Logistics costs boom

Tunbridge Wells, UK:  Nearly three quarters of logistics companies report rising costs driven by fuel price increases, according to a survey by Logistics UK. Its report, Logistics UK May 2022 Performance Tracker, says 71% of UK logistics companies reported cost of transporting goods during up the first quarter compared to the same period last year. And 40% of respondents said that costs had climbed by 25% or more.
 
Surging costs are feeding through to freight rates particularly air and by road to outside the UK with more than six in ten respondents saying air and international road freight rates had increased substantially.

And at least half of respondents said freight rates for transporting goods by sea, domestic roads and rail had increased substantially, the report finds.
 
Bulk diesel prices, which constitute about 30% of the cost to operate a vehicle, have risen by 35.7% to average 129.03 pence per litre the first quarter of this year (compared to Q1 2021). All 241 respondents to the survey reported a rise in fuel costs.
 
The results suggest that the cost to transport goods and the broader cost of living squeeze are beginning to affect 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, deputy director – policy information, Logistics UK 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 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.”