Costs
6 December 2011

Operating costs tracking ahead of inflation, says FTA

The high cost of fuel remains the biggest cause for concern amongst haulage operators, who are continuing to be squeezed by rising operating costs and pressure for earlier payment terms from suppliers, whilst facing downward pressure on haulage rates and lengthening payment terms from customers.

The October 2011 update report of the Freight Transport Association’s Manager’s Guide to Distribution Costs 2011calculates that, on average, vehicle operating costs for rigid, articulated and drawbar vehicles have risen by 6.2 per cent in the year to 1 October 2011 to reach an all-time high. The largest contribution to the rise came from an increase in the price of diesel, which has risen by 13.9 per cent in the year to 1 October 2011. In addition, tyre costs have risen by 8.3 per cent and overheads by 5.6 per cent in the same period.

In contrast, increases in haulage rates have not matched the rise in operating costs. According to calculations in the update, domestic haulage rates have risen by an average of just 2.8 per cent in the nine months to 1 October 2011 and international haulage rates have risen by an average of just 1.6 per cent in the same period. Forty-five per cent of the contributors to the update indicated that they had not increased their haulage rates since the start of 2011.

Bruce Goodhart, FTA Research Analyst, commented: "Commercial vehicle operators are under intense pressure from their customers to suppress haulage rates at a time when the cost of running a truck has risen inexorably and fuel prices nearing record levels. This 'squeeze' has left balance sheets fragile and carriers vulnerable during a period of weak economic growth.”

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