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Latest TEG Road Transport Index out now

January ’22

8th February 2022

Highest ever price-per-mile for January: TEG Road Transport Price Index up 15% on last January

January 2022 shows usual post-Christmas drop in price-per-mile, but sets much higher starting level for the year than previous Januaries

The latest data from the TEG Road Transport Price Index reveals January’s average price-per-mile has decreased by 13.5 points since December 2021, but represents the highest figure to start off the year since at least 2019.

January Key Findings:

Compared to both January 2021 and January 2020, which both showed the same price-per-mile average, there’s been a 15.3 point increase in what carriers are charging per mile for haulage and courier vehicles. This reflects what’s happening in the wider economy, amid record-high inflation.

The 13.5 point drop between December and January follows the pattern of previous years, with demand dropping after the Christmas peak. However, the current figure of 116.8 is the highest on record for January

For haulage vehicles, January prices dropped by 18.6 points compared to December 2021, but showed an 18.8 point increase when compared to January 2021.

The price-per-mile for courier vehicles decreased by 10.3 points between December and January, but the current level still represents an 11 point year-on-year rise.

Interestingly, the gap between haulage and courier prices is closing, with haulage prices now only being 2.5 points higher than couriers, compared to a difference of 10.8 points in December 2021.

Price-per-mile changes over the last 14 months

Inflation and the supply chain

At the beginning of February, interest rates were increased for the second time in three months, in an effort to curb the soaring cost of living. 

Rapidly rising inflation – which saw a 30-year high in December – is closely linked to supply chain bottlenecks and rocketing energy costs. The more it costs to manufacture and transport goods, the higher their price tag will inevitably be. As well as materials costing more, recruitment costs and salaries have risen due to a shrinking post-Brexit labour market. 

For an example of higher labour costs, we need look no further than the logistics industry itself. The ongoing driver shortage – caused by Brexit, Covid-19 absences and fewer driver licences being processed – has pushed driver salaries up. The sector also had to deal with much greater demand as millions ordered goods from home, moving away from engaging with the service industry.

More turbulence for freight prices ahead

Emission zones
In 2022 alone, 11 new low-emission zones will be introduced around the UK, with four already in place.

Drivers will have to choose between paying tolls to drive through them, or taking more circuitous routes to avoid them adding costly miles to journeys.

To counteract this, freight companies will begin to think seriously about electric vehicles. However, electrifying vehicles will mean significant costs, again affecting prices. And, because electric models are usually smaller than their diesel equivalents, carriers may need more vehicles to transport the same number of loads.

On-demand economy
The on-demand economy really took off with companies like Uber, but lockdowns saw the rise of many more firms in ultra-fast, hyper-local grocery delivery. There is fierce competition in this space, particularly when lockdowns made us dependent upon these services.

Consumer expectations have been shaped by these companies, putting pressure on the transport and logistics sector to meet demand, recruit quickly and adapt to new technological requirements. Needless to say, this has contributed to rising costs in the sector for some time now.

But it remains to be seen how lasting the public appetite for on-demand services is, meaning heavy investment in this area might prove unwise in the medium term.

“When you consider the various factors affecting the industry right now, as well as the general level of inflation, this January’s costs shouldn’t come as a surprise. That doesn’t make them any easier to deal with, however.

“We can see that the supply chain is now more present in the wider economy than it’s ever been, playing a major role in driving inflation upwards and affecting businesses and consumers in the process.

“Looking ahead, we should expect a continued shift towards an on-demand economy. However this may not prove sustainable, commercially or environmentally, so there are still many unknowns.”

Lyall Cresswell, CEO of Transport Exchange Group

“The TEG Index is telling us two stories about road transport as we enter 2022. First, despite the large seasonal drop in January, price increases have come to stay – the TEG Index is at a completely different starting level to the previous three years. Second, the haulage and courier elements have re-converged, at least for now, suggesting that there was an element of (understandable!) panic about HGV drivers going into the peak demand period.”

Kirsten Tisdale, director of logistics consultants Aricia Limited and Fellow of the Chartered Institute of Logistics & Transport

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