July ’23 – Road Transport Price Index

14th August 2023

Prices drop, but ULEZ and government green rethink point to future volatility

Courier and haulage prices fall – as Uxbridge byelection result means uncertain road ahead

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TEG Road Transport Price Index - Trends at a glance

The latest data from the TEG Road Transport Price Index reveals that the average price-per-mile for haulage and courier vehicles has dropped in the last month. The overall price for haulage and courier services is currently 119.7, down 2.13% from 122.3 in June. Year-on-year, the picture shows a 2.60% decrease from the all-time July high in 2022.

The Courier Price Index in July dipped slightly, to 124.9. Haulage prices, meanwhile, have fallen significantly, down 3.88% from June’s figures.

Compared to 2022 figures, both courier and haulage prices were down by a similar amount: 2.65% and 2.48% respectively.

Industry pulse

Much of the talk around the road transport industry will understandably be focused on ULEZ and other clean air zones around the country. While the government was firmly encouraging operators to go electric – even if its last budget didn’t back them financially – it’s now rethinking its green policies. This leaves the industry in something of a limbo situation.

Meanwhile, issues like shortages of mechanics are also bubbling away in the background. This will also be the first month where HGV owners will pay the amended levy.

It’s a time of change for the industry, but, as ever, the sector isn’t driving the changes itself.

ULEZ expansion meets with frustration

It was a landmark day on 28 July as the expansion of London’s Ultra Low Emission Zone (ULEZ) to cover the whole capital was decreed lawful by the High Court.

It aims to improve air quality by deterring drivers of older vehicles from taking their high-emissions vehicles into London. It’s hoped that up to 4,100 deaths could be avoided each year, thanks to ULEZ cleaning up the air around Greater London. The measure is also designed to encourage drivers of these older vehicles to make the switch to electric vehicles.

Of course, some of the vehicles falling foul of ULEZ will be courier vehicles. According to SMMT's Motor Industry Facts 2023, there were 4,887,593 vans on the roads in the UK in 2023, with only 43,000 electric vans. That means less than 1% of vans are electric.

Most diesel vans registered before September 2015 will have to pay the charge, as well as most petrol vans produced before January 2006. Transport for London estimates that more than 200,000 drivers of non-compliant vehicles will be affected.

The ULEZ scrappage scheme offers grants of up to £5,000 for van drivers – to help small businesses and individuals switch to cleaner transport.

However, with ULEZ charges coming into effect from 29 August, there’s certain to be at least a short-term impact on road transport operators’ costs. The knock-on effect could be the end of steady haulage prices, at least in and around Greater London.

In response to the High Court decision, the Road Haulage Association said: “The ULEZ and its sister policy of clean air zones are, in many cases, badly designed and have long vexed our industry.”

ULEZ byelection results spook government into green policy backtracking

Before the High Court’s decision, the Conservative candidate Steve Tuckwell won the Uxbridge and South Ruislip byelection on an anti-ULEZ ticket.

Although he won by just 495 votes, Labour had been expected to take the seat, causing both Labour and the Conservatives to reevaluate their green policies somewhat. Downing Street later confirmed that this included reexamining the 2030 ban on new petrol and diesel car production.

The result for the road transport industry is uncertainty. Will the planned ban on new smaller diesel trucks by 2035 go ahead? And will new trucks over 26 tonnes be available to buy after 2040?

But also, given the government is seemingly trying to win car owners over by ditching green policies, can road transport operators expect any government action on EV infrastructure? Before they invest in fleets using diesel alternatives, haulage and courier businesses will want some assurances.

Zero emission survey

Even as the last days of campaigning in Uxbridge and South Ruislip were under way, the Department of Transport surveyed operators and drivers. It wanted their views on infrastructure needed for the transition away from diesel.

The department released a survey it encouraged both road transport businesses and drivers to contribute to, seeking answers on the necessary measures to support zero-emissions HGVs. It includes questions on daily driving distances, drivers’ resting and sleeping patterns, and the types of vehicles preferred for different routes.

Many in the industry saw the survey as a positive opportunity to influence the direction of zero-emissions moves. However, in the wake of the byelection result and the ensuing green rethink from government, some operators and drivers might wait for more clarity from Westminster.

The rise of HVO?

Of course, not everything hinges upon EV infrastructure. Hydrotreated vegetable oil (HVO) is another avenue that some HGV operators are exploring.

The Royal Mail is one such operator.

They recently announced plans to switch from diesel to HVO for some of their larger fleet vehicles. They estimate the move will save 2.1 million litres of diesel this year.

PepsiCo is another big organisation trialling the fuel, committing to using HVO to transport all potatoes for Walkers Crisps production at its Leicester factory. The company has previously said that every mile powered by HVO produces about 80% less greenhouse gas emissions than standard diesel.

Of course, it’s easier for larger organisations to make this kind of switch, but if more operators can use HVO fuel, paying up for travelling through clear air zones will become much less of a concern.

For the majority of operators, eyes are still firmly trained on the price of diesel. The good news for them was that diesel prices are now just 2p off parity with petrol, which scarcely moved during June. The figures are a full quarter lower than they were this time last year.

Whether firms feel confident enough to transition away from diesel or not, they’ll certainly welcome the current prices at the pumps.

In summary

Even as the price-per-mile and fuel prices found relative stability, the byelection and the resulting fallout created fresh uncertainty.

Although some big organisations are experimenting with HVO fuel, many operators will now be waiting for direction from the government before they commit to moving away from diesel.

In the short term, some firms might even be relieved if there’s less pressure on them to make the switch, especially as inflation remains high. There will also be less pressure on them to raise their prices.

But the industry will certainly be wanting answers on the government’s future green policy before too long. Like everyone else, they’ll be watching upcoming developments with great interest.

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