8th June 2022
The latest data from the TEG Road Transport Price Index reveals the average price-per-mile for haulage and courier vehicles increased by 0.3 points in May.
Compared to figures for haulage and courier vehicles from last May, there’s been a year-on-year increase of 6 points in the overall index. In fact, the index is at its highest level for May since index records began in 2019.
However, May’s year-on-year jump of 6 points is less than April’s 8.8 points and almost half the year-on-year hike seen just two months ago in March, which was some 11.6 points.
This could be signalling a levelling out in the index, after months of dramatic year-on-year increases. The haulage industry has been one of the fastest digital adopters in recent years, which could be helping combat the rapidly rising costs.
McKinsey’s research on global supply chain leaders found that 84% had invested in digital supply chain technologies in 2020, and 92% plan to continue doing so moving forward
For haulage vehicles, the index actually shows a 0.5-point decrease, when compared to April. Year-on-year, however, it’s gone up by 2.4 points.
The year-on-year increase is more pronounced for courier vehicles: up 8.7 points from 2021. And the courier index has also risen 0.9 points month-on-month.
This is now the fourth month in a row where the index for courier vehicles is higher than that of haulage vehicles, finishing 4 points higher in May.
Price-per-mile changes over the last 14 months
With the war in Ukraine pushing oil prices ever higher, there is renewed pressure to reduce the UK’s reliance on foreign oil imports. Announced in May, £200 million plans to help electrify the UK’s HGV fleet will also reduce costs passed onto consumers and contribute to the fulfilment of COP26 commitments. At COP26, the UK government pledged that, from 2040, only zero-emission HGVs will be sold in the UK.
Currently, 18% of the UK’s road transport emissions comes from HGVs. The introduction of new low emission zones in several cities is also intended, in part, to reduce HGV through-traffic in those cities.
Such measures – in addition to ongoing Brexit and recruitment issues – present road transport companies with challenges. A requirement to switch to electric vehicles will be another factor these firms must consider.
Smaller haulage companies have already called for more clarity on how the transition to electric vehicles will work in practice. One of the biggest concerns within the industry is how larger vehicles can run using green fuels which are perceived to be less powerful.
Lyall Cresswell, CEO of Transport Exchange Group, says:
“The government’s announcement about zero-emission vehicles is one example of how the market is changing. It’ll be interesting to see how progress towards their target is made in the coming months and years.
“Although it comes with challenges, the electrification of HGV fleets is an inevitable transition. And the industry is definitely moving forward by embracing new technologies like these.
“In fact, using new innovations and digital solutions has helped our industry to navigate through turbulent times in the last couple of years. Even now, with runaway inflation and historically high fuel prices, road transport firms are showing great resilience. You can see that in the price index, with May’s figures representing greater stability.”
Kirsten Tisdale, director of logistics consultants Aricia Limited and Fellow of the Chartered Institute of Logistics & Transport, says:
“Transport is sometimes said to be a leading indicator for the economy. If this is the case, and the situation is sustainable, then the levelling out of the TEG Road Transport Price Index is good news for the country. The year-on-year increase in May was less than 5% – compared with a high of over 25% back in September.”