17% below the end of Q1
• Operating costs rose by almost 10% YoY and 4.9% QoQ, according to the French government's Comité National Routier's (CNR) long-haul truck index, with the index spiking from 166.29 in February to 182.03 in April
• Road trade volumes between major EU economies fell 1.6% YoY in Q2, a far shallower decline than the 8% recorded in Q1, pointing to volumes stabilising rather than deteriorating
• Driver availability remains a structural capacity constraint: 13% of truck driver positions are unfilled in Europe, equivalent to around 502,000 positions, according to IRU's 2025 driver shortage report
• Continued upward pressure through H2 2026 is expected, as high operating costs are passed through, though softening industrial demand should cap how far rates can rise
• The Road Freight Sentiment Index for Q2 stood at 28.3, up by 11.4 points from Q1 and its highest level on record, indicating strengthened expectations that European road freight rates will rise over the next three months

Operating costs pushed both contract and spot rates upwards in Q2 2026. Fuel has been the dominant driver, with operators unable to absorb the scale of diesel increases without passing them through to customers. According to CNR's long-haul trucking index, operating costs rose by almost 10% YoY, with the index spiking from 166.29 in February to 182.03 in April.

The cost shock originates from the closure of the Strait of Hormuz, through which around 20% of the world's petroleum and crude oil normally passes. EU diesel prices turned the corner within the quarter, peaking at an average of EUR 2.19 per litre in April and averaging EUR 1.94 across Q2 before falling steadily to EUR 1.76 in the last week of June, the first sustained decline since the start of the crisis. That relief has already proved temporary, with EU average prices exceeding EUR 2 per litre again on 22 July.

Michael Clover, Ti's Head of Commercial Development, said, "Somewhat unsurprisingly, with the closure of the Strait of Hormuz mostly taking effect in Q2, we saw both spot and contract rates rising rapidly over the quarter, as fuel prices increased in an environment where European capacity is tight and volumes have held up. There was some relief in July, as fuel prices generally fell. But with the resumption of hostilities, it seems likely that they will remain elevated this year. The nature of this crisis makes decision-making very challenging for shippers. Fuel prices fluctuating around political decisions make the job of negotiating contracts even more risky. Many shippers and carriers are looking to de-risk their freight purchasing with index-linked contracts."

Volumes tell a story of stabilisation rather than recovery.

Road trade volumes between major EU economies fell 1.6% YoY in Q2, with the steepest declines on two of the largest corridors: Germany-France (-3.9%) and Spain-France (-3.6%), partly offset by Germany-Poland (+1.5%). That is a far shallower decline than the 8% recorded in Q1. As Q2 is typically among the stronger quarters in tonnage terms, the easing YoY decline points to road volumes levelling off. Measured in tonne-kilometres, the fall may be smaller still, as longer average hauls partially offset lower tonnage.

Only a handful of markets were shielding carriers from fuel costs. Spain and France operate national fuel indices allowing hauliers to pass diesel costs through to rates, and Italy does so to a more limited extent, but even these mechanisms struggled to keep pace with the speed of the increase.

Spanish hauliers, in particular, struggled to recover the increase despite their legal entitlement to do so, prompting the Spanish government to introduce Real Decreto-ley 9/2026, in force since 16 April, which substantially strengthens the mandatory pass-through of fuel cost increases and introduces penalties for non-compliance.

EU countries began unwinding relief measures as prices fell. Germany cut fuel duty by around EUR 0.17 per litre for May and June under a EUR 1.6 billion package, while Ireland deployed a EUR 505 million support scheme. Slovakia withdrew its foreign-plate diesel surcharge and purchase limits on 8 May under Commission infringement pressure, and Hungary released 575 million litres of strategic reserves in May before voting to phase out its price cap. Germany's duty cut, Spain's VAT reduction and Poland's fuel VAT cut expired on 30 June.

Marie-Anne Cervoni, IRU's Associate Director for Strategy, Market and Intelligence, said, "European road freight volumes are starting to steady. The year-on-year drop in Q2 was far smaller than in Q1. But it's too early to call it a recovery: subdued consumer demand and inflation are still weighing on the sector, even as higher fuel costs push rates higher. And the 13% driver shortage rate is also impacting operators' bottom lines. Operators need joint government and industry action to manage the immediate cost shock. The response must combine targeted tax relief, as in Germany and Spain, and support for operators, as in France, with fuel clauses that keep pace with diesel prices."

Market outlook

Rates are likely to stay elevated through the second half of 2026 as costs continue to be passed on. Brent is expected to remain high and volatile through Q3, as flows through the Strait of Hormuz take months to recover between disruptions. In its 7 July estimate, the EIA cut its 2026 Brent average to around USD 82 a barrel on the assumption the strait remained open, a view already overtaken by the 11 July re-closure. Rystad Energy, which prices in the disruption, puts its 2026 average nearer USD 89. Notably, while Brent is firmly in high territory, it is not at a record in inflation-adjusted terms, but volatility has climbed to crisis-grade levels, above the 2022 energy crisis and approaching the Covid-19 high.

Industrial growth has been surprisingly strong in the first half of the year. But Q2 output was likely held back by geopolitical tensions and a surge in war-related costs, even if some industries benefited from Asian competitors being hit harder by trade disruptions. If industrial demand softens under the weight of high raw and intermediate goods costs and higher energy prices at factory gates, that would put downward pressure on rates and place a ceiling on how far they can rise.

On volumes, July data suggest the 2026 IRU forecast could indicate 1% growth compared with 2025 in tonne-kilometres, though realisation will depend on the duration of the crisis, fuel availability and prices, and inflationary pressures and their impact on consumer behaviour. Trade policy has the potential to be the larger near-term swing factor. Although there has been some relief from US tariffs, freight corridors carrying goods to the US therefore remain directly exposed to shifts in US trade policy.

The IRU x Ti x Upply European Road Freight Sentiment Index rose by 11.4 index points to 28.3 in Q2 2026, its highest level on record. This indicates that expectations of rising European road freight rates over the next three months have strengthened sharply.

The rise was again broad-based. But this quarter marked a clear shift towards the higher end of the increase magnitude. "Slight increase" remained the most common response (54%), while expectations of a "substantial increase" went from 4.9% to 31.9%. Only 9.8% of respondents expect no change, and just 4.3% expect a decline of any magnitude.

Thomas Larrieu, Upply's Chief Executive Officer, said, "Q2 confirms a fundamental shift in the European road freight market. After three quarters of divergence, contract and spot rates are once again moving in tandem, driven more by cost pressures than by freight demand. For both shippers and carriers, traditional demand indicators are no longer enough to explain rate movements. As long as fuel markets remain volatile, the pace of cost pass-through will continue to shape freight rates across Europe."