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Truck operating costs rise ahead of inflation

Tunbridge Wells, UK:  The high cost of fuel remains the biggest cause for concern for haulage operators squeezed by rising operating costs and pressure for earlier payment terms from suppliers, says the Freight Transport Association.

“Commercial vehicle operators are under intense pressure from their customers to suppress haulage rates at a time when the cost of running a truck has risen inexorably and fuel prices nearing record levels.  This ‘squeeze’ has left balance sheets fragile and carriers vulnerable during a period of weak economic growth,” says Bruce Goodhart, FTA research analyst.

The FTA’s Manager’s Guide to Distribution Costs 2011 update for October calculates that, on average, vehicle operating costs for rigid, articulated and drawbar vehicles have risen by 6.2% in the year to 1 October 2011 to reach an all-time high.

The largest contribution to the rise came from an increase in the price of diesel, which has risen by 13.9% in the year to 1 October 2011.  In addition, tyre costs have risen by 8.3% and overheads by 5.6% in the same period.

In contrast, increases in haulage rates have not matched the rise in operating costs.  According to calculations in the update, domestic haulage rates have risen by an average of just 2.8% in the nine months to 1 October 2011 and international haulage rates have risen by an average of just 1.6% in the same period.

Nearly half (45%) of the contributors to the update said they had not increased their haulage rates since the start of 2011.

The FTA’s Manager’s Guide to Distribution Costs is produced annually based on data gathered from a survey of FTA members in April each year, as well as data from other independent sources.

The data on wages, vehicle operating costs and haulage trends is then updated quarterly as at 1 July, 1 October and 1 January.

Average costs movements for the 12 months to 1 October 2011 for rigid, articulated and drawbar vehicles are:

Cost element               Annual change %
VED                                                          0.0
Insurance                                              +2.7
Depreciation                                           0.0
Diese                                                     +13.9
Tyres                                                      +8.3
Maintenance                                        +4.4
Employment cost of driver                +2.0
Overheads                                             +5.6
Vehicle costs                                         +8.8
Vehicle and driver costs                     +6.3
Total vehicle operating costs             +6.2
Total costs excluding fuel                   +2.9

Source: Freight Transport Association