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Continued Fuel Duty Cut Welcomed By Logistics Uk

In response to the Spring Budget, Logistics UK is delighted that – following multiple calls from the business group – the 5ppl fuel duty cut originally introduced in March 2022 is to be retained for a further 12 months.

About Logistics Uk

Logistics UK is one of the UK’s leading business groups, representing logistics businesses which are vital to keeping the UK trading, and more than seven million people directly employed in the making, selling and moving of goods. With decarbonisation, Brexit, new technology and other disruptive forces driving change in the way goods move across borders and through the supply chain, logistics has never been more important to UK plc. Logistics UK supports, shapes and stands up for safe and efficient logistics, and is the only business group which represents the whole industry, with members from the road, rail, sea and air industries, as well as the buyers of freight services such as retailers and manufacturers whose businesses depend on the efficient movement of goods. For more information about the organisation and its work, please visit logistics.org.uk

Logistics is the UK’s system for growth and today’s budget announcement was an opportunity for the Chancellor to ensure continued – and potentially increased – investment in green growth and fulfilling careers, while keeping prices down in the shops. Today’s announcement that the 5ppl cut in fuel duty is to be retained for a further 12 months is very welcome news for logistics businesses, particularly SMEs – who make up 99% of the industry, and traditionally operate on low margins. Logistics UK has consistently urged government to extend this cut, while maintaining revenue levels through VAT and other sources. Logistics is at the heart of every sector of the economy; this decision recognises the importance of managing logistics costs to avoid further inflationary pressures on business and consumers. This should help to ensure businesses have the funds to invest in productivity, growth and greener technologies, alongside the new policy for full capital expenditure announced as the successor to the superdeduction (providing it encourages the transition to a zero-carbon economy). However, Logistics UK is dismayed by the lack of support to help businesses with energy costs and our sector’s transition to a low carbon economy, something which the government has urged industry to commit to. This is a missed opportunity. Our members will also be concerned about proposals for a reformed HGV road user levy and together we will be seeking urgent clarification as to the detail involved. While we are also disappointed there was no reference to much-needed Apprenticeship Levy reform, it is encouraging that government is focused on supporting people into work, which will help to relieve the existing skills gaps in industry and the wider UK economy. Logistics UK will work with its members to scrutinise the detail and identify what these measures will entail, such as the announcement of skills bootcamps and Returnerships, and whether these will provide a credible pathway into logistics.

David Wells, Chief Executive, Logistics UK

The haulage price-per-mile has fallen nearly 2% year-on-year and 3% month-on-month, despite diesel prices rising 12% in the last year.

In February, the average price charged by haulage drivers and companies fell for the second consecutive month. The year-on-price was also down, despite meteoric rises in inflation and operational costs over the last year.

The latest data from the TEG Road Transport Price Index revealed that haulage prices in February were 3% lower than in January, and 2% down on last February’s figures. In fact, they were at their lowest level since March 2021.

The data shows that despite cost and workforce pressures, haulage companies are still holding back their prices. But with the Windsor Framework potentially signalling closer cooperation between the UK and EU, hauliers will be hoping for an economic upturn and higher profit margins in the near future.

Over the past year, courier prices have told a different story, rising by over 10% year-on-year. In February, however, courier prices also fell by 4% as consumer spending grows slowly and focuses more on services than material goods relying on haulage/courier services.

To survive in such a challenging business landscape, logistics companies will need to devote time to business development. But they also have to increase efficiency and lower costs. One way to do this is by becoming more sustainable.

Cleaner freight: obstacle or opportunity?

Demand for lower and zero-emission vehicles is growing as the entire sector prepares to make the transition, hastened by fuel price volatility and the Russian invasion of Ukraine.

There are also seven clean air zones in the UK now, with Sheffield becoming the latest addition. Plus, the EU is calling for a 90% reduction in truck emissions by 2040, which will affect many UK-based companies, regardless of Brexit.

Truck manufacturers are already investing heavily to bring a range of electric, hydrogen and other new technology models to market. Those companies who can afford the initial investment in greener fleets will make significant savings on ongoing operational costs. But before they invest their capital in new vehicles, they might want to see higher profit margins.

A price drop in February is nothing new. We’ve seen exactly the same pattern in previous years, and we’d expect prices to rise gradually as we head into spring. However, this year is somewhat uncertain as the UK narrowly avoided a recession and inflation remains high. Businesses are still scaling back, encouraging haulage and courier companies to keep their prices down, even as they contend with high costs. But the future for freight is still looking promising. There are huge opportunities for development in new technology and sustainability – opportunities that the industry must grab.

Lyall Cresswell, CEO, Transport Exchange Group