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Road freight prices continue to surge unabated

Its no secret that road freight prices have been increasing steadily over recent times due to driver shortages and we’ve written about it extensively over the past few years. Now though it’s the cost of rising fuel which is a key concern. One third of a HGVs running costs is fuel and hauliers have already been grappling with escalating fuel costs recently as well as having already paid for huge wage increases to retain drivers. But since the invasion of Ukraine by Russia we have seen record prices across Europe which is resulting in soaring transportation and freight costs beyond the boundaries of normality.

Since the start of the conflict these skyrocketing fuel costs have caught transport companies on the backfoot due to the speed of the rises. Hauliers have had to hastily introduce fuel surcharges to cover their rising costs and we’re seeing prices upwardly adjusted week by week as the situation continues.

Some hauliers have introduced a carefully calculated fuel surcharge whilst some are using weekly spot pricing which can be wildly volatile and difficult to budget for. Whichever method is being used it seems nothing is absolute. If you’re a manufacturer this makes for a very unstable environment to plan in, and whether it’s trains or trucks, manufacturing or mining, it’s diesel that powers the economy. These higher prices are now having an impact on consumers and everyday life which we are seeing daily as headline news.

The swirl of issues facing our industry also includes other complexities such as the recent introduction of phase 2 of the EU mobility package which essentially limits the resource flexibility of transport operators. Whilst demand both in UK and EU has become strong, road freight carriers have been struggling to increase capacity. Different covid-19 restrictions across different countries have made planning drivers difficult. Also bottlenecks and supply constraints of critical components like semiconductor chips for HGVs means even with new drivers onboard, new truck orders have lengthy wait times.

The number of challenges continues unprecedented, and all adds to escalating fuel prices putting further pressure on economies trying to open up after Covid. Statistics indicated previously reported a 6th quarter on quarter growth in freight prices and it seems this upward trend is set to continue.

We can’t finish without mentioning the unique and difficult position the UK remains in from the fallout of Brexit. Many European hauliers have gone on record stating they have called time on coming to the UK due to border difficulties and the now notorious queues into Dover. We have seen first-hand the impact this is having on many businesses who rely on a steady supply chain and it is forcing companies to look at alternatives modes of transport.

In conclusion we are now deep into a period of extreme volatility as we experience the ever rising cost of fuel with seemingly no apex and various other restrictions all putting severe pressure on price and capacity. As companies jostle for new modes and routes of transport it’s important we take time to make the right decisions and focus on core values. Traditional methods aren’t necessarily the right choice anymore and it is prudent to review your complete supply chain with experts from all parties involved. The landscape is changing fast and what’s important is identifying what your business needs most to weather the storm and what changes need to be made. There may be options you haven’t thought of and that is where we can help.

We offer free supply chain reviews to look at your whole business and listen to what’s important and see what improvements or modal changes can me made. So if you feel now is the time for change please contact us here / Roddy e:roddy.forster@jordonfreight.com or Steve e:steve.townley@jordonfreight.com / who will be more than happy to help.

In the meantime we wish everyone good health for themselves and their business as we navigate these rocky seas and we look forward to hearing from you.

The Jordon Team

24/05/2022
Author: Jon