Chancellor Gordon Brown’s pre-Budget statement was extremely disappointing for the haulage and distribution industry. It was disappointing both for what it did say and what it did not.
The increase in fuel price will hit many hauliers, but was to be expected. While we would have preferred him not to increase them, the Chancellor probably felt if he did not do it now, with oil prices falling, he ever would. So he increased the duty levels.
Worryingly he said that fuel duty should rise “at least” as much as inflation and the implication is that it could rise to raise revenue for the Government. Raising fuel duty by inflation is bad enough, but to raise it more than inflation in future would sound like a return to the fuel escalator.

A BBC2 TV programme last week contained some eye-opening facts and figures on transport costs. "Addicted to cheap shopping" examined how the cost of many consumer goods has actually fallen over the past decade, one factor being transport costs. Looking at the Eleonora Maersk, one of 9 11,000-box super container ships in service or build, Maersk's CEO reported these typical transport costs from China to UK:

Pair of jeans - 20p
DVD player - under £1
Bicycle - £3
Washing machine - £6

He quoted the fact that 95% of a UK household's contents have been in a container, but most revealing was that while a cost of £1,300 to move a box from London to Glasgow, it cost just £500 to bring the same box to the UK from China.

One last fact - those 11,000 containers could carry 165 million mobile phones.

In next weeks Commercial Motor [2 August 2007] used section we profile the Iveco franchise covering South Wales – Dragon Truck and Van.
The company originates from the 1930s but the Dragon name only came about in 1996, when chairman Steve Powell decided to concentrate on vehicle recovery with Dragon Rescue. Previously he’d spent more than 30 years running workshops, garages, service stations, and two car franchises, under the Powell name.
The move to Iveco in 2003 was too good an opportunity to miss and Dragon has improved turnover more than four-fold and matching Iveco’s national marketshare in its region.
With retirement looming Steve is preparing the way for the next generation to take Dragon Truck and Van to the next level, his daughter dealer principal Jaime Powell.

They say the best way to accumulate is to speculate. Imperial Commercials, led by customer demand in Somerset, will open its new tailor-made site at Frome over the next few weeks.
In the next issue of Commercial Motor [2 August 2007] regional director David Lewis explains just some of the ups and downs negotiating with strong-willed property developers and what opportunities are being created with a new state-of-the-art site.
Frome remains a satellite dealership of the main Bristol hub, but it will be the sole Fiat commercial vans franchise, as well as selling new and used Daf Trucks.

British hauliers may find it difficult to get credit for their businesses. This would be another blow for the industry. The problem comes from the US where loans were given to people who could not repay them. Banks are now reluctant to lend money because they don’t know the scale of the losses.
The haulage industry could be affected because it relies heavily on loans and contract hire and leasing. Almost all trucks are acquired using some form of credit. And lenders may stick to lending to only the safest of firms. How many hauliers are in that position? Also interest rates may rates may rise well above the base rate.
The Daily Telegraph reported the The Federation of Small Businesses as saying it would "not be surprised to hear of more business failures" as banks struggle to borrow cheap money due to poor liquidity in the markets” . An FSB spokesman is reported as saying "On a scale of one to 10, with 10 being blind panic, we are at a seven at the moment. It could get worse."
Currently it is difficult to buy a new heavy truck or van because of the long waiting times. Now even if you can find one to buy, it may be more difficult to get credit.
This is the crunch week in the UK. It will probably be a passing problem butit may also be very serious for smaller firms that need capital.

How the crunch is hurting

Rumour has it you will get more money for your truck at auction than through a used dealer. With the strong demand for late-year, used truck dealers have been very proactive to get to hauliers and finance houses ahead of the auctions to ensure their prices are met, stock is secured and margins are maintained.
Passing on price hikes to the operator has not proved popular.
Two auction houses have confirmed this trend and have to work hard themselves to make sure they aren’t squeezed out of the used truck supply chain. If you are a haulier the message is 'shop around' it will pay off.
Many hauliers have even gone down the private sale route to make sure they get the full return…either way it’s a sellers market.
What you replace your fleet with is, of course, another question.

The Clipper Group has bought Iveco and Fiat dealership Stormont Truck and Van. The deal by the Yorkshire-based specialist logistics services company adds the south and Midlands based dealership to Northern Commercials which it bought in December 2005.

The FTA and the RHA met Chancellor Alistair Darling today to try to persuade him to scrap the planned 2p/lit rise in fuel duty due in April.
The message that's come back to CM is that Darling was sympathetic to the problems and understands why hauliers see fuel duty as such an issue.
However sympathy is not going to help the honest operator make ends meet in the face of tough competition from a foreign haulier able to cut prices because their fuel bill isn't so big.
The government's budget is clearly already allocated and it will be a tough call to make, but there is no reason why operators that are working hard to make a living and keep this country moving should subsidise inefficiencies in the health service or in education or anywhere else for that matter. It wouldn't be so bad if there was evidence that the cash was being invested in the transport infrastructure in the UK, but this isn't happening either.
So come on, be the Darling of the road haulage industry and make the decision that could be the difference between making ends meet and going to the wall for many operators.