Key takeaways:
- UK diesel has passed £2 a litre for the first time, up almost 58p since the end of February.
- Hauliers are paying about £350 more per truck every week to keep their fleets running.
- With margins of around 2% and many fixed-price contracts, most firms cannot absorb the increase.
- The Road Haulage Association expects more insolvencies and wants the government to act on fuel duty.
A cost no margin can carry
For most haulage firms, the numbers simply do not add up. According to the Road Haulage Association (RHA), operators are paying around £350 more per week for each truck than they did in February, when the average diesel price stood at about 142p a litre. By early October it had reached a record 200p.
“Businesses in our sector operate on slim profit margins, typically about 2%,” said RHA managing director Richard Smith. At that level, a sudden jump in one of the largest running costs can wipe out a year’s profit within weeks.
The problem is made worse by the way much of the industry is paid. Many hauliers work on fixed-price contracts, so they cannot pass higher fuel costs on to customers straight away. Until those contracts are renegotiated, the difference comes out of the operator’s own pocket.
£15,000 more every month for a 22-truck fleet
Direct Connect Logistics, which runs 22 lorries, shows what this looks like in practice. Its monthly fuel bill has risen from around £50,000 to about £65,000.
“If these events continue, then it’s going to put a lot of haulage firms out of business,” warned managing director Rhys Hackling.
Operators also report that weaker business confidence means fewer jobs on the market, so firms are facing higher costs and lower demand at the same time.
More firms are likely to go under
The warning comes on top of an already difficult year. “We’ve seen hundreds of transport businesses going bust already this year,” Smith said. Recent weeks have brought a steady stream of collapses, including a 25-truck haulier.
Smaller operators with limited cash reserves are the most exposed. They have little room to wait for contract renegotiations or to finance fuel bills that arrive weeks before customers pay their invoices.
Shippers and shoppers will pay too
The RHA stresses that the impact will not stop at transport companies. “Almost everything on a supermarket shelf got there on a lorry. There is nowhere for additional costs to go but onto customers,” Smith said.
For shippers, that means tougher talks on freight rates and fuel surcharges in the coming weeks. For consumers, it means higher prices – which is why the association sums up its message with the slogan “a fuel duty hike is a food price hike”.
What hauliers want from the government
The government has extended the 5p cut in fuel duty until the end of the year, and the G7 has announced the release of 100 million barrels of oil from emergency reserves. Local bus operators in England have also received help with fuel costs. Freight operators have received no targeted support.
The RHA is now calling on ministers to:
- pause the fuel duty increase planned for the new year,
- scrap plans to link fuel duty to the Retail Price Index from April,
- introduce a fuel duty rebate for essential users such as hauliers, coach and van operators.
“This is completely unsustainable, and with no end to global uncertainty in sight,” Smith said. With further risks to supply – including a possible US ban on diesel exports – few in the industry expect quick relief at the pump.
