Rising Diesel Prices: What Higher Fuel Costs Mean for UK Hauliers

Fuel has always been one of the largest operating costs for a haulage business, but recent increases in diesel prices are once again putting pressure on operators across the UK.

Official Government figures show that diesel prices rose by 9.8 pence per litre during September alone. The Road Haulage Association has also highlighted the impact of rising fuel costs on HGV operators, particularly where businesses are unable to pass those additional costs on to their customers. GOV.UK

For an industry where margins can already be tight, even relatively small increases in the cost of a litre of diesel can have a significant effect when multiplied across thousands of miles and several vehicles.

Why have diesel prices increased?

International events continue to have a direct effect on the cost of fuel in the UK. The RHA has recently highlighted rising fuel prices linked to conflict in the Middle East and warned about the consequences for transport businesses and ultimately their customers. RHA

For haulage companies, the problem is particularly acute because fuel isn't a discretionary expense. Vehicles need to remain on the road for the business to operate.

The impact can quickly add up

Consider a haulage operation using thousands of litres of diesel every month.

An increase of just 10p per litre means:

• 5,000 litres = an additional £500
• 10,000 litres = an additional £1,000
• 50,000 litres = an additional £5,000

For fleet operators, a sustained increase can therefore add tens of thousands of pounds to annual operating costs.

The difficulty is that hauliers cannot always recover all of this from their customers. Earlier this year, an RHA survey found that only 10% of operators surveyed were able to pass on all of the fuel cost increases they were experiencing. RHA

Fuel surcharges and customer contracts

Operators working under longer-term contracts may want to check whether their agreements allow for a fuel surcharge or other adjustment when diesel prices move significantly.

Where possible, having a clearly understood mechanism for dealing with changes in fuel costs can help protect both the haulier and the customer from sudden movements in the market.

For owner drivers and smaller operators in particular, absorbing a substantial increase in diesel costs for a prolonged period can place considerable pressure on cash flow.

What happens to fuel duty next?

There is another issue on the horizon.

The Government has extended the existing 5p-per-litre fuel duty cut until 31 December 2026. Under the legislation currently in place, diesel duty is due to increase by 3p per litre from 1 January 2027 and by a further 2p per litre from 1 March 2027.

However, the Government has said that the final rates will be confirmed at the 2026 Budget. GOV.UK

That makes fuel costs an area haulage operators will want to watch closely over the coming months.

Don't overlook insurance when reviewing operating costs

When costs are rising, it is understandable that businesses look closely at every area of expenditure.

Insurance should be reviewed too—but simply reducing cover to achieve a lower premium may leave a haulage business exposed if a serious claim occurs.

Instead, it can be worth checking that the business is still insured appropriately, that vehicles and drivers are correctly declared, and that the insurance market has been properly explored at renewal.

For operators with more than one vehicle, it may also be worth considering whether Haulage Fleet Insurance or a multi-vehicle arrangement is more appropriate than maintaining individual policies.

The same applies to associated covers such as Goods in Transit Insurance and Hauliers' Liability Insurance. The cheapest arrangement isn't necessarily the most appropriate if it doesn't provide the protection required by the business or its customers.

Specialist insurance for the haulage industry

At Avis Insurance Services, we have specialised in arranging insurance for truck and haulage operators for over 40 years.

From individual owner drivers to larger fleets, our team can help operators review their existing arrangements and look for competitive cover appropriate to the work they undertake.

If your truck or haulage insurance is approaching renewal, speak to our specialist team on 01628 662 666.