Truck operating costs in the UK rose by up to 4.7% in the past year, with rising fuel prices and Brexit uncertainties cited as key factors.
These are the headline conclusions of the latest annual analysis of truck operating costs by our sister title Commercial Vehicle Engineer.
Seeking to establish what impact the 2016 EU referendum result has had on supply chain costs, the Chartered Institute of Procurement and Supply (CIPS) surveyed more than 1,100 supply chain managers across the UK and continental Europe.
Costly Brexit preparations affecting businesses
The research claims 64% of UK businesses have been hit by extra supply chain costs as a result of sterling’s weakening since the referendum. About 25% of UK businesses with more than 250 employees have spent at least £100,000 in Brexit-related preparations.
Against that backdrop, it’s surprising that the year-on-year cost increases are not greater. UK inflation for 2018 was 3.2% for RPI (Retail Price Index) and 2.2% for CPI (Consumer Price Index).
Commercial Vehicle Engineer calculated that truck operating costs in the UK rose by between 3.8% (a two-axle rigid at 7.5 tonnes GVW with a dry-freight box body) and 4.7% (a two-axle tractive unit operating at 38 tonnes GCW) last year.
Trailer operating costs generally less affected
Trailer costs generally rose less, mainly because they were unaffected by a sharp rise in the cost of diesel. Our figures show increases from 3.5% for a tandem-axle box-van semi-trailer to 3.6% for a tri-axle step frame with lifting deck.
The exception in the trailer table is the tri-axle with controlled-temperature bodywork. In this case, operating costs shot up by more than 5% as a result of the spiralling cost of red diesel used to fuel refrigeration equipment.
The cost of red diesel rose by more than 15% last year, according to the Agriculture and Horticulture Development Board (AHDB). Pump prices for undyed (normal) diesel also rose by 8%.
Attention to detail adds up
How have truck fleets managed to contain operating cost rises in the face of such challenges? There are many answers to that question. One that cropped up repeatedly in our research was attention to detail in specifying new trucks, trailers and bodywork. Others related to a plethora of fuel-saving measures.
In our cost tables 12 months ago, AdBlue and bulk diesel prices were 26p and 98.8p per litre respectively. These figures increased in this year’s tables to 30p and 105.7p.
Last year, we highlighted how truck-related insurance premiums were rising steeply for a host of reasons. One notable factor was the high cost of repairing minor damage when costly sensors and other driver assistance systems were involved.
But there is another side to this coin, illustrated by the experience of Liam Quinn, a North Yorkshire haulier. Quinn put a new Mercedes-Benz Actros tractor into service at the end of 2017 and negotiated a 5% (£700) reduction in the truck’s insurance with NFU Mutual, purely because he specified the optional “safety pack”.
There have also been steep increases in energy prices, according to the Department for Business, Energy and Industrial Strategy (BEIS). Average electricity prices in the “non-domestic sector” rose by more than 9% between Q3 2017 and Q3 2018.
Non-domestic gas prices rose by 16% over the same period, while Climate Change Levy rates also increased.
For a complete analysis of truck operating costs for 2019, download the January 2019 issue of Commercial Vehicle Engineer magazine.