Logistics and retail companies feel the pressure from rising costs

Three-quarters of logistics companies are reporting rising costs due to fuel price increases

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Logistics and retail companies are struggling with growing costs of fuel, resulting in sharp transportation cost increases.

A new survey by Logistics UK, May 2022 Performance Tracker, shows that 75% of logistics companies are reporting rising costs. Principally, these stem from fuel price increases, with 40% reporting a cost increase of over 25%.

Due to this, 60% of respondents reported that air and international road freight rates were increasing significantly and half said the same for domestic freight.  

Typically, bulk diesel prices account for about 30% of the operation cost of a vehicle. Prices have risen by 35.7%, reaching an average of 129.03 pence per litre in the first quarter of 2022 compared to 2021.

This all comes on top of the rising cost of living, and a dampening demand for goods. Thirty-five percent of respondents reported a decrease in orders, with 12% saying orders had fallen by as much as a quarter.

Freight transport companies with cross-Channel EU contracts have also been hit by Brexit regulations. For small and medium-sized businesses, trade with the EU has all but collapsed, mainly as a result of red tape, new taxes and the need for ‘proof of origin’ regulations.

There has also been a 15% increase in retail business closures in the first quarter of 2022, compared to the same period in 2021, and the number of new retail businesses has also dropped significantly. This is likely to continue as cost-of-living soars.

However, e-commerce is likely to maintain its 26% share of the retail trade, with the parcels sector remaining stable.

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