Logistics UK is calling on the government to freeze fuel duty forever to help the sector make the shift to alternatively fuelled vehicles.

The association is warning that as the haulage sector struggles to overcome the impact of Covid-19 and headwinds such as inflation and driver shortages, any rise in fuel duty would stymie recovery and slow down the industry's shift to alternatively fuelled vehicles.

David Wells, Logistics UK CEO said: "As the logistics industry recovers from the impact of the pandemic on the economy, and with the threat of price inflation on the horizon, every penny counts for our sector, which traditionally runs on extremely narrow margins.

"While our members are committed to switching to cleaner alternative fuels from diesel, the cost of a new alternatively fuelled HGV makes them challenging for many businesses – despite government grants of up to £25,000 – when, at present, businesses must allow for higher operating costs, leaving less spare cash for investment.

Wells said the haulage industry is "fully behind" the switch to alternative fuels but needs help to make the transition. He called on the government to confirm it will not use a rise in fuel duty to make up for the impact of the pandemic on tax revenues.

"This will help our member businesses to allocate more funds to the vehicle replacement cycle, secure in the knowledge that they will not be surprised by unexpected duty hikes in the coming months or years," he added.

Read more

Wells pointed to Logistics UK research which shows that diesel is one of the single biggest running costs for large fleets of HGVs, accounting for more than 30% of HGV’s operating costs.

He warned that with many logistics businesses facing increased costs due to spiralling drivers’ wages, caused by the current skills shortage, finances for businesses recovering from the impact of COVID-19 are very fragile.

He continued: “With margins pared down to a minimum, and inflationary pressure set to bite over the autumn, a guaranteed, permanent freeze on fuel duty would allow our members to recover from the impact of the pandemic and start to focus on how best to make the switch to alternative fuels on the road to Net Zero.”