Fuel takes LGV running costs to an all-time high
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By Hayley Pink
LGV RUNNING COSTS have hit an all-time high due to the soaring cost of fuel, according to research by the Freight Transport Association (FTA).
Data from April 2011 to April 2012 suggests that the cost of running a typical 44-tonner has shot up by £1,919 per year (see chart) due to fuel price hikes alone. FTA chief economist Simon Chapman says: “The high price of diesel is the main concern keeping hauliers awake at night. Fuel now represents around 40% of annual operating costs compared to around a third just three years ago.” He adds that despite high operating costs, hauliers are also under pressure from customers not to raise rates and are seeing overall levels of activity fall as the economy continues to struggle.
“As a result, hauliers are struggling to keep their balance sheets in the black, with a growing number having to close their gates permanently,” warns Chapman.
Ian Barclay, operations director at Willenhall-based Aspray24, says that fuel has clearly had a major effect on operating costs in the past year, but that campaign group FairFuelUK has done a “great job” maintaining pressure on the government and gaining public support.
However, he adds that other costs have been “turbulent at a time when we would think decreases would be appropriate. For example, raw material costs are coming down, but premium tyre suppliers have yet to move to a commensurate position,” he says. “We are under significant pressure from customers who, no doubt, are under pressure from their customers, but it has to stop somewhere.
“We are seeing suicidal transport rates being bandied around, the likes of which we’ve never seen. Those operators will not survive in the long term, perhaps when the banks get more bullish in how they manage debt,” Barclay insists.
Leighton Buzzard-based MiniClipper says it is important that operators are proactive in managing fuel costs. Sales director Jayne Masters says: “Hauliers with no professional structured strategy towards fuel economy and cost reduction are suffering and, well into the recession, their cashflow is clearly suffering.” She adds that measurement of fuel economy across its 32-truck fleet has been crucial to helping MiniClipper achieve 13% financial growth in the past year.
High UK fuel costs are largely down to fuel duty, which stands at 57.95ppl, stresses the FTA.
UK diesel duty is, on average, 24ppl higher than on the Continent, putting UK hauliers at a significant disadvantage to foreign operators, says Chapman. “There is a compelling case for an immediate cut in diesel duty.”