Logistics UK warns rising distribution costs risk fuelling inflation

Logistics UK has warned that rising fuel, labour and operating costs across the logistics sector could create renewed inflationary pressure for UK businesses and consumers.

R By Ryan Fowler

15 July 2026 2 min read

Rising fuel, labour and operating costs across the logistics sector risk creating renewed inflationary pressures across the UK economy, according to new analysis from Logistics UK.

The warning comes as the business group publishes its Manager’s Guide to Distribution Costs 2026, which found vehicle operating costs increased by more than 12% in the year to April 2026.

Logistics UK said the rise was driven largely by a 36% increase in diesel prices, a 7% increase in vehicle insurance costs and an almost 8% rise in driver employment costs.

Ben Fletcher, chief executive at Logistics UK, said: “For many logistics operators, the only economically feasible way to manage these significant cost increases is to pass them on to their customers. As logistics businesses operate on extremely narrow margins and underpin every sector of the economy, these increases risk feeding through to the prices we all pay as consumers.”

The report has been published during ongoing worldwide economic disruption caused by the situation in the Strait of Hormuz, which Logistics UK said has placed pressure on global supply chains and contributed to higher fuel costs.

Fletcher continued: “Fuel represents around one third of the operating cost for an HGV, and a 36% rise in the price of diesel represents a sharp and unbudgeted increase in the cost base that would be difficult for any business to absorb, let alone those that often operate on margins of just 2-3%.

“The Middle East conflict and disruption of freight flows through the Strait of Hormuz have renewed pressure on global supply chains and highlighted the need for resilience in the way our goods are moved, whether for manufacturing, retail, hospitality, healthcare or e-commerce.

“Our sector has the capacity to be a powerful catalyst for growth and resilience across the whole economy, but its ability to do this is by no means guaranteed. The cost increases outlined in our report are hitting businesses hard and demonstrate why we need a policy framework that supports the logistics sector to drive the economy forward.”