UK road freight prices rise more than one third in a year

Land Transport

Source: Lloyd's Loading List, 2021-11-03

UK road freight prices appear to be stabilising after rising by more than one third in the space of just 12 months, a new industry index indicates, although prices will remain high for some time amid “unprecedented demand for freight transport drivers and fleet capacity.”

Among calls for more action to address driver labour shortages, the TEG Road Transport Index, set to be released monthly, reveals the latest industry data on price-per-mile in the road transport market — from the Transport Exchange Group (TEG.)

This new transport industry index highlights the data behind spiking demand for UK courier and haulier services. Before stabilising in October, the sector experienced the highest price-per-mile average across all vehicle types in September 2021 — a 21.8-point increase compared to September 2019, and a 26.1 point increase on September 2020. But for road haulage alone, the rise was much higher at around 37% (and 37 percentage points). 

The TEG Road Transport Price Index, compiled by the Transport Exchange Group since January 2019 from over 4m aggregated and anonymised transactions (representing over 8,000 member businesses), reveals unique data on pricing in the road transport market covering haulage and courier services. 

The price-per-mile average is currently at its second-highest level in 34 months, since data was first collected in January 2019, with prices in October 2021 just slightly below their peak the previous month. Year-on-year (October 2020 to October 2021), the price-per-mile average across haulage and courier services has surged by 24 points; but for road haulage, the rise was around one third. 

Year-on-year (October 2020 to October 2021,) the haulage industry has experienced the steepest rises, with prices surging by 34.2 points. Courier services have also seen sharp year-on-year price-per-mile increases, jumping by 15.8 points. 

The Index also reveals that the overall price-per-mile average hit its lowest point in May 2020, soon after the first UK lockdown began. 

The TEG Road Transport Price Index will be updated monthly, with a new report released on the third day of every month — “for policy makers, those operating in the transport industry and those writing about it,” TEG said.

Lyall Cresswell, CEO of Transport Exchange Group, commented: “Demand for freight transport drivers and fleet capacity is unprecedented, with various factors meaning it will remain high for quite some time. We’ve been able to chart the rise in demand with our price-per-mile data and the TEG Road Transport Price Index will allow anyone to take the pulse of the industry. Based on the breadth and depth of this data, we believe that this is the most authoritative and real-time price index ever published in the UK road freight industry.

“Month-on-month, it will provide vital insight into the state of a market that’s integral to the UK’s economy.”

Kirsten Tisdale, Director of Logistics Consultants Aricia Limited and Fellow of the Chartered Institute of Logistics & Transport, commented: “The TEG Road Transport Price Index is one to watch going forward, as it is so real time in such a changeable supply chain environment. Any price index is influenced by several factors: underlying cost changes; availability/capacity of the market; and demand for the service. 

“The key influencers for the TEG Road Transport Price Index have often been changes in the cost of diesel and demand levels for road transport. Driver pay will also have been an element contributing to the rise from Spring 2021 onwards; but it looks as if potential overheating of transport rates is now abating, although there may yet be further pent up demand.” 

The TEG Road Transport Price Index tracks changes in the pricing of road transport services based on millions of aggregated and anonymised transactions between thousands of transport companies.

The TEG Road Transport Price Index is an arithmetic weighted series, tracking price-per-mile each month against a base of January 2019. Weighting is applied according to the mileage mix from each vehicle type using the Paasche formula. This ensures the price-per-mile of each month is compared accurately with the base month.

Data is gathered from completed transactions on the TEG platforms, aggregated and anonymised. PPM (price-per-mile) is calculated as the average of all completed orders, excluding 0 values. Sample size is circa 2m orders per annum across c. 8,000 participants.  

Further information on the index can be found here.

Established in 2000, the Transport Exchange Group creates and delivers real-time decision-making solutions for logistics and transportation businesses around the world. It provides freight data aggregation and analysis tools to help build businesses. 

With its public and private freight exchanges, it is the leading provider of managed freight exchange services for the UK road transport industry.

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