The latest figures from the HX Price Index show haulage prices increased by 2.87% during June 2023. The increase is the fourth in as many months, possibly reflecting the haulage industry’s current battle with inflation.
Despite the ongoing inflationary environment, fuel prices fell in June 2023. Petrol prices dipped by 1.0%, while diesel prices plummeted by 5.8%. The drops means diesel is now only slightly more expensive than petrol at the pumps, which is welcome news for hauliers nationwide.
As encouraging as the fall in diesel prices may be, worrying omens lurk. The industry is currently facing a shortage of HGV mechanics: according to a recent Logistics UK survey, over half of haulage businesses have struggled with hiring enough fitters, technicians, and mechanics of late. The shortage seems to be caused by mechanics leaving the industry, which suggests the problem is long-term. If that’s the case, hauliers can expect defective vehicles to be unusable for extended periods, capping capacities.
Elsewhere, the HGV levy is due to return on the 1st of August, which will place immediate added strain on hauliers. What’s more, the levy returns at a time when excess inflation continues to squeeze haulage margins. The UK government and the Bank of England continue to combat inflation, and the Bank of England raised base interest rates once again in June in a fresh effort to achieve the aim.
Curbing inflation may bring raw haulage costs down. Still, unexpectedly high interest rates are now squeezing public spending, which has reignited fears of an upcoming recession. If the fears materialise, demand for hauliers will inevitably decrease. On the one hand, the haulage industry needs inflation to fall. If that means a recession, however, any resulting celebrations would be short-lived.
Lyall Cresswell, CEO of HX parent brand Transport Exchange Group, said, “It is, perhaps, surprising that prices have remained so stable given the multiple challenges facing the industry right now. In addition to ongoing inflation, they now must contend with the return of the HGV levy and mechanic shortages.
“The problem for the industry is that many operators have paid mechanics higher salaries to become drivers and they’ll now struggle to attract new mechanics – particularly if they can’t afford those high salaries.
“All told, it might be difficult for logistics companies to keep absorbing costs, particularly if demand is affected by slow economic growth.
“However, the silver lining right now is significantly lower diesel prices. The industry has long been calling for lower prices and now they’ve finally come, which will at least help with everyday business costs.”
The HX Price Index will continue to track changes in haulage prices in July 2023.
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