UK road freight prices hit 2023 high in December: TEG

19 Jan '24

3 min read

Pic: Adobe Stock

Insights

UK road freight prices peaked in December 2023, the highest since December 2022, driven by rising fuel costs and capacity strains.
Prices increased by 3.9 per cent, with haulage up 4.07 per cent.
YoY, overall prices were down 2.7 per cent.
Prices are expected to decrease in early 2024, but uncertainties remain due to net-zero emission transition costs.

As the year 2023 concluded, the UK witnessed a significant peak in road freight prices, reaching the highest levels since December 2022. This surge in pricing was in line with industry expectations, as reported by the Transport Exchange Group (TEG) Road Transport Price Index. The increase in prices was largely attributed to the steady rise in fuel costs from July to November and the strain on capacities during the peak season.

In December, there was a notable 3.9 per cent increase in the price per mile for haulage and courier vehicles. Specifically, haulage prices rose by 4.07 per cent, climbing from 115.4 to 120.1. However, when compared year-on-year, overall prices showed a decrease of 2.7 per cent, with haulage down by 1.6 per cent.

Despite the recent hike, there is optimism in the industry that this increase will be temporary. Already in the first week of January, there has been a decrease in prices, offering some relief to businesses and consumers. However, the outlook for the year remains uncertain, with many operators facing significant expenses in their transition towards net-zero emissions, as per TEG.

In a positive turn, wholesale fuel prices experienced considerable reductions before Christmas, leading to the lowest average petrol price since October 2021 and the lowest average diesel price since July 2023. The drop in fuel prices has been the most significant since August 2022, following an all-time peak in July of that year. This decrease in fuel costs presents an opportunity for operators to either attract new business through lower prices or benefit from higher profit margins.

However, there are concerns over potential increases in fuel prices due to the recent Red Sea attacks, which could disrupt supply chains. Although market analysts suggest that disruptions in the oil market may not have a severe impact, road freight operators remain cautiously optimistic.

Looking ahead to 2024, it is a critical juncture for progress towards net-zero emissions. The UK government's zero emission mandate will soon require 70 per cent of new vans sold to be zero emission by 2030, increasing to 100 per cent by 2035. Additionally, the sale of non-zero emissions heavy goods vehicles (HGVs) will be banned by 2040. The industry has seen significant advancements in green technology trials, but the success in meeting net-zero targets will depend on the widespread accessibility and affordability of such technology.

As businesses adapt to new regulations and green technologies, road freight prices are expected to reflect these additional costs. Consequently, the industry may see further price increases throughout the year as operators aim to cover increased overheads.

Fibre2Fashion News Desk (DP)

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