Anyone in the HGV industry will know that one of their biggest overheads is fuel costs. Recent global events, energy instability and economic shifts have caused unprecedented surges in fuel prices, which has sent shockwaves throughout the haulage sector.
The knock-on effects of squeezed profit margins, rising delivery costs, and ongoing staffing concerns have impacted every part of the logistics industry as well as the wider economy.
In this article, FleetEx discuss how these fuel price hikes are affecting HGV operators, what is driving the cost increases, and what solutions businesses can explore to help mitigate the impact.
The largest industry expense
Currently, fuel accounts for 30–40% of an HGV operator’s total operating costs. This means that when prices rise, profit margins can shrink dramatically, especially for small and mid-sized HGV companies that lack the buying power or fuel hedging strategies of larger organisations.
Many haulage firms are also locked into delivery contracts and pricing models that were set before the latest round of price hikes, which makes it more difficult to pass these costs on to customers.
At this point, even large-scale fleet operators are starting to feel the squeeze, with price volatility making long-term forecasting and budgeting more complex than ever before. The Road Haulage Association reports that some firms are spending tens of thousands more per month on fuel compared with previous years. This means that any significant increase in diesel cost can lead to immediate financial strain across the board.
Record highs for diesel prices
Diesel prices in the UK have remained persistently high due to a combination of post-pandemic demand rebound and reduced refining capacities. There has also been significant global supply chain disruption and ongoing geopolitical tensions, such as the war in Ukraine.
This has meant that average pump prices for diesel have exceeded £1.70 per litre in some regions, putting immense pressure on the cost of operating HGVs. Trucks can easily use 8–10 mpg, which means rising costs will add hundreds or even thousands of pounds per vehicle every month. In addition to this, fuel duty and VAT have compounded the problem, despite a freeze in fuel duty in the 2024 Spring Budget.
It is important to remember that rising fuel prices are no longer just a blip, but an ongoing challenge with no immediate return to pre-crisis levels expected any time soon.
Supply chain knock-on effects
Fuel costs impact every industry that relies on road freight – from supermarkets and retailers to construction and manufacturing – and not just the hauliers themselves. This means that as transport costs rise, businesses must either absorb the cost and cut into their own profits or pass the increase on to consumers, leading to growing inflation. They may also reduce their orders or services, which will then impact supply.
Fuel inflation is therefore a key contributor to the rising cost of living in the UK. With the HGV sector also facing significant driver shortages, high insurance premiums, and increasing vehicle costs, the rise in fuel prices adds pressure to what was already a fragile system. As a result, some small logistics businesses have left the market altogether as they have been unable to stay afloat due to higher costs and inflexible contracts.
The cost of sustainability
The rise in fuel prices has helped renew focus on eco-friendly alternatives such as electric HGVs, hydrogen fuel cells, biofuels and synthetic fuels. However, adoption of these methods remains limited due to high upfront costs and limited infrastructure. There are also significant performance concerns for anyone offering long-distance haulage.
Several companies are investing in aerodynamic upgrades, driver behaviour tracking and route optimisation software to help reduce fuel consumption, therefore cutting costs and improving environmental impact at the same time. They are also consolidating loads and exploring better scheduling to improve efficiency – but this has its limitations.
There is no doubt that sustainable transport will be an essential part of the long-term future of logistics, but for now it is not yet possible to fully offset the immediate challenges that fuel inflation has created.
The haulage response
HGV firms have been forced to take action to remain competitive and operational. This has led to many negotiating fuel surcharges into contracts and introducing fuel levies wherever possible for B2B services. They are now reassessing traditional routes and delivery schedules to minimise mileage and upgrading fleet vehicles to create better fuel economy.
It has also proved worthwhile to invest in driver training, which can encourage more fuel-efficient driving behaviours, and to switch to telematics systems for real-time fuel usage tracking. Some have joined buying groups or fuel card programmes to access bulk discounts that would not otherwise be possible.
These are all useful strategies, but many still require significant levels of investment – which many smaller businesses cannot afford. This shows there is no quick fix to the fuel cost problem, and only gradual adaptation through cost-control technology and smarter planning can provide a solution.
Government impact
There have been many calls for the government to reduce fuel duty further and provide targeted support for small haulage firms. There is also a need for incentives to help HGV companies switch to greener vehicles that might otherwise be out of reach.
Currently, government strategy is focusing on broader decarbonisation goals and is offering short-term, limited relief for hauliers affected by the fuel spike. This is why a balanced approach is needed – one that supports businesses through current volatility while still encouraging long-term innovation and sustainability.
The impact of rising fuel costs has been severe and far-reaching for the HGV industry. And while technology, training and sustainability offer long-term solutions, it is important to recognise the urgent need for short-term cost control and policy support for the road freight industry to survive.
