The transport prices in December 2024 have surged significantly, presenting a challenge for businesses and consumers alike during the festive season. This increase, which many had anticipated due to seasonal trends and inflationary pressures, has been confirmed by the latest TEG Road Transport Index. According to the index, transport prices rose by an impressive 5.7 points, reaching 132.3. This represents a 4.5% increase from November and a 4.17% rise compared to December 2023. The substantial hike in haulage prices, which saw a notable increase of 5.01% to an index of 132.1, marked a staggering 9.99% annual rise, highlighting the harsh economic reality faced by the transport sector. Courier prices, on the other hand, witnessed a 4.08% rise in December to 132.5, although this was accompanied by a slight 0.23% year-on-year decrease.
Seasonal Demand and Inflationary Pressures
The festive season has always been a time of increased demand, which contributes to the rise in transport prices. This year, the high street footfall on Christmas Eve spiked by 31% year-on-year, indicating a significant surge in consumer activity. Such heightened demand naturally drives up transport costs as more goods and services need to be moved to meet festive season requirements. Improved consumer sentiment also played a role, with the GfK Consumer Confidence Index rising by one point and personal finance optimism increasing by two points.
However, the story doesn’t end with seasonal demand alone. Inflationary pressures remain a dominant factor, continually influencing transport costs. As the Consumer Prices Index (CPI) rose to 2.6% in November, it led the Bank of England to maintain its interest rate at 4.75%. This decision reflects ongoing efforts to control runaway inflation, which affects various sectors, including transport. Additionally, fuel prices saw modest increases, continuing the upward trend observed in November. Despite these increases, both diesel and petrol remained cheaper than the previous year, a slight relief in the broader inflationary landscape.
Operational Costs and Policy Changes
Operating costs for hauliers have been on the rise, adding to the challenges faced by the transport sector. According to the Road Haulage Association (RHA), there was a 3.51% increase in overall costs. This rise was driven by higher fuel prices and HGV driver salaries, both crucial components of the transport industry’s operational expenditure. Compounding these factors are policy changes, such as the recently updated National Planning Policy Framework (NPPF), which now recognizes logistics as a critical economic component. This acknowledgment has been praised by Logistics UK, although they continue to call for further action on pressing issues like lorry parking and the development of green infrastructure.
Despite the policy kudos, the costs associated with decarbonizing operations remain a challenge. Electric vehicle (EV) refueling costs, for instance, decreased significantly in 2024, with at-home charging dropping by 15% to 24p per kWh and public charging averaging 78p per kWh. Yet, many hauliers have been slow to transition from diesel and petrol fleets to EVs, underscoring the need for additional support and incentives to make greener operations more viable.
Economic Balancing Act and Future Prospects
Operating costs for hauliers are on the rise, exacerbating challenges in the transport sector. The Road Haulage Association (RHA) noted a 3.51% cost increase, driven mainly by higher fuel prices and HGV driver wages, both pivotal to the industry’s running expenses. Additionally, policy shifts like the updated National Planning Policy Framework (NPPF), which now acknowledges logistics as an essential economic component, add to the complexity. Logistics UK welcomed this recognition but continues to push for action on critical issues such as lorry parking and green infrastructure development.
Despite policy advancements, the costs of decarbonizing operations remain daunting. Although EV refueling became cheaper in 2024—home charging costs fell to 24p per kWh and public charging averaged 78p per kWh—many hauliers have been slow to shift from diesel and petrol to electric fleets. This slow transition highlights the need for more robust support and incentives to make environmentally-friendly practices feasible for hauliers, emphasizing the ongoing struggle to balance cost and sustainability in the industry.
