Logistics companies struggle with continued rising costs
A members survey by freight trade association, Logistics UK, found that 40% of respondents had experienced transport costs rising by 25% or more and with margins typically very low, particularly for road freight, many will not be able to absorb these increased costs.
In the survey 71% reported an escalation in the cost of transporting goods during Q1 2022, with sharp increases in the cost of fuel and other global supply chain pressures with 40% reporting increased costs of 25% or more.
Surging costs are feeding through to freight rates, with more than six in ten respondents saying both air and international road freight rates had increased substantially and 50% confirming freight rates for transporting goods by sea, domestic roads and rail had increased substantially. As if you didn’t know…….
Bulk diesel prices, which constitute about 30% of the cost to operate a vehicle, have risen by 35.7% compared with Q1 2021, with the cost to transport goods and the broader cost of living squeeze beginning to impact demand for goods.
The cost to transport goods is surging at an unprecedented rate amid significant increases in the cost of fuel and the sheer number of companies reporting increases in freight rates and the costs to move goods suggests rising prices are deeply embedded and unlikely to subside in the short-term. 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 indicator for the broader economy and the survey reveals worrying signs, with more than a third of respondents saying orders are declining, likely as a result of rising costs and consumers cutting back amid a broader cost of living squeeze.
With COVID-19, Brexit, new technology and other disruptive forces driving change in the way goods move across borders and through the supply chain, logistics has never been more important.
Logistics UK represents the freight and logistics industry, with members from the road, rail, sea and air industries, as well as the buyers of freight services such as retailers and manufacturers whose businesses depend on the efficient movement of goods.
YOU CAN USE THIS LINK TO VIEW THE ORIGINAL SURVEY REPORT ON THE LOGISTICS UK WEB SITE
We work tirelessly to keep our operating costs low and to protect our customers from price rises, as much as possible.
From accessing alternative solutions, like our group shipping line (Ellerman City Lines), to leveraging our considerable group buying power in negotiating volume and price contracts with leading air and ocean carriers, our focus is always on deals that deliver the best service at optimum pricing.
Our long-standing investment in technology and innovation is driven in large-part by developing applications and processes that simplify and automate activity, that frees up resources and drives down cost.
Many of these initiatives are supported by our Business Process Outsource operations in Malaysia and India, where our experienced personnel are highly skilled at executing complex data input projects and completing global compliance and regulatory declarations.
If you would like to review your processes and explore your cost-cutting opportunities, talk with Elliot Carlile, who will take you through the options.