Kevin Green, Policy Director at Logistics UK, stressed that fuel costs represent the most substantial expenditure for logistics companies. He emphasised that the current fuel duty rate is crucial for allowing the industry to plan for a sustainable, decarbonised future. According to Green, the sector operates on extremely narrow profit margins, typically around 2.5%, leaving little room for absorbing additional costs without impacting consumers.
“Increasing fuel duty would heap the cost pressure on operators,” Green stated, noting that the logistics industry would likely have no choice but to pass these costs on to end customers, a move that businesses are reluctant to make. He also pointed out that the industry is already grappling with rising wage costs and the escalating prices of new vehicles, which adds to the financial strain on logistics companies.
Logistics UK argued that the sector plays a vital role in driving economic growth and productivity. Green added that an increase in fuel duty could stifle the economic activity that the logistics industry can generate. He urged the Chancellor to consider alternative measures to tackle the budget deficit without placing additional burdens on the logistics sector.
The potential impact of a fuel duty increase extends beyond the logistics industry. Green warned that higher fuel costs would also affect millions of car drivers, who would face increased expenses for both travel and everyday goods. The weekly fuel bill for a 44-tonne diesel HGV is estimated at approximately £888, with £436 of that amount currently being paid in fuel duty to HMRC.
“Nothing moves without logistics and our sector is a key driver for growth and productivity,” continued Green. “We have a great opportunity to help kickstart the economy but this opportunity will be stifled if logistics businesses cannot create profit to invest in the future of the sector. Our industry underpins every sector of the economy, and as such is ideally placed to help the government get growth moving, but this cannot happen if the sector is placed under such significant cost pressure