As part of a recent survey, businesses from across Right Fuel Card’s SME customer base were questioned to understand more about their confidence and plans for the next 12 months.
Whilst confidence across all industries is low, businesses in the haulage and transport industry were highly pessimistic about the next 12 months and an overwhelming 97% had no plans to move to EV despite the growing shift to sustainable fuels.
Cost and capacity challenges across the haulage and transport industry
Less than 1 in 5 haulage and transport firms feel positive about the next 12 months. This is unsurprising given the record-breaking increases in fuel prices (which is often the largest cost driver), driver shortages and huge fluctuations in demand driven by COVID-19 which has powered uncertainty across the sector.
Although fuel prices are starting to fall slowly after an all-time high, most transport businesses have seen a need to pass these on to customers, which has led to increased competition and uncertainty as customers shop around to get the best price or reduce activity themselves.
Outside of fuel, businesses have also seen the cost of commercial vehicles and trailers has increased substantially over the last year, increasing financial strain. The ability to purchase these new vehicles is also an ongoing challenge for those in the haulage and transport industry due to the global supply chain shortages. This makes it harder for businesses to expand and modernise their fleets.
In addition, over the last few years, the haulage and transport industry has been struggling with HGV driver shortages which is increasing the pressure on supply chains.
Although these shortages have subsided in recent months, the challenge of finding qualified HGV drivers still exists for many businesses. Whilst there is a push to get more qualified drivers, those exam hopefuls are currently waiting several weeks to get a test slot, so not obtaining their CPC qualification as quickly as the industry needs.
Another significant challenge for this industry is the introduction of clean air zones which have specific HGV regulations. These restrictions are increasing costs for fleets as many HGVs don’t meet the low-emission requirements due to the fact they’re more often large, diesel vehicles. These clean air zones have now been set up in several major cities across the UK, making it difficult for hauliers to avoid them.
The mounting costs from travelling through these zones are adding pressure on fleets to invest in new vehicles which meet the Euro 6 emissions standards as these produce 80% less harmful exhaust emissions than their predecessors. Smaller businesses that are running on a budget and so may not be able to invest in new fleet vehicles will likely be struggling with these challenges the most and have to make a commercial decision as to whether it is worth accepting jobs which enter clean air zones.
No interest in adopting EV technology
With the upcoming ban on the sale of new vehicles using fossil fuels under 26tn by 2035 and over 26tn by 2040, plus the positive reputation impact of being seen as sustainable, we had expected a small, but significant, proportion of customers to be considering a switch to EV in the near future. However, when surveyed, 97% of customers in the haulage and transport industry stated that they had no plans to move to EV in the next 12 months.
When properly considered, this response is not actually that surprising given the number of barriers holding businesses back from making the switch.
- High purchase cost. As a result of the current cost of living crisis, many businesses that are already under financial strain do not have the means to invest in new vehicles using sustainable fuels.
- Lack of availability. Although the range of vans is increasing, electric HGVs are still inaccessible to most businesses due to the limited number of models on the market. Production times are also significant with some models having an 18-month lead time. Given how much uncertainty there is in the economy, smaller businesses may not be willing to take a punt on planning this far ahead.
- Risks for temperature-controlled vehicles. Currently, many temperature-controlled vehicles use a diesel-powered fridge, meaning that a vehicle engine failure will not impact the cargo. A move to EV needs special consideration to ensure the trailer and engine retain the ability to operate independently so that an electric engine failure will not impact the temperature control.
- Inadequate charging infrastructure. The EV charging infrastructure is growing, enabling a high proportion of consumers to make the switch. However, the current infrastructure is not suited to many larger commercial vehicles meaning businesses cannot rely on it for longer journeys.
Private charging facilities are an option for businesses with multiple depots across the country, or those who are willing to share with other businesses but, again, high initial investment is required. Plus, for those with smaller, driver-maintained van fleets, businesses may find that many drivers do not have access to a driveway or garage where they can recharge their EV and so will be reliant on public charging points. - Slow charging times. As well as encountering ‘range anxiety', particularly when travelling through rural areas, businesses also need to consider the length of time it takes to recharge a vehicle. Drivers in the haulage and transport industry are constantly on the road and often have deliveries that are time-sensitive, so are not able to regularly stop to recharge.
The driving range of electric vehicles is considerably less than its diesel counterparts which is more challenging for when long-distance journeys are needed. Slower charging times can also increase the necessity of overnight stays and limit the number of journeys that drivers can make increasing costs further.
Although it’s cheaper to charge an EV than pay for fuel, it would likely still cost businesses more overall in the short term at a time when most businesses are looking to control costs more tightly. Wider financial support will be required to help many businesses switch.
However, Nikki Redhead, Managing Director of Keep It Cool Ltd argues that “The Government is not providing enough support to achieve this 2035 goal; they are relying on industry to do the research and develop the infrastructure and right now achieving this goal across the industry seems a very tall order.” This certainly seems to be the case as a number of oil companies including Shell, BP and Certas have announced independent developments across Electric, Hydrogen and HVO (Hydrotreated Vegetable Oil) fuel.
Ultimately, for haulage and transport businesses keen to move to sustainable fuels as soon as possible, significant investment will be needed in both new vehicles and infrastructure alongside an understanding that “as soon as possible” may still be a minimum of 18 months into the future.
For those with no urgency, it may prove beneficial to sit tight in the short term. Whilst a ban on petrol and diesel engines is on the horizon, this is for new vehicles only. Small businesses will therefore have more time to get full value out of their current fleets and more time to plan an efficient switch to an alternative fuel.
Right Fuel Card can help businesses in the haulage and transport industry with our range of fuel cards. With these cards, businesses can save time and money and can easily track their fuel expenditure through our online account management system. If you’d like to discuss your fuel card options, contact our team at 0113 202 5110, or alternatively, you can explore our range of fuel cards..
Notes: The survey was conducted June 2022, receiving 1156 responses.
