Anyone who thought that the world might be an easier place to live (or survive) in 2024, given the difficult years that had preceded it, was to be disappointed as the year went on. Battles still raged between Ukraine and Russian forces, while the Middle East showed no signs of achieving – or even wanting – peace. Closer to home, while Covid remained, it was less of a concern and there were breakthroughs with unions to bring an end to the industrial action that had plagued the country for too long.
A change of government brought positivity and relief for many UK residents, but it was not long before Sir Keir Starmer’s honeymoon was deemed over, after divisive policy decisions and a budget that seemed to create more problems than it solved.
After gross domestic product (GDP) dropped to -0.3% in Q4 2023, there was a sharp recovery in Q1 2024 to 0.7% – the highest figure since the corresponding quarter two years earlier. While there were further drops in Q2 and Q3 (0.5% and 0.1%, respectively), there were optimistic predictions for GDP in 2025 and beyond.
After 2023’s best first quarter since the pandemic, there was a 3.9% fall in truck registrations (11,068) for the corresponding period in 2024. Rigids were up 8.4% in Q1, but registrations for artics plummeted by 16.5%. There was better news by Q2, as the market achieved year-on-year growth of 2.6% and 11,469 registrations.
However, it then felt like the sector was back to square one by Q3, with a 6.0% reverse on Q3 2023 and just 10,839 units registered. Again, rigids performed better than artics – the former was up 6.0%, but the latter dropped 20.4%. Last year’s version of this report suggested “hope and expectation for the good times to continue” through 2024, but that did not really materialise. Total vehicle numbers for 2024 to the end of Q3 were, at 33,376 registrations, 2.5% down on the equivalent timescale in 2023.
Total goods vehicle numbers in the UK’s vehicle parc dropped in the 2023-24 period from 2022-23 (down 5,763 to 373,318). There was also a fall in the number of O licences to 66,821 from 69,022 (down 2,201).
One glimmer of hope for operators is that, compared with previous years (2023: 9.21%; 2022: 11.6%), the rate that costs increased last year is much reduced. RHA’s annual survey of cost movements (Haulage Cost Movement 2024), which informs this text, calculates the overall percentage increase for 2024 was 5.95% (3.51% including fuel). Logistics UK has supplied tables in this article; for its commentary, see p24.
ECONOMIC BACKDROP
The peak inflation rates of late 2022 and early 2023 were long forgotten in 2024, as January started off at 4% and, by April, the rate had fallen to 2.3%, before further drops to 2% in May and June. Slight rises then came before September’s rate of 1.7%, which was the first time it had been below the Bank of England’s target in over three years.
Unemployment rates in the UK in 2024 were mixed. Leaving 2023 at 3.8%, there was a rise to 4.0% in January and then a steady increase to 4.4% by April. There was then a drop over the summer months, the rate getting back down to 4.0% in August, before heading back up to 4.3% in September.
Maintaining the ability to predict the fortunes of interest rates, our January 2024 report’s statement that the rate of 5.25% ‘will remain in place until mid-2024, before dropping to 4.75% by the end of the year’ was largely correct. August saw a reduction in rates from 5.25% to 5%, before the Bank of England made a further cut in November, to 4.75%. At the time of going to press, the OECD has stated that rates could be higher for longer through 2025, due to the budget, with a fall to 3.5% by early 2026.
TYRES
Beyond the ever-increasing prices for tyres, other cost-related problems have become more prominent for operators over the past year. One of the hurdles is delayed call-outs for roadside encounters, due to a general shortage of tyre technicians across the country.
This deficit is part of the wider skills shortage across the industry, something that many transport organisations, including the IRTE, will be working hard to address throughout 2025. The cost of natural rubber, which is increasing by 24%, does not help the situation.
FUEL
Thankfully, the cost of diesel reduced in 2024. The first RHA fuel survey report of the year gave an average price for bulk/bunkered diesel at 113.30ppl ex-VAT and by August it reached a 2024-low of 103.58ppl. The average, though, from January to end of September and the figure used in the RHA’s costs consideration was 113.46ppl compared to 117.67ppl last year – so a reduction of 3.58%.
In that time, Brent ranged from $71 to $91 per barrel and averaged around $80.70 for the year to 19 November 2024. In a nutshell, poor economic scenarios around the globe – in particular, China – caused the downward force and to the opposite effect was the ongoing Israeli/Palestinian/Iranian conflict.
DIESEL EXHAUST FLUID (DEF)
Another bit of positive pricing news has come from AdBlue, the cost of which has fallen again over 2024. The RHA has used its 1,000-litre IBC price of 47.5ppl compared to the previous year at 56.5ppl: over a distance of 75,000 miles, this means the total AdBlue costs dropped from £1,409 to £1,185 based on 6% of fuel used.
VEHICLE AND DEPRECIATION
Leasing remains popular with larger companies, but smaller operators typically use purchase arrangements to acquire their trucks. The only exceptions are if they are short-term rentals to cover ad-hoc work or trialling net-zero vehicles such as an electric 18-tonner.
New vehicle costs have increased partly due to the new General Safety Regulations (EU) (GSR) – and DVS requirements for those operating in London. For trucks already on the road, these regulations have affected R&M budgets, too. The GSR requirement (from July 2024) is a road safety directive that means new registrations must comply in the EU and have eight safety features included – and this, we are advised, will add around £3,500 per vehicle. The Department for Transport delayed this matter and has still not agreed to the EU standard despite the UK previously being at the fore when it comes to vehicle safety in general.
The number of transport companies sliding into administration has resulted in considerable numbers of second-hand trailers appearing on the market. This scenario has affected used values and means that the rental fleets are likely to get less for their assets when disposal times come around. It may also mean that hauliers may be more inclined to buy used rather than rent, lease, or buy new if they can pick up a bargain.
INSURANCE
There was another rise in the overall cost of insurance according to RHA members in 2024 – this year being 7.9%, compared with 7% in 2023. There were reports of ‘extraordinary’ insurance premiums in the aftermath of a big claim or a series of too many smaller claims mounting up to a poor rating.
In the first half of the year, the Association of British Insurers appears to have campaigned for an immediate drop in the Insurance Premium Tax (IPT) rate (currently 12%) as insurance costs rose. This tax, of course, brings the Exchequer a lot of cash – it is estimated that IPT receipts will surpass £8bn this tax year, with current receipts up 10% versus the previous financial year.
REPAIRS AND MAINTENANCE
The start of 2024 brought very large increases to R&M pricing specifically for older vehicles that were then out of warranty, but often for newer trucks, too. Examples given ranged from 11.7% on monthly R&M packages to a 23% increase in costs for inspections, MOT, and laden brake testing. Due to the high added costs in recent years, RHA members confirmed they are extending the life of their equipment, but this also comes at a cost.
Meanwhile the ongoing technician shortage continues to be a major concern, with the government being lobbied from different areas to try and bring about change in the way training is offered and financially covered.
VED AND LEVY
Last year saw campaigns against the reintroduction of the HGV Levy, which was reintroduced in August 2023 for HGVs over 12,000kg operating on a motorway or A roads. However, it was all in vain because, in the autumn budget, the chancellor announced that the government would uprate the HGV VED rates in line with RPI from 1 April 2025. The government will also uprate the HGV Levy in line with RPI from the same date, putting further cost pressures onto vehicle operators at a time when the industry is facing a range of other rising costs.
OVERHEAD COSTS
The proposed changes to business rates to introduce a higher multiplier for the most valuable properties could unfairly penalise logistics businesses who operate large warehouses. These premises often require a larger footprint, but offer a relatively low return on land values. RHA believes that operators need a rates system that supports growth and incentivises success by not punishing those who are seeking to move to larger premises or operate in high-cost areas.
DRIVER EMPLOYMENT COSTS
RHA members explained that, on average, their driver employment cost had increased by 5%, which does not translate to a pay rise, it is the cost of covering. Just under 37% of RHA members, when surveyed, advised that driver availability was a major factor to them.
In RHA’s autumn briefings, the traffic commissioners reminded operators that they need to be careful on how they employ drivers. Drivers are still routinely getting their tachograph information wrong; their concern is that if this is not monitored then what else does not get suitable attention.
The national living wage for 2025 (representing a 6.5% rise from £11.44 to £12.21 an hour from April 2025) was announced just prior to the budget and is, in some cases, a painful addition where some staff are concerned. The rate is still used by some for truck drivers, but it also affects the rates of others.
THE FUTURE
Yet again, in a scenario that seems familiar to every year since 2020, trying to predict what the future might hold is a very difficult exercise. One of the most recent assessments – courtesy of the Organisation for Economic Co-operation and Development (OECD) – is that interest rates will fall slower than expected, partly due to chancellor Rachel Reeves’ budget. After an initial boost to the economy, changes to tax and spending would result in the cost of borrowing taking longer to come down. The OECD predicted growth of 1.7% in 2025 (up from the previous prediction of 1.2%) and 1.3% in 2026.
Rising costs of elements such as insurance, tyres and drivers – not to mention the actual vehicles themselves – mean this predicted growth will be too little to reassure operators, who are continually seeing margins squeezed. The previously mentioned additional costs, such as the HGV Levy and GSR-related additions, will also be a concern. Then there is the transition to EVs, which has slowed and is showing signs of stalling in the wider passenger car market. There is no debate that the nation will eventually move across to battery-driven fleets, but as for when that will definitely take place, the jury is still out.
The costs of fuel and oil – as we have seen throughout this year and others – is likely to remain volatile, especially given ongoing tensions in Russia and its obsession with Ukraine and, quite possibly, other countries in the region. Whether the promises of president-elect Trump to end that conflict – and others around the world – come to fruition, remain to be seen.
BOX: THE VIEW FROM LOGISTICS UK
The logistics sector in 2024 navigated falling fuel costs, rising operational expenses, labour shortages in specialised roles and supply chain challenges, emphasising the need for efficiency, innovation and workforce development to maintain resilience.
In Q3 2024, Brent crude prices fell 10% year-on-year to $77 per barrel, reflecting weak demand from China, evolving OPEC strategies and disruptions caused by Hurricane Francine in the Gulf of Mexico. Despite escalating Middle East tensions adding volatility, the decline in oil prices brought a welcome reprieve for logistics operators.
Diesel costs – a cornerstone of logistics expenses – dropped by 19.9% in the year leading to October 2024, according to Logistics UK’s Manager’s Guide to Distribution Costs (MGDC). This sharp decline in diesel prices, influenced by increased global oil supply, renewable energy investments and surging electric vehicle adoption, has substantially reduced total vehicle operating costs.
There are continuing challenges in filling vacancies for certain roles within the logistics sector, particularly for mechanics and technicians, where 51.7% of respondents to Logistics UK’s quarterly survey reported severe to very severe problems. HGV drivers also continue to face recruitment difficulties, with one-fifth of respondents experiencing severe issues with filling vacancies, although total HGV driver employment rose by 20.9% between Q3 2023 and Q3 2024 meaning there is not an acute shortage of HGV drivers at present. In contrast to drivers, roles such as forklift drivers and van drivers are easier to fill, with 47.3% and 38.9% reporting no problems, respectively.
Operators predict road congestion, delivery times and cost-of-living pressures will create the most significant headwinds in the coming months. Vehicle maintenance staff shortages and supply chain disruptions from China and the EU are also pressing concerns.
These trends highlight the growing importance of cost-efficient technologies and a skilled workforce. Investments in automation, electric vehicles and workforce training are no longer optional but essential strategies for navigating this evolving landscape.
Sarah Watkins, Deputy director of policy information
