Dearer fuel and tyres squeeze haulage margins

The high cost of fuel remains the biggest cause for concern amongst haulage operators, according to the July 2011 update of the Freight Transport Association's Manager's Guide to Distribution Costs. Commercial vehicle operators continue to be squeezed by rising operating costs and pressure for earlier payment terms from suppliers whilst facing downward pressure on haulage rates and lengthening payment terms from customers.

FTA’s latest update calculates that, on average, vehicle operating costs for rigid, articulated and drawbar vehicles have risen by 5.6 per cent in the year to 1 July 2011 and remain close to the all-time highs recorded as at 1 April 2011.  The largest contribution to the rise came from an increase in the price of diesel, which has risen by 12 per cent in the year to 1 July 2011.  In addition, tyre costs have risen by 7.3 per cent and overheads by five per cent in the same period.

By contrast, increases in haulage rates have not matched the rise in operating costs.  According to calculations in FTA’s update, domestic haulage rates have risen by an average of just 1.8 per cent in the six months to 1 July 2011 and international haulage rates have risen by an average of just 1.5 per cent in the same period.  Just over half of the contributors to the update indicated that they had not increased their haulage rates since the start of 2011.

Bruce Goodhart, FTA Research Analyst, commented: “Hauliers were able to ride out the recession by reducing margins and delaying vehicle replacement.  However, they are continuing to feel the pinch with rising input costs, the high price of fuel and pressure from their customers not to increase charges.  Economic growth is currently very weak in the UK and it is likely that some hauliers may not be able to sustain their business in these circumstances.”