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UK road freight prices rise 15% year on year

UK road freight prices are up 15% on the start of 2021 and the highest of the previous three Januarys, according to the latest TEG Road Transport Price Index.

It says that the average price-per-mile for haulage and courier vehicles increased from 101.5 points to 116.8 points between January 2021 and January 2022 and comes as inflation and interest rate rises continue to bite.

Kirsten Tisdale, director of logistics consultants Aricia and fellow of the Chartered Institute of Logistics & Transport, said: “The TEG Index is telling us two stories about road transport as we enter 2022. First, despite the large seasonal drop in January, price increases have come to stay – the TEG Index is at a completely different starting level to the previous three years.

Second, the haulage and courier elements have re-converged, at least for now, suggesting that there was an element of (understandable!) panic about HGV drivers going into the peak demand period.”

Lyall Cresswell, CEO of Transport Exchange Group said there will be further impacts on road freight prices this year including outgoing cabotage rules and the on-demand economy.

“Cabotage rules were changed to ease a shortage of drivers and supply chain disruption, allowing international companies to send lorries with foreign drivers to the UK to make unlimited deliveries in a 14-day period,” he said.

“Previously, cabotage rules only allowed international drivers to make two cabotage journeys within seven days of entry into the UK. This will again be the case when cabotage rules revert back in May, reducing the number of loads international drivers can carry. This will not, of course, help the driver shortage. In addition, cabotage loads are priced lower, so less of them means higher costs all round.

“Significantly, new regulations in May will mean smaller vehicles (between 2.5t and 3.5t) will require an operators’ licence. This requirement for international goods vehicle operator licences for carriage of goods previously only applied to larger vehicles, therefore this rule extension is another big industry change that we’ll soon see reflected in the TEG Road Transport Price Index. Businesses transporting goods between the UK and the European Economic Area will need a licence from May, adding to costs for a great many firms.”

He said the growth of the on-demand economy will also drive supply chain costs. “There is fierce competition in this space, particularly since lockdowns made us dependent upon these services. This growth has put immense pressure on the transport and logistics sector to meet demand, recruit quickly and adapt to new technological requirements. Needless to say, this has contributed to rising costs in the sector for some time now.”

“However, the appetite for so many on-demand services could prove fickle, particularly when the pandemic winds down, and companies may find commercial sustainability elusive. As with so much else in the transport industry, much depends upon the course of the pandemic in the next few months and how consumers respond to changing circumstances.”

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