For food and drink manufacturers, road freight is the backbone of distribution. The EU is comfortably the biggest export market for UK food and drink brands. It's an industry where timely delivery is vital.
Reliable road haulage ensures that perishable goods remain fresh, while adoption of technology allows businesses to maintain visibility over their supply chains.
However, in recent years, both the UK and EU road haulage sectors have been under strain. This creates significant challenges for manufacturers reliant on reliable logistics.
According to the Road Haulage Association Cost Movement Report 2024, 49.2% of haulage companies established in the UK since 2019 have gone bankrupt, with nearly 500 firms collapsing in 2023 alone. These failures threaten supply chain stability, increasing risks and costs for food and drink producers.
So what are the key challenges facing the road freight sector? How do businesses in food and drink protect against uncertainty in road haulage? In this article we outline the biggest challenges for hauliers and provide strategies for food and drink businesses to mitigate.
Undoubtedly the key pain point for the road haulage sector. Haulage is a low-margin industry, and economic downturns make operations even harder to sustain.
Administrators that are dealing with bust hauliers are highlighting rising fuel and energy costs as major contributors, alongside long-standing Brexit-related disruptions. A reduction in cross-border trade have tightened margins further, leading to cash flow issues and insolvencies.
Whilst the road haulage sector welcomed the continued fuel duty freeze announced in the Autumn 2024 UK budget, the threat of high costs remains.
The shortage of HGV drivers remains a major concern despite somewhat successful attempts to remedy the situation. The latest Skills and Industry report from Logistics UK showed that the number of HGV drivers employed in the UK increased 20.9% in the year to Q3 2024.
However, the UK’s departure from the EU saw an exodus of EU-based drivers, and recruitment struggles continue, although they’re admittedly less intense than in 2021, when vacancies peaked at over 100,000.
With fewer skilled drivers available, haulage capacity has shrunk, leading to delays, higher wages, and rising transportation costs. All of which impact food and drink supply chains.
The essential push for greener transport solutions brings added costs and complexity. New regulations demand fleet upgrades, alternative fuels, and stricter emissions controls.
From 2035, the UK will ban the sale of new HVGs under 26 tonnes that are not zero-emission. The ban will then extend to all new HGVs from 2040. Meanwhile, those operating in the EU will also need to comply with the EU’s emission standards for HGVs, which demand a gradual reduction in emissions until 2040.
While obviously necessary for long-term sustainability, these measures create financial pressures on operators. They need to find the cash to renew their fleets with lower- or zero-emission vehicles while balancing that with keeping costs under control.
Both sides have risks. Overinvesting in a new fleet that is more environmentally friendly but has higher running costs can make a haulier uncompetitive. Conversely, underinvesting risks huge fines for violating regulation.
Manufacturers must prepare for potential disruptions as hauliers adapt to these new requirements over the coming decade.
The perishable nature of many food and drink movements is the key factor in why food and drink manufacturers need reliability from hauliers.
Firstly, insolvency of key transport providers forces manufacturers to scramble for alternative carriers, leading to uncertainty and potential product losses. This scramble creates a limited time window to find alternative options, with product shelf-life at stake.
Some products, such as alcohol, can be difficult to find good hauliers for. Being forced into this situation within a limited time frame presents a real challenge.
Changes to cross-border trade between the UK and EU, which have been plentiful in recent years, also depend on road hauliers understanding the process. Uncertainty in the sector makes it more difficult for manufacturers to find a good partner to support this process.
Last-minute carrier changes and transport disruptions all add costs to businesses. Therefore, finding cost-effective freight solutions becomes more difficult as haulage firms struggle to stay afloat.
In the face of challenges within the EU and UK road haulage sector, food and drink manufacturers can use some techniques to mitigate risk. We have outlined 3 options below for consideration.
Relying on a single haulage provider can leave you exposed. Establish relationships with multiple hauliers to ensure flexibility and protect against insolvency or other operational challenges, such as driver shortages, from a single provider.
Alternatively, engage with an experienced and secure logistics service provider, such as WTA, which has existing relationships with many hauliers. That way you can leverage their scale, more favourable rates and reliability to your advantage.
The road freight sector has not fully embraced the concept of supply chain visibility as we see in sea freight. However, its benefits are substantial, including protection from instability in the sector.
When we discuss visibility, we’re talking about far more than simply location tracking, although that does form part of it. Reputable logistics providers should be able to deliver a range of data points when monitoring goods in transit. All helping boost resilience and meet KPIs in transportation:
A well-monitored supply chain enables proactive management of disruptions. Boosting on-time deliveries, which is essential for perishable items.
Alternatively, or possibly in addition, you can always look to foster stronger relationships and open communication channels with logistics providers. Regular communication helps identify vulnerabilities and improves your response to disruptions.
Preparing for potential disruptions is crucial for maintaining operational continuity in the event of a shock. A key part of this could be scenario planning, where you build a strategy for dealing with certain logistical challenges.
Establishing clear procedures for responding to disruption, including communication plans and decision-making frameworks can hugely improve your response. The regular drills and updates to these protocols can further enhance your preparedness.
Conduct regular assessments to identify where the risks are and if you are prepared for any new ones. Being proactive against disruption is better than reactive.
Building a buffer of inventory of vital ingredients can cushion against supply chain interruptions where possible.
To conclude, the UK and EU road haulage sector is facing significant challenges, and food and drink manufacturers must take proactive steps to protect their supply chains.
Businesses can mitigate risks and maintain reliability even in an uncertain freight environment by building resilient logistics strategies, investing in visibility tools, and diversifying transport partnerships.
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