Due to an increase in the price of crude oil, the already-rising price of fuel in the UK has risen exponentially and is effecting the UK Haulage industry.
In the 2022 Spring Statement given by the government in March, a 5 pence-per-litre cut in fuel duty tax was established to ease the burden for UK motorists; an amount many have argued to be insufficient.
According to government estimates, the period between October 2020 and September 2021 showed a decrease in car and taxi traffic by 1.7%, while van and lorry traffic, such as container haulage vehicles, rose by 7.3% and 8.9%. Respectively, this is likely the result of an increase in both demand for delivery services and remote working precipitated by the initial nationwide lockdowns.
For those returning to offices, shops and other places of work outside the home, the new fuel tax cuts have done little to alleviate the cost of living crisis, including the fuel needed to keep motorists moving.
For those in the UK haulage and logistics industry already facing disruption from both Brexit and COVID, the cuts create additional problems along the supply chain for everyone, from haulage subcontractors to the customers awaiting deliveries.
The 5 pence-per-litre cut has already been met with criticism by the RAC who, amongst the 13 other countries in their comparison table, noted that Germany had reduced their fuel costs by 25pence per litre, Italy by 21p, Portugal by 16p, Ireland and the Netherlands by 15p.
They also noted that prior to the cuts, all but six EU countries were already charging less in fuel tax than the UK (even after the 5 pence cut), leaving the country near the bottom of the table. Although the UK cuts are intended to support drivers, many feel there is ample room for improvement.
According to Kate Jennings, (Policy Director for Logistics UK), the continuing level of inflation is placing “unprecedented pressure” on UK logistics operators, who were already paying duty at 63.5% higher than the EU average.
Earlier in 2022, the CMA (Competition and Markets Authority) also found that while customers were benefiting from the 5 pence cut, further investigations would be made into petrol and diesel pricing following concerns over sharply rising fuel prices (specifically following processing at oil refineries).
Logistics UK estimates a cut in Fuel Duty of 6 pence-per-litre would save the industry on average £2,424 per year per 44-tonne truck. There is already an official petition to the UK government being made, calling on them to lower the tax rate on fuel and VAT for a period of two years.
At Transmode, we understand that the cost of living and the rising fuel cost is putting pressure across all industries. Even with the fuel tax cut, it’s a difficult time for most.
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