Seven in ten logistics operators report escalating costs as fuel prices soar, Logistics UK survey finds

Almost three quarters (71%) of UK logistics companies suffered escalating transportation costs in the first quarter of 2022, compared to the same period a year ago, according to Logistics UK’s May 2022 Performance Tracker.

In addition, 40% of respondents said costs had climbed by 25% or more, as operators continue to battle against rising fuel costs and global supply chain pressures.

Announcing the results of the survey, Logistics UK said: “Surging costs are feeding through to freight rates – the price charged to move goods – particularly cargo transported by air and by road to outside the UK.”

More than six in ten respondents said both air and international road freight rates had increased substantially. Meanwhile, at least half of respondents said freight rates for transporting goods by sea, domestic roads and rail had increased substantially.”

All 241 respondents to the survey reported a rise in fuel costs. Bulk diesel prices, which make up around 30% of the cost to operate a vehicle, have risen by 35.7% to an average of 129.03 pence per litre in Q1 2022, compared to the same period last year.

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At the same time there are signs that the cost to transport goods and the broader cost of living squeeze are impacting on demand for goods, with 35% of respondents reporting a decrease in orders, while 12% said orders had fallen by at least a quarter.

Sarah Watkins, Logistics UK deputy director of policy information, said: “The cost to transport goods is surging at an unprecedented rate amid significant increases in the cost of fuel.

“The sheer numbers of logistics companies reporting increases in both freight rates and the costs to move goods suggests rising prices are deeply embedded and are unlikely to subside in the coming weeks. The sector is particularly reliant on diesel, the cost of which is likely to remain elevated even as the cost of other fuels subside.

“Activity in the logistics sector is a reliable leading indicator for the broader economy and this survey reveals worrying signs. More than a third of our respondents say orders are declining, likely as a result of both rising freight costs and as consumers cut back amid a broader cost of living squeeze.”