I read a fairly alarming survey earlier this week – it estimated that 33% of haulage companies would go out of business over the upcoming year. I can’t think of any other industry facing this kind of crisis, and I’d be lying if I said it didn’t concern me.
The main reason for the decline is, of course, rising haulage fuel costs. A full tank of diesel fuel now costs around £450, which I think we can all agree is an extortionate amount. Now, the bigger haulage companies can pass these fuel expenses onto the consumer no problem, but the little guys – especially the owner operators - are really struggling here. This is reflected by the average growth figures, with small companies showing no expansion, and even the larger companies displaying minimal 6-7% growth. Plimsoll Publishing who carried out the survey stressed that in times of crisis, the niche operators tended to perform better, but this trend is being reversed with the haulage industry – probably to do with the huge costs and upkeep involved in staying profitable in this line of work, with the larger haulage companies boasting only 1% margins, which could easily be wiped out by further fuel hikes or through wear and tear of vehicles.
From talking to hauliers, there seem to be three main issues which prompt the most grumbles…
Haulage fuel costs
Without a doubt, the biggest issue affecting our industry is haulage fuel pricing, which shows no signs of slowing. Since 1999, the price of bulk diesel has increased by over 50%, and in recent months we have seen an almost weekly rise. It’s no secret that the industry is deeply unhappy about this, and that everyone related is facing a massive squeeze to turn out any kind of a profit. We need tax breaks for haulage companies and owner operators desperately, but so far we have seen nothing.
Previously, hauliers with aging vehicles could make pretty good business by taking loads to and from London. The Low Emission Zone (LEZ) tax has now given us the tough decision to either upgrade our vehicles to make them more green, to pay £200 a day to enter London or to avoid England’s capital altogether. Due to the squeeze the industry has been facing thanks to fuel hikes, the first two options are beyond the reach of most industry workers, forcing a large portion of drivers out of previously profitable London work.
Long Working Hours
Despite European direction insisting haulage workers work no more than 56 hours per week, a recent survey on our site showed the majority of our members worked an average of over 60 hours per week. The truth is that to be profitable in our business, you often have to break health and safety codes – that must tell you something of how our industry is suffering at the moment!
Looking at all these problems, I see two conclusions – first, the industry is indeed struggling at the moment, with zero help from the government, and secondly the only way we can help ourselves is to stick together! Working together through a freight exchange or through a local network of contacts can increase profitability by eliminating dead mileage, which can also reduce those long hours because we no longer need to break our backs to be profitable. And as for the LEZ, it can be avoided altogether by subcontracting loads out to those who meet the LEZ restrictions already!
We haulage companies and owner operators need to swallow our pride and help each other out. It’s tempting to think it’s a sink or swim situation, but the only way we’re going to remain profitable enough to fight another year is to increase the number of backloads and cut down on dead mileage. By cooperating as a collective, more of us can stay in business, and the more of us in business means there’s more to be outraged and protest the next time the government brings in over-the-top fuel hikes. Cooperation can help limit the damage of all areas above – let’s swallow our collective pride and make it happen.