News

Road haulage in the UK is a highly competitive and fragmented industry comprising a range of operators including haulage chains, independents and hauliers specialising in a specific type of goods, such as food or waste products.

While the road haulage industry has recorded growth over the last five years, driver shortages, rising fuel prices and the transition to net zero are significant challenges. Growing demand for road haulage across the wider UK economy has intensified the impact of HGV driver shortages and is holding back growth in the industry.

Industry snapshot

• Industry revenues forecast to grow by 0.5% per year from 2023 to 2027.
• Road haulage accounted for 85% of all domestic freight in 2022, up 7% since 2017.
• 10% fall in number of HGV drivers between 2019 and 2022.
• 17.5% fall in number of licensed HGVs between 2017 and 2022.

Sustainable operations

Rising fuel prices and stricter net zero emissions targets are accelerating the transition to electric vehicles in the road haulage industry. Demand for mixed fuel and gas-powered HGVs is also expected to increase. In addition, around 84% of hauliers believe decarbonising their operations is a high priority and 61% plan to increase investment in sustainability measures.

Freight prices

Road freight prices are expected to continue to increase in 2023 due to growing demand, rising inflation and higher fuel prices. The average price-per-mile for haulage vehicles reached its highest level for three years in 2022. More hauliers are being forced to pay higher wages and bonuses to attract and retain drivers, which is also contributing to high road freight prices.

Post-Brexit haulage

Industry experts have warned that new rules for transporting goods to Europe will lead to higher costs and bureaucracy, particularly for smaller operators. Since May 2022, anyone operating a light goods vehicle and/or trailer between 2.5 and 3.5 tonnes requires a goods vehicle operator’s licence to transport goods to, through or within the EU. Hauliers must also have a transport manager in place.

E-commerce demand

More hauliers are reviewing their operating models to capitalise on increasing demand from retailers due to the growth of e-commerce. Hauliers are working with their supply chains and retailers to develop specialised services that meet changing consumer demands. For example, consumers increasingly expect quick delivery times and precise delivery windows.

Driver shortages

The House of Commons Transport Committee has outlined recommendations to boost capacity in the road haulage industry and tackle driver shortages. Recommendations include improving driver working conditions and setting up skills bootcamps to train new HGV drivers more quickly. The committee has also called for a new ‘multi-modal’ model in which long distances are served by rail and water and shorter journeys by road.

Zero-emission HGVs

The Department for Transport has announced a £200 million programme to support the rollout of zero-emission HGVs. Over three years, the programme will fund a series of competitions to accelerate the development and commercialisation of the technology and infrastructure needed to transition to net zero. Fleet operators will also be able to bid for funding to showcase their green technology on UK roads.

Contact us to discuss your asset finance or refinancing needs.

The Spring Budget yesterday had some implications for small businesses. We’ve summarised the main points below:

Tax

• Corporation Tax will increase from 19% to 25% for businesses with taxable profits over £250,000. Businesses with profits between £50,000 and £250,000 will pay between 19% and 25%. Businesses making profits of less than £50,000 remain at the 19% rate.
   
• Fuel duty has been frozen so the 5p cut to petrol and diesel will remain in place for another year.
   
• Businesses can deduct investment in new machinery and technology to lower taxable profits. The super-deduction has been replaced with full expensing.
   
• Increase in Draught Relief will help pubs but alcohol taxes to rise with inflation.
   
• 12 new Investment Zones to be created across the UK, covering West Midlands, Greater Manchester, North East, South Yorkshire, West Yorkshire, East Midlands, Teesside, and Liverpool. At least one investment zone each in Scotland, Wales and Northern Ireland.
   
• The Pension Lifetime Allowance before paying extra tax – currently £1.07m – has been abolished. The pensions annual tax free allowance will rise by 50% from £40,000 to £60,000.
   
• Enhanced credits for businesses that have R&D as 40% of turnover.
   

Workforce

• Skills boot camps and apprenticeships targeted at over 50s to encourage people to return to the workplace.
   
• 30 hours free childcare for working parents in England expanded to cover one and two-year-olds by September 2025. This will be introduced in phases from April 2024, starting at 15 hours.
   
• £600 incentive payments for those becoming childminders and relaxed rules in England on how many children childminders can look after.
   
•  A new voluntary employment scheme, Universal Support, announced for disabled people and those with health conditions in England and Wales.

Energy

• Energy support for households has been extended for three months until the end of June.
   
• No changes were announced to the Energy Bills Discount Scheme for businesses, which will run from 1 April 2023 to 31 March 2024.

Trade

• Commitment to ease customs declarations for small businesses that trade internationally.

Obtain finance to help you spread the costs of your VAT bills and HMRC Corporation tax bill, particularly given the very challenging trading conditions we face today.

Key advantages of financing your Tax bills:

• Competitive cost – a fixed transaction fee is added to your finance agreement and spread throughout your repayment term
• Simple application process without the need for supporting projections or complex application forms
• New, unsecured line of credit with no assets charged as security – existing funding lines are not impacted
• Preserve you your cash flow and maintain working capital for other areas of your business
• Spread the repayments over 3 months for VAT
• Flexible repayments – spread the HMRC repayments over 6, 10 or 12 months to suit your budget, with an option for reimbursement if you have already paid HMRC in full

Contact us to find out more

Introduction

The automotive industry is a vital part of the UK economy, involving the design, manufacturing, selling and maintenance of motor vehicles. The industry has an annual turnover Of €74 billion, with vehicle exports worth E27 billion.

Around 80% of cars manufactured in Britain are exported, and the EU is the UK’s largest trading partner accounting for more than half of all vehicle exports. Covid-19 has had a significant impact on the industry, with growth in sales, output and servicing down since the start of the pandemic.

However, demand is expected to recover in 2022/23.

• Turnover in 2020 was E74bn, down 6.2% on 2019.
• There were 44, 500 vehicle maintenance businesses in 2020, down 3.7% on 2019
• There was a 6.7% fall in UK car production in 2021
• 1.6 million new car sales in 2021, down 36% on 2017
• 452,527 electric vehicle sales in 2021, up 58.7% on 2020
• 11.5% increase in used car sales year-on-year in 2021

Sales forecasts cut

The automotive industry has cut vehicle sales forecasts for 2022 due to rising interest rates, component shortages and higher costs. While vehicle sales are forecast to increase by 15% year-on-year in 2022, this is 18% below pre-pandemic levels. Demand for used cars is expected to remain strong in 2022, as shortages of key components such as chips and semiconductors will continue to impact new car supply.

Export barriers

Industry experts have warned that the introduction of new customs and export rules in January 2022 could slow growth in the UK electric vehicle sector. Some cars assembled in the UK will not qualify for tariff-free export to the EU due to how components essential for electric vehicles, such as batteries, are sourced. As a result, the automotive industry has called for export rules to be reformed so zero emission vehicles can be exported globally.

Advertising automated vehicles

The automotive industry has agreed a set of principles for the responsible marketing of automated vehicles ahead of their expected introduction to British roads in 2022. The principles will ensure consumers have access to consistent and clear information about automated driving features. The principles have been backed by industry, Government and the Advertising Standards Authority.

Key bodies

Institute of the Motor Industry (IMI)
www.theimi.org.uk

Society of Motor Manufacturers and Traders (SMMT)

www.smmt.co.uk

Independent Carage Association (ICA)

www.independentgarageassociation.co.uk

Electric vehicle adoption

The automotive industry has warned that electric vehicle charging infrastructure must be improved if the UK is to meet zero emission targets and end the sale Of new petrol and diesel vehicles from 2030.

Currently, there are disparities in the number and cost of charging points across the UK. While some local authorities allow motorists to charge their batteries for free, other areas charge up to €4 per kilowatt hour.

Online car sales

Industry experts have urged traditional bricks and mortar dealerships to develop their online presence after Covid-19 accelerated the shift to buying cars online. The number of cars sold online has increased by more than 1,200% since the start of the pandemic.

Overall, 60% of motorists would now consider buying a car online. In addition, online spending on parts and aftermarket services reached El.5 billion in 2021, up 46.1% on 2017.

Electric vehicle technician shortage

The automotive industry is calling for measures to tackle a significant shortage of electric vehicle
technicians. Overall, 90,000 technicians will be required to service the number of electric vehicles predicted to be on the road by 2030. Based on current training levels, this means there could be a shortage of 35,700 electric vehicle technicians by 2030 and a skills gap will materialise by 2026.

Information for this Industry Report was sourced from:
SMMT: UK Automotive Trade Report 2021, SMMT: Motor Industry Facts 2021, UK Parliament: Electric Vehicles and Infrastructure Report