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Energy crisis hits the logistics industry, causing price hikes

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The latest government figures show 56% of transport, logistics and storage companies faced higher costs in March as the energy crisis loomed, leading 37.3% of them to raise their prices. ParcelHero warns increased transport costs will lead to higher retail prices.

The latest Office for National Statistics (ONS) Business Insights report shows transport and storage companies were forced to pass on higher costs to their customers in April in light of the energy crisis. The home delivery expert ParcelHero warns this will raise retail prices and the cost of home deliveries.

ParcelHero’s Head of Consumer Research, David Jinks MILT, says: "It’s not only households that are facing steep rises in costs. Transport, logistics and warehousing companies have also faced significant increases in the cost of energy and materials, and many are being forced to pass these on to their own customers.

"In all, 37.3% of transport, distribution and warehousing companies reported they were increasing their rates in April. That’s because 56% of companies in this sector faced significant rises in costs during March.

"Of course, it is shoppers who will pay the price for rising supply chain costs, and they will end up spending more for food and goods in the next months. With that in mind, both consumers and retailers might be heartened to learn that 25.3% of transport, delivery and warehousing companies said they planned to keep on absorbing increased costs themselves, rather than pass them on, or even reduce costs."

Energy crisis results in 'forced' price increases to customers

Transport and storage sector companies are by no means the worst offenders when it comes to quickly passing on costs. A sizeable 45.1% of accommodation & food services companies and 42.6% of construction companies said they were increasing the price of their goods and services in April.

The impact of the rise in costs does not end there. A total of 17.5% of transport and warehousing companies said their turnover decreased in March. However, problems for some companies were opportunities for others in the sector and 15.1% actually reported increased turnover during the month.

There was also some good news for employees in the transport and warehousing sector. The ONS' latest business wave report says that, even though the energy crisis has seen costs for companies rising fast, none of the businesses said they were planning redundancies, and only 4.2% planned any significant decrease to staff working hours. Many haulage and courier companies operate on relatively low margins, so the sector has little protection or wiggle room against increases in fuel and equipment costs.

To find out more about how logistics companies and their partner retailers are innovating to reduce costs and maximise the potential of technology, see ParcelHero’s study on ‘Dark Stores’ and the High Street of the future here.

 

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