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UK fuel costs crippling freight industry

Tunbridge Wells, Kent, UK; Heavy goods vehicle operating costs for the UK freight industry have reached an all time high due to soaring diesel prices, says the Freight Transport Association.

In the year to April, increases in diesel alone added £1,900 to the cost of running a 44-tonne vehicle. These increases are crippling the transport industry, the association says.

Simon Chapman, the Freight Transport Association’s chief economist says: “The high price of diesel is the number one concern keeping hauliers awake at night.  Fuel now represents around 40% of annual operating costs compared to around a third just three years ago.

“Whilst operating costs have now reached an all-time high, hauliers face pressure from customers not to raise their haulage rates and are seeing overall levels of activity fall as the economy slides back into recession.  As a result, hauliers are struggling to keep their balance sheets in the black, with a growing number having to close their gates permanently.”

Problems for UK operators are compounded by the duty at 57.95-pence per litre (ppl), UK diesel duty is on average 24-pence per litre higher than the rest of Europe.  This puts UK carriers at a significant cost disadvantage to their foreign counterparts when competing for domestic haulage business in the UK.  A foreign carrier entering the UK with a full tank of fuel has the ability to undertake a week’s work using low-cost fuel purchased on the continent, before returning to mainland Europe, Chapman says.

“There is a compelling case for an immediate cut in diesel duty,” he says, citing research undertaken by the Centre for Economic and Business Research that shows a “modest” 3-pence per litre cut in duty today would be cash neutral to the Treasury within 12 months.  “The loss in revenue from duty would be fully offset by extra revenues and savings on the public purse resulting from more rapid economic growth,” Chapman says.