The Chancellor must reduce fuel duty immediately to protect essential services to the UK economy, the Association of Pallet Networks (APN) said this week.
The APN joined the Road Haulage Association today (16 March) in calling on Chancellor of the Exchequer Rachel Reeves to support the transport and logistics sector by immediately cutting fuel duty, ditching its plans to increase fuel duty on 1 September this year; and abandoning the inflation-linked increases scheduled from April 2027.
The association is also demanding the implementation of a temporary reduction in VAT on fuel and mandatory 30-day payment terms for UK haulage businesses.
The APN said these measures will help to stabilise an essential but vulnerable sector facing huge fuel cost increases due to the Middle East conflict.
According to the Institute for Fiscal Studies, oil prices have risen by 35% due to the Middle East conflict. The subsequent impact on diesel prices has added thousands to hauliers’ weekly costs.
Fuel is an unavoidable expense, which comprises a large percentage of daily operating costs, the APN argued, adding that haulage firms are also vulnerable to customer default, customer insolvency, and delayed payment terms, all of which compromise cash flow.
The sector has seen record insolvencies in the past three years, APN said, pointing to government data which shows that approximately 1,400 UK haulage businesses have gone into insolvency since 2023.
The association also noted that whilst road transport provides 81% of all UK freight movement, including 98% of food, agricultural and consumer products, operators work on average margins of less than 2%.
Paul Sanders, APN chairman, said: “Our pallet network members operate on small margins. Increased fuel costs threaten their businesses, which in turn threatens the supply chains underpinning our entire goods-based economy.
“We’re asking the Chancellor to urgently address the current surge in fuel prices which is pushing many haulage companies to the brink of collapse.”
He emphasised that the hundreds of hauliers which make up the UK pallet network sector are also significant regional employers, spread across the entirety of the UK.
“Not only are these businesses at the heart of the economy and the heart of their communities, but the shared-platform service they provide also lowers consumer costs and UK carbon emissions. These businesses need the support of their government.”
