The Road Haulage Association has issued a stark warning to the government, highlighting a 10% increase in insolvencies within the road freight sector over the past year. The RHA is urging policymakers to take immediate action to alleviate the financial pressures that are driving businesses to the brink of collapse.
According to Richard Smith, Managing Director of the RHA, the cost of operating heavy goods vehicles (HGVs) has surged by 10% over the past year, a rise that has led to significant financial strain on hauliers. The impact of these rising costs is evident, with nearly 500 haulage companies going out of business last year alone. Alarmingly, this year’s insolvency figures have already surpassed 250, marking a 10% increase compared to the same period in 2023.
The average profit margin for businesses in the sector has plummeted to just 2%, with some operators running at a loss. This grim reality is exacerbated by a range of factors, including higher interest rates, increased compliance costs, and soaring fuel prices, which now account for a third of operating expenses.
Smith highlighted that the road freight sector is not alone in facing financial difficulties. He pointed to a recent report in The Times, which revealed that the number of insolvencies across various industries in the past year has exceeded those seen during the 2008 financial crisis.
“The rising cost of fuel is placing UK hauliers at a competitive disadvantage across Europe, where diesel prices are significantly lower,” Smith said. He also underlinedthat the government could play a crucial role in mitigating these challenges. The RHA is advocating for the introduction of a fuel ‘essential user rebate’ linked to emissions reduction, which would bring UK fuel duty levels more in line with those in Europe.
As the industry moves towards decarbonisation, the RHA is calling for the government to support the transition by incentivising the uptake of low-carbon fuels, such as Hydrotreated Vegetable Oil (HVO), which can reduce emissions by up to 90%. The association also seeks access to the National Wealth Fund to invest in zero-emission vehicles and infrastructure, which Smith believes would be “bold and positive steps” to ease growing pressures on the industry.
In addition to financial challenges, the sector is grappling with other issues, including a skills gap, an ageing driver workforce, and the economic impact of road congestion. Smith pointed out that congestion alone costs the UK economy £30 billion a year, with unfinished infrastructure projects like the Lower Thames Crossing exacerbating the problem.
The RHA is urging the government to collaborate with the industry to develop a detailed roadmap that addresses these pressing issues, ensuring the sustainability of a sector that is vital to the UK’s economic growth and supply chain stability.