8th December 2022
Haulage prices have fallen 12% in the past year, but are likely to rise as the thinly spread road freight industry enters its busiest period.
The average price-per-mile for road freight vehicles has dropped for the second month in a row, as the industry prepares for its peak demand period.
Haulage price changes are driving the overall price down, having decreased by 1.9 points during November. By contrast, courier prices are already on the way up, rising 0.6 points.
The figures come from the TEG Price Index, which has recorded Christmas time price rises every year since 2019.
At the same time as parcel volumes shoot up and consumers expect ever faster delivery, ongoing HGV driver shortages will mean the workforce will be stretched to its limits. The number of haulage drivers employed in the UK was 11% lower in the July 21-June 22 period than it was two years previously*.
The Autumn Statement headline for the industry was a proposed 23% increase in fuel duty, effective from March next year. Adding 12p per litre to petrol and diesel prices, it will mean a rise in overheads for companies, just before the Energy Bill Relief Scheme (EBRS) is set to end.
As inflation hit a 41-year high of 11.1% in November, many road freight businesses are already operating on thin profit margins. Faced with this unsustainable scenario, companies will likely be forced to pass price rises onto their customers and – ultimately – consumers.
Lyall Cresswell, CEO at Transport Exchange Group and Integra, says:
“Although the cost of living crisis will undoubtedly impact Christmas sales figures, the price index will inevitably rise, as all the previous data tells us.
“Road freight companies will welcome the increased revenue, but the HGV driver shortage will pose staffing issues across this busiest of times. Nonetheless, businesses will be looking to take advantage of the Christmas delivery surge, particularly as 2023 will bring challenges in the form of fuel duty and energy price hikes.
“In common with every sector, what the road freight industry really needs is a drop in inflation. Until that happens, profit margins will be squeezed and the industry will have to focus on efficiency and show its customary adaptability.”
Kirsten Tisdale, Director of Logistics Consultants Aricia Limited and Fellow of the Chartered Institute of Logistics & Transport, says:
“Despite conforming to a pretty regular pre-peak dip, it feels surprising that the haulage element of the TEG index for November is now at the same sort of level as it was in late spring, particularly given that fuel prices are still so high. The comparatively high levels of logistics job adverts must be a function of the tight employment market rather than reflecting a high level of demand.”