TEG Index Update: Do falling UK road freight prices signal easing of the HGV driver shortage?
Do falling UK road freight prices signal easing of the HGV driver shortage?
New industry data reveals that haulage price-per-mile index fell below courier figures for the first time in 11 months, but industry costs remain high.
As the haulage capacity crunch shows signs of subsiding, the TEG Road Transport Price Index for haulage vehicles has fallen below the courier vehicles index for the first time since March 2021. This suggests that HGV drivers are slightly less in demand than in previous months, with a surge in driving tests meaning more drivers on the road.
The combined index (for both haulage and courier vehicles) supports this trend, dropping 6.7 points since January and following the same pattern as in previous years.
However, the index is still at its highest mark for February since TEG records began in 2019, up 11.4 points against February 2021. Comparing just the haulage index year-on-year, the difference is even more stark: this February’s index is some 14 points higher than it was in February 2021.
Clearly then, industry costs are still extremely high, particularly when record inflation and fuel prices are taken into consideration.
Is the haulage capacity crunch over?
Supply chain issues and dry fuel pumps last year forced the government into action on the haulage capacity crisis. The wide-ranging government response to the crisis – including driver bootcamps and relaxed rules on testing – has certainly helped to improve the situation somewhat.
The lifting of Covid-19 restrictions has also meant fewer driver absences because of Covid-19 self-isolation, and made it possible to process more licence applications and tests.
More than 30,000 drivers entered or reentered the industry during the third quarter of 2021. Women are also being encouraged to take up driving positions, with better pay packages and conditions now on offer.
More work to do
Last month, executive director of the Road Haulage Association (RHA), Rod McKenzie, warned that there was still a 85,000 shortfall in drivers.
The RHA recently issued a Spring Statement to the Chancellor, detailing further actions it deems necessary for the health of the industry. These include maintaining the fuel duty freeze for another two years, investing in overnight facilities for drivers and greater flexibility on how training budgets can be used.
And prospective drivers will also need to be reassured that Brexit bureaucracy will not cause them long delays, loss of income and even mental health issues. Lengthy queues of lorries on the way to Dover recently attracted widespread media coverage and McKenzie told drivers to expect regular delays of three to four hours.
Lyall Cresswell, CEO of Transport Exchange Group, says:
“As we all know, inflation and fuel prices are higher than they’ve ever been – and events in Ukraine and global instability will only add to that. But the haulage index falling behind the courier index is certainly a positive sign in terms of the HGV driver crisis.
“Yes there’s plenty more that can be done, as the RHA have rightly pointed out, but the important thing is that the will to act is there and previous government measures seem to be having an impact.”
Kirsten Tisdale, director of logistics consultants Aricia Limited and Fellow of the Chartered Institute of Logistics & Transport, says:
“Despite fuel prices and various other indicators going up in February, the TEG Road Transport Price Index went down – the movement of the TEG index wasn’t wholly unexpected as that’s what it has done in the past three years. However, although the TEG index is still at a completely different level to previous years, the rate of decrease at the start of 2022 is sharper than it has been in other years. Let’s hope this is a good omen for inflation generally!”