Vehicle operating costs surge by 12% in a year
Vehicle operating costs rose by 12% in the year to April, according to the latest Manager’s Guide to Distribution Costs produced by Logistics UK.
The increase was driven by a 36% rise in diesel prices, a seven per cent increase in vehicle insurance costs and an almost eight per cent growth in driver employment costs.
Higher operating costs have been exacerbated by the global economic disruption caused by the war in Iran and disruption around the Strait of Hormuz.
Logistics UK chief executive Ben Fletcher said: “For many logistics operators, the only economically feasible way to manage these significant cost increases is to pass them on to their customers.
“As logistics businesses operate on extremely narrow margins and underpin every sector of the economy, these increases risk feeding through to the prices we all pay as consumers.”
Fuel prices
He continued: “Fuel represents around one third of the operating cost for an HGV, and a 36% rise in the price of diesel represents a sharp and unbudgeted increase in the cost base that would be difficult for any business to absorb, let alone those that often operate on margins of just two or three per cent.
“The Middle East conflict and disruption of freight flows through the Strait of Hormuz have renewed pressure on global supply chains and highlighted the need for resilience in the way our goods are moved, whether for manufacturing, retail, hospitality, healthcare or ecommerce.
“Our sector has the capacity to be a powerful catalyst for growth and resilience across the whole economy, but its ability to do this is by no means guaranteed. The cost increases outlined in our report are hitting businesses hard and demonstrate why we need a policy framework that supports the logistics sector to drive the economy forward.”
