Freight prices climb as industry left without support for green energy transition

The latest data from the TEG Road Transport Price Index has revealed that courier prices continue to fall from their mid-2022 peak, falling 0.7% in March as prices stabilise. Year-on-year, however, they’re up 6.4%. By contrast, March saw a 2.2% rise for haulage prices, ending a two-month drop – even as diesel prices came down by 1.8% and closed the gap on unleaded prices.

In his Spring Budget, Chancellor Jeremy Hunt announced that the planned rise in fuel duty will be cancelled, maintaining last year’s 5p cut for another 12 months. This came as a particular relief to vehicle users and businesses reliant on fleets of vehicles.

However, the government also announced the return of the HGV levy later this year. Vehicles that meet the latest Euro VI emissions standards will receive a 10% discount on it, encouraging companies to use newer vehicles.

Coming into force in August, it puts hauliers in a lose-lose situation: pay more for older vehicles or spend to update the fleet to newer/greener vehicles.

Unlike last year, electric vehicles did not feature in this year’s Spring Budget. In an industry set to be penalised for CO2 emissions with the new HGV levy, many would have expected support for transitioning to greener energy.

A 10% discount on the levy might not be enough for potential EV adopters to make the switch. Steep initial costs, high energy prices and insufficient charging infrastructure are still significant obstacles.

Lyall Cresswell, CEO of Transport Exchange Group and Integra, says: “The most positive news from the Spring Budget was undoubtedly the freezing of fuel duty. It came as a welcome relief, as the industry had been urging the government to extend the cut for some time.

“It’s good to see the government responding to the needs of the logistics industry. The industry is at the heart of the economy, so minimising logistics costs can help prevent additional inflationary strains on both businesses and consumers.

“Many businesses would have liked increased investment in green energy, as the industry (like many others) is feeling the push to go greener. Pressures like these, combined with stubborn inflation, mean we could see significant rises in the future – and we’re already seeing haulage prices start to creep up.”

Kirsten Tisdale, Director of Logistics Consultants Aricia Limited and Fellow of the Chartered Institute of Logistics & Transport, says: “The haulage element of the TEG Road Transport Price Index went up in March 2023 – no surprise there as it has been low (still lower than this time last year) and has gone up in March every year so far following the post-peak doldrums. However, the courier element went down in March – the first time it has done this, showing signs of reducing inflation rates …but just prior to oil production being cut in April, which is likely to push this element of the index back up again.”