Costs blow out in UK

News Story
- 19 May 2022 ( #1077 ) - London, United Kingdom
2 min read
Logistics faces cost rises
Logistics faces cost rises

The vast majority of UK logistics companies (71%) reported an escalation in the cost of transporting goods during Q1 2022 compared to the same period a year ago amid sharp increases in the cost of fuel and other global supply chain pressures. 

Logistics UK’s May 2022 Performance Tracker found 40% of respondents said that costs had climbed by 25% or more.

Surging costs are feeding through to freight rates - the price charged to move goods, particularly cargo transported by air and by road to markets outside the UK. More than six in 10 respondents said both air and international road freight rates had increased substantially. Meanwhile, at least half of respondents said freight rates for transporting goods by sea, domestic roads and rail had increased substantially.

Bulk diesel prices, which constitute about 30% of the cost to operate a vehicle, have risen by 35.7% in Q1 2022 when compared with Q1 2021.

The results suggest that the cost to transport goods and the broader cost of living squeeze are beginning to impact demand for goods. Some 35% of respondents reported a decrease in orders, while 12% said orders had fallen by at least a quarter.

Sarah Watkins, deputy director – policy information at Logistics UK, comments: “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 the 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.”

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