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Fuel price tops vehicle operator concerns as costs reach all-time high, says FTA report

The January 2012 update report of the Freight Transport Association’s Manager’s Guide to Distribution Costs 2011 indicates that the high cost of fuel remains the biggest cause for concern amongst haulage operators. Operators continue to be squeezed by rising operating costs and pressure for earlier payment terms from suppliers whilst facing pressure to minimise any increases in haulage rates and lengthening payment terms from customers.

Bruce Goodhart, FTA Research Analyst, commented:
"The high price of diesel is the number one concern keeping hauliers awake at night. Fuel now represents around 40% of annual operating costs compared to around a third just three years ago. Whilst operating costs have now reached an all-time high, hauliers continue to face pressure from customers not to raise their haulage rates. As a result, balance sheets remain fragile and hauliers vulnerable during this period of weak economic activity."

The update calculates that, on average, vehicle operating costs for rigid, articulated and drawbar vehicles have risen by 3.7 per cent in the year to 1 January 2012 to reach an all-time high. The largest contribution to the rise came from an increase in the price of diesel, which has risen by 6.3 per cent in the year to 1 January 2012. In addition, tyre costs have risen by 9.2 per cent and overheads by 4.0 per cent in the same period.

In contrast, increases in haulage rates have not matched the rise in operating costs. According to calculations in the update, domestic haulage rates have risen by an average of just 3.1 per cent in the year to 1 January 2012 and international haulage rates have risen by an average of just 1.6 per cent in the same period. Forty-six per cent of the contributors to the update indicated that they had not increased their haulage rates since the start of 2011.

FTA’s Manager’s Guide to Distribution Costs is produced annually based on data gathered from a survey of FTA members in April each year, as well as data from other independent sources. The data on wages, vehicle operating costs and haulage trends is then updated quarterly as at 1 July, 1 October and 1 January.

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