Wednesday, December 15, 2010

Freight Haulage Costs Continue To Rise

RHA Survey Highlights Increases
Shipping News Feature

UK – Costs for British road hauliers rose by 4.9% in the 12 months to October 1, according to the Road Haulage Association’s annual cost movement survey, even discounting fuel, costs rose by 1.7% and rising diesel commodity prices and duty increased costs by a further 3.2 percentage points. The Road Haulage Association warns that its survey of what members are paying for diesel shows an increased in this core cost of 4% in just a fortnight. The price has risen by 3.88 pence a litre to 104.78 pence (before VAT) from an already high level. The RHA cost movement survey is based on the costs of operating a 44 tonne articulated truck.

RHA Director of Policy Jack Semple commented on the hike and warned the Government that the continual rises would have a detrimental effect on truck freight in the country saying:

“The issue for government is to consider whether it can afford to go on adding to the economy’s business taxes with further diesel duty increases planned in the New Year and then again in April. The UK already has much the highest diesel duty rate in the EU. The RHA’s message to the Chancellor is, it is time to stop adding to the tax burden.

“ These increases further threaten the viability of firms who have been caught in a ‘perfect storm’ of rising prices, reduced credit terms and a credit squeeze, often made worse by customers taking longer to pay their bills. On top of all that, in the past couple of weeks, many hauliers have faced an additional business risk; the greatly reduced productivity and increased costs resulting from the appalling problems on the roads has hit many firms’ profitability and cash flow.

“Diesel is around 32% of operating costs. With fuel prices rising and becoming increasingly volatile, we strongly recommend those companies that have not already done so, to implement a mechanism that links diesel prices to rates. Customers can be reluctant to agree to such terms but we would urge them to recognise the importance such mechanisms can have for the sustainability of their haulage suppliers.

“Operating costs though are not simply about diesel. It is clear from our survey that other costs have also risen and this should be acknowledged. Overhead costs can be a particularly important area for customers to recognise. In looking ahead to the coming year, it seems that the only way haulage costs are going to move is upwards, with fuel, truck, driver and insurance costs all under pressure."