Market data suggests that road transport pricing may be stabilising after record increases, but is likely to remain at elevated levels for some time, due to continuing shortages of freight transport HGV drivers and limited capacity.
UK road freight prices appear to be stabilising after rising by more than a third in 12 months, with increasing calls for more action to address the 100,000 HGV driver shortage, which has led to spiralling labour costs in the freight sector. And despite government action to attract EU drivers to the UK with short-term visas, and changes to HGV testing, the driver shortfall will continue until next year.
A new transport industry index highlights the spiking demand for UK courier and haulier services, with the sector experiencing the highest price-per-mile average across all vehicle types in September 2021 — a 21.8-point increase compared to September 2019, and a 26.1 point increase on September 2020, with road haulage rising 37%.
The TEG Road Transport Price Index, compiled by the Transport Exchange Group since January 2019, from over four million aggregated and anonymised transactions, reveals the haulage industry has experienced the steepest rises, year-on-year (October 2020 to October 2021) with prices surging by 34.2 points, while courier services have jumped 15.8 points.
Key indicators for the price index will include the sharp increases in the cost of diesel, up 30p a litre and consistently high demand levels for road transport. Driver pay will also have been an element contributing to the rise from Spring 2021 onwards; but it does look as if potential overheating of transport rates is now abating, although further pent up demand could reverse this.
The European road freight rate benchmark for Q3 shows that prices have hit historic highs across Europe, driven by a mix of robust economic growth, global supply chain bottlenecks, rising costs and scarce capacity.
And let us not forget the highest ever cost of Petrol and Diesel on record.
Q3 2021 is the 5th consecutive quarter of rate increases and a 4% rise from the rates seen in Q2 2020, with freight rates expected to rise further in Q4 2021 as demand increases and capacity remains tight.
Although there is some evidence that shipping rates may have started to stabilise, the past 18 months have seen rates rise exponentially resulting in record profits for shipping lines and record high prices for companies moving goods.
Other modes are also up in price, with air freight getting more expensive and overall rates 37% higher than a year ago, according to figures from data monitors.
The reality is rates are stabilising, but at hugely inflated levels, to what could ever be imagined. The good news, when you actually look at it, is not quite so good.
Road transport cannot be avoided, as part of the international movement of goods, with drivers critical for container movements, international and domestic haulage.
We work with a select number of strategically located long-term haulage partners, to give us access to the widest pool of equipment and driver resource, where and when it is required.
To learn more or to discuss any requirements, please contact Elliot Carlile or Grant Liddell (or Simon Balfe, who leads our UK multimodal transport operations) to talk you through the options.