RHA calls for government action as rising costs threaten industry stability
London, UK – Richard James Smith, Managing Director of the Road Haulage Association (RHA), issues a stark warning about the growing pressures on the road freight sector, as rising operating costs push many hauliers to the brink. In a recent social media post, Smith highlights the alarming rate of insolvencies within the industry and calls for urgent government intervention to alleviate the financial strain on businesses that are crucial to the UK’s economic growth.
Smith notes that the cost of operating a Heavy Goods Vehicle (HGV) has surged by 10% over the past year, a burden that has led to some hauliers running at a loss, with profit margins nearly obliterated. He points out that the average profit margin for businesses in the sector has now dwindled to just 2%, a figure that underscores the precarious situation many operators find themselves in.
The post comes as the latest insolvency figures, reported by The Times, reveal that the number of companies going insolvent across various industries has surpassed those seen during the financial crisis of 2008. The road freight sector is particularly hard hit, with nearly 500 hauliers going out of business last year alone. Smith expresses deep concern that this trend is continuing, with over 250 hauliers already closing their doors this year—a 10% increase in insolvencies compared to the same period in 2023.
“These are challenging times,” Smith writes, citing higher interest rates, increased regulatory compliance, and escalating running costs as significant factors contributing to the financial difficulties faced by hauliers. He emphasises that fuel costs, which account for a third of business expenses in the sector, are a major concern, particularly as diesel prices in the UK remain significantly higher than in many European countries. This disparity, he argues, places UK hauliers at a competitive disadvantage across the European market.
Smith also references the RHA’s recent Blueprint document, which outlines the association’s proposals for reducing the tax burden on the industry to foster growth. He urges the government to take action, particularly in supporting the industry’s transition towards decarbonisation. Smith advocates for a detailed roadmap from the government to address the challenges associated with decarbonisation, including the high costs that currently act as barriers. He calls for incentives to promote the uptake of low-carbon fuels, such as Hydrotreated Vegetable Oil (HVO), which can reduce emissions by 90%.
Additionally, Smith proposes the introduction of a fuel ‘essential user rebate’ linked to emissions reduction, a move that would bring UK fuel duty levels closer to those in other European countries. He also stresses the importance of allowing access to the National Wealth Fund for investment in zero-emission vehicles and infrastructure, arguing that such investments would demonstrate the government’s commitment to supporting an industry that is vital to the supply chain.
Beyond financial concerns, Smith highlights other challenges facing the sector, including a widening skills gap, an ageing workforce, and the impact of congestion due to poor road infrastructure. He notes that congestion alone costs the UK economy £30 billion annually, with incomplete infrastructure projects like the Lower Thames Crossing exacerbating the problem by making journey planning unpredictable and increasing fuel consumption.
In closing, Smith reiterates the RHA’s commitment to working with the government to address these pressing issues. “We believe the government has an opportunity to take bold and positive steps to ease the growing pressures on our industry,” he says, urging policymakers to recognise the critical role the road freight sector plays in the nation’s economy.
