Thursday, January 6, 2011

Diesel Fuels The Flames As Prices Rise For Freight Hauliers

Government Told to Show Some Grit (Whilst in Ireland There Was None)
Shipping News Feature

UK – IRELAND – The haulage and business press have been full of fuel price stories lately, hardly surprising as the British Government earn extra revenue from increased fuel duty and then add a further 2.5% as VAT rises to see the New Year in. The talk is all of likely failures amongst UK freight hauliers with many small and medium sized logistics companies seemingly unable to bear the extra costs.

The Road Haulage Association (RHA) today welcomed the news that the Prime Minister intends to revisit the Conservative proposal to ‘share the risk’ of higher fuel prices between the government and road users. RHA Chief Executive Geoff Dunning obviously feels there is a real chance of rescuing something from the situation on behalf of his members saying:

“We supported the proposal of a fair fuel stabiliser when it was first raised four years ago and we shall be supporting it now. This will certainly go some way to help relieve the crippling financial burden currently being faced by UK hauliers and we shall be pressing for its implementation as soon as possible.

“We were greatly encouraged when the Coalition, within weeks of taking power, proposed the possibility of a fuel duty stabiliser and were extremely disappointed when the plans were shelved for ‘financial reasons’. In 2009, road users contributed nearly £50 billion to Treasury coffers, £32 billion of which came from fuel duty and VAT on fuel, yet only a small proportion was returned through road building and maintenance.

“The fact that the price of fuel before tax has risen dramatically means that the Treasury will get far more revenue than expected from the hike in fuel duty on 1st January and the VAT increase on 4 January, so 2011 looks set to be a bumper year for tax income from fuel. The money is there so let’s see some of it being used in a way that may well provide the lifeline that UK hauliers have been so desperately waiting for”.

Simon Chapman, Chief Economist of the Freight Transport Association (FTA) takes a harsher and more pessimistic line:

“This latest fuel duty increase, together with those previously introduced this year, will add a further £1,200 per year to the running costs (for an articulated truck). The Chancellor is treating the road freight sector as a bottomless well from which cash to bolster the public finances can be drawn. At the same time he has embarked on a savage set of cuts to transport infrastructure which will see spending on national road schemes fall by 45 per cent and local authority budgets for capital schemes slashed.

“For the UK to trade its way out of recession its supply chains need to be cost competitive and its roads must provide reliable routes to market. Neither is achieved by a tax base spiralling well above inflation and a transport network starved of investment. There is a propensity for government to disguise revenue raising exercises under a large green banner. However, while fuel duty hikes may influence the behaviour of the private motorist – who can substitute car journeys with public transport – lorries simply have to be driven if we want our shelves stocked.

“Ironically, raising fuel tax simply reduces the amount of cash the industry has to invest in eco-driver training and newer, cleaner engines. Fuel duty is not a lever that can be pulled to reduce the logistics sector's carbon emissions, suggesting otherwise is simply ‘greenwash’.”

For hauliers the figures make harsh reading with duty on diesel having risen by 1p per litre to 57.19 pence per litre (ppl) on 1 April 2010 and by a further 1ppl to 58.19ppl on 1 October 2010. It has risen again this week by 0.76p per litre to 58.95 pence per litre meaning duty accounts for around 60% of the pump price before the addition of VAT. The FTA says this latest hike will add another £94+ million to the freight industry’s annual bill on top of the £7.22 billion taken per annum in fuel duty.

Meanwhile differing attitudes to authority in two of the areas hardest hit by the latest atrocious weather conditions. Last week the Irish Road Haulage Association (IRHA) severely criticised the National Roads Authority (NRA) for what they saw as a lamentable response to the heavy snowfalls. Slip roads on motorways such as the M50 were left un-gritted which the IRHA said put motorists lives at risk and meant hauliers had to cope in almost impossible conditions with little or no help from the responsible authorities.

Scotland however saw local freight organisations praising the leniency shown by the authorities who allowed drivers to continue to work after long delays, when technically they were out of hours and should have rested. The FTA and RHA both met with Scottish Government ministers to discuss ways to keep Scotland moving in the extreme weather conditions and how future severe circumstances could best be dealt with.

Amongst the matters discussed were better ways to keep drivers informed of any temporary suspension of hours of service rules, tyres adapted for winter running conditions, lorry stacking to enable gritting and weather alerts specifically targeted at working drivers and it was mutually agreed that the meetings were beneficial and that the Scottish transport authorities understood the importance of keeping supply chain arteries open, particularly for vital commodities.