High casualty rate among UK haulage firms on a challenging road
Opportunities for new road haulage firms in the UK appear to be diminishing, just over ...
DHL: ROBOTICSCHRW: ONE CENT CLUB UPDATECAT: RISING TRADEEXPD: TRUMP TRADE LOSER LINE: PUNISHEDMAERSK: RELIEF XPO: TRUMP TRADE WINNERCHRW: NO JOYUPS: STEADY YIELDXPO: BUILDING BLOCKSHLAG: BIG ORDERLINE: REACTIONLINE: EXPENSES AND OPERATING LEVERAGELINE: PIPELINE OF DEALS LINE: DEMAND PATTERNS LINE: LANDSCAPE
DHL: ROBOTICSCHRW: ONE CENT CLUB UPDATECAT: RISING TRADEEXPD: TRUMP TRADE LOSER LINE: PUNISHEDMAERSK: RELIEF XPO: TRUMP TRADE WINNERCHRW: NO JOYUPS: STEADY YIELDXPO: BUILDING BLOCKSHLAG: BIG ORDERLINE: REACTIONLINE: EXPENSES AND OPERATING LEVERAGELINE: PIPELINE OF DEALS LINE: DEMAND PATTERNS LINE: LANDSCAPE
The road haulage sector is still facing rising operational costs, and transport companies have “little choice” but to pass the increase to shippers.
Yesterday’s Transport Intelligence (Ti) road freight survey echoes what has long been reported about the industry.
“Rising overall costs along with the economic downturn are the most significant challenges facing the global road freight forwarding sector,” it says.
A global economic crisis and rising inflation has meant driver wages, tolls, vehicle maintenance costs, insurance and fuel prices have all risen.
And Ti noted: “Considering the very thin margins in the sector, every cost increase represents another risk to profit erosion.”
And with about a third of hauliers’ running costs attributed to fuel, there is little operators can do to mitigate the rising costs.
“While it is possible for freight operators to absorb some of the cost increases, as fuel prices have been increasing continually, absorbing the costs is no longer feasible,” said Ti.
“There is little choice but to pass the increase onto shippers, who then pass the increase onto their customers.”
But with everyone feeling the pinch of inflation, customers have been reluctant to spend more, meaning a record number of road haulage companies have been pushed toward insolvency.
Of course, the report also acknowledges the pressing concern of “substantial truck driver shortages”, and the IRU expects this to continue to worsen.
The IRU’s 2023 driver shortage research showed more than three million jobs remain vacant and, without “meaningful action to attract and retain drivers”, it is estimated the number will escalate to some seven million by 2028.
On top of this, the imperative to invest in digital and sustainable solutions is also weighing heavy on transport operators’ shoulders.
However, Ti said forwarders believed data analytics could improve vehicle performance, reduce costs, improve processes, develop strategies, optimise routes and times and foresee and identify problems.
Additionally, investing in alternative fuels and electric vehicles will allow operators to dodge increasing CO2 tolls across Europe.
So, while requiring substantial investment, digital and sustainable solutions may prove worthwhile for haulage firms that have liquid capital – but they are few and far between in this struggling sector.
The need for new investment, then, might act as a catalyst for more consolidation among haulage companies, such as the GXO takeover of Wincanton.
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