Research by the Freight Transport Association shows that heavy goods vehicle operating costs for the UK freight industry have reached an all time high, thanks to the soaring price of fuel.  Between April 2011 and April 2012, increases in diesel alone pushed the cost of running a 44 tonne articulated vehicle up by the equivalent of £1,900 per year.

Simon Chapman, FTA’s Chief Economist explains: “The high price of diesel is the number one concern keeping hauliers awake at night.  Fuel now represents around 40 per cent of annual operating costs compared to around a third just three years ago.  Whilst operating costs have now reached an all-time high, hauliers face pressure from customers not to raise their haulage rates and are seeing overall levels of activity fall as the economy slides back into recession.  As a result, hauliers are struggling to keep their balance sheets in the black, with a growing number having to close their gates permanently.”

Problems for UK operators are compounded by the duty that the Government applies to diesel.  At 57.95 pence per litre (ppl), UK diesel duty is on average 24 pence per litre higher than the rest of Europe.  This puts UK carriers at a significant cost disadvantage to their foreign counterparts when competing for domestic haulage business in the UK.  A foreign carrier entering the UK with a full tank of fuel has the ability to undertake a week’s work using low-cost fuel purchased on the continent, before returning to mainland Europe.

Chapman continued:

“There is a compelling case for an immediate cut in diesel duty.  Independent research undertaken by the Centre for Economic and Business Research (CEBR) shows a modest 3 pence per litre cut in duty today would be cash neutral to the Treasury within 12 months.  The loss in revenue from duty would be fully offset by extra revenues and savings on the public purse resulting from more rapid economic growth.”

Notes for editors

Effect of rising diesel prices on operating costs
3.5t van 7.5t rigid 18t rigid 26t rigid 32t tipper 44t artic
Annual fuel cost as at 1 April 2011 £7,524 £13,758 £23,647 £25,797 £35,470 £53,482
Annual fuel cost increase due to rise of 4.1ppl £270 £494 £849 £926 £1,274 £1,919
Percentage change in fuel costs due to 6.7ppl increase +3.6% +3.6% +3.6% +3.6% +3.6% +3.6%
Annual total vehicle operating cost as at 1 April 2011 £16,297 £52,725 £76,879 £81,799 £103,107 £133,334
Percentage change in annual cost due to fuel cost increase +1.7% +0.9% +1.1% +1.1% +1.2% +1.4%

Source: FTA’s Manager’s Guide to Distribution Costs (vehicle costs data), EnergyQuote JHA (fuel prices)

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