Logistics UK has urged Chancellor Rachel Reeves to abandon plans to increase fuel duty by 5p per litre from September as businesses across the logistics sector face mounting pressure from sharply rising fuel costs linked to disruption in the Middle East.
The business group warned that rising crude oil prices were already placing severe strain on operators, with oil now trading above $110 a barrel and the cost of filling a large HGV increasing by 31% over the past three months to nearly £1,000.
Logistics UK said many operators were working on narrow margins and would struggle to absorb the additional costs, increasing the risk of higher inflation feeding through into the wider economy.
Ben Fletcher, chief executive at Logistics UK, said: “Our members provide everything that every part of the economy relies on, every day, but they are currently facing ever increasing cost pressures, most notably the sharply rising price of fuel. Crude oil now costs over $110 a barrel, and the cost of filling up a large HGV has risen by 31% to nearly £1,000 in the past three months.”
Fletcher added: “With most logistics businesses operating on very narrow margins and unable to absorb this level of increase, we have made clear to government that the impact is likely to be higher inflation for everyone.”
The organisation said the Treasury had already benefited from higher fuel prices through increased tax receipts, estimating that rising prices had generated an additional £42m in tax revenue since the end of February.
“The rise in fuel prices has already benefitted the Treasury to the tune of £42 million in increased tax take since the end of February, so it is right that the government now reverses its decision to increase fuel duty, which would provide a welcome boost to our industry at such a tough trading time, as well helping to reduce price rises on the shelves,” Fletcher said.
Logistics UK also warned that higher operating costs could slow investment in decarbonisation and net zero initiatives across the industry.
Fletcher said: “With so little financial headroom, rising fuel prices mean logistics businesses are being forced to prioritise business-as-usual costs over investing in future growth and a transition away from fossil fuels.”
