Latest TEG Road Transport Index out now

Record road freight prices for May

9th June 2023

Road freight prices have been steadily rising since February, as green transition challenges persist.

Following a significant decline at the start of the year, the average price-per-mile for haulage and courier vehicles has risen by 4.4 percentage points since February, increasing steadily every month.

The TEG Road Transport Price Index has revealed an overall price-per-mile increase of 1% in May, despite inflation finally hitting single digits at 8.7%. The index has risen 1.2% year-on-year, and last month’s figures are at their highest in May since the index began in 2019.

Haulage prices have also shifted upwards slightly by 1.2% during the month, compared to courier prices which have almost hit a plateau with a minimal 0.2% change.

Longer lorries to cut 70,000 tonnes of CO2 pollution

In an effort to grow the economy and cut emissions, the UK government is changing regulations to allow longer trailers on roads. Raising the maximum size by 2.05 metres, the change in law is projected to deliver a £1.4 billion boost for the UK’s economy by supporting productivity. 

At the same time, it’s hoped that it’ll also decrease carbon dioxide emissions by 70,000 tonnes as a result of reducing lorry journeys by 8%.

Diesel price drop

The long-awaited diesel price drop is picking up pace, with pump prices falling by 2.75% in May – seven times as fast as petrol prices. They’ve now reached levels last seen in February 2022, before Russia’s invasion of Ukraine caused prices to skyrocket. In the last week of May, they were 26% down on the July 2022 peak figures.

Good news for the turn to EVs

Over in the UK, electric HGVs will soon be cheaper to own and run than diesel vehicles. A study conducted by Element Energy by Transport & Environment UK shows that battery electric trucks are already cheaper than diesel vehicles for some uses.

With sales of new sub-26 tonne HGVs ending in just 12 years, the study is welcome news for hauliers. For fleet owners looking to go electric, the opportunity to reduce regular overheads is greatly encouraging.

Factors influencing road freight prices

Prices are also being influenced by the uncertain economic climate the UK is still enduring. Of course, any drop in inflation is a positive, but operators and businesses in general would’ve hoped for a more significant fall – ideally coupled with stronger growth.

Plus, the cost of living continues to drive demand for higher salaries and, in turn, increases in road freight prices.

Lyall Cresswell, CEO of Transport Exchange Group, says:

“It’s great to see government support for the somewhat strained haulage and logistics industry. Allied with falling diesel prices and decreasing EV costs, the move to longer lorries could provide a real boost to the sector.

“Of course, a strong supply chain is important to the economy, and consumers depend upon the road transport network for their daily needs. So the government will be hoping that the road transport industry can help the economy towards more positive growth.”

Kirsten Tisdale, Director of Logistics Consultants Aricia Limited and Fellow of the Chartered Institute of Logistics & Transport, says:

Year-on-year inflation for the combined TEG index went up a little in May, but that brought it back into the Bank of England’s ideal band for inflation of 1 to 3% – the courier element is just above that band at 3.2%. The TEG index for spot haulage rates completed a full 12 months of year-on- year deflation, making the timing of the recent Tesco Distribution decision to increase transport charges to its suppliers look even more strange.

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