Funding will accelerate alternative fuels

Logistics UK calls for increased funding from the government to recognise the vital role of the logistics industry in the post-pandemic economic recovery and the net zero transition. The call for additional investment was in response to the government’s Comprehensive Spending Review with the association also calling for a freeze on fuel duty to encourage uptake of alternative fuels options.

Elizabeth de Jong, policy director at Logistics UK, comments: “The 2021 Comprehensive Spending Review must include significant investment into the nation’s transport infrastructure. With the UK seeking new international trading agreements post-Brexit, the need for world-class infrastructure has never been greater to help the UK take its new place in the global economy.

“This includes the need to invest in roads nationwide to reduce congestion, as well as improving driver facilities to attract HGV drivers into the occupation and increased rail capacity to encouraging greater rail freight use. Investment in IT systems at our border is needed for smooth trade, and investment in connected and automated vehicles to increase our competitiveness.

“With the logistics industry committed to reaching net zero emissions by 2050, Logistics UK is also urging the government to prioritise funding to accelerate the development of alternative fuels, across all transport modes, and to commit to delivering the energy supplies needed.”

Freeze fuel duty forever
In a separate statement Logistics UK also called for Government to freeze fuel duty ‘forever’ to help the sector make the shift to alternatively fuelled vehicles

CEO logistics UK calls for duty freeze to support alternative fuel development
David Wells, CEO Logistics UK

As David Wells, chief executive of Logistics UK explains, the sector needs time to prepare for alternative fuels: “As the logistics industry recovers from the impact of the pandemic on the economy, and with the threat of price inflation on the horizon, every penny counts for our sector, which traditionally runs on extremely narrow margins,” he says.

“While our members are committed to switching to cleaner alternative fuels from diesel, the cost of a new alternatively fuelled HGV makes them challenging for many businesses – despite government grants of up to £25,000 – when, at present, businesses must allow for higher operating costs, leaving less spare cash for investment.

Eliminate the fear of duty hikes
“Our industry is fully behind the switch to alternative fuels but, in order to do so, needs a confirmation from government that fuel duty will not be used as a tool to close budgetary gaps in the economy.  This will help our member businesses to allocate more funds to the vehicle replacement cycle, secure in the knowledge that they will not be surprised by unexpected duty hikes in the coming months or years.”

Diesel is one of the single biggest running costs in operating a large fleet of HGVs:  Logistics UK’s own research indicates that fuel accounts for more than 30% of HGV’s operating costs. And with many logistics businesses facing increased costs due to spiralling drivers’ wages, caused by the current skills shortage, finances for businesses recovering from the impact of COVID-19 are very fragile, as Mr Wells continues: “With margins pared down to a minimum, and inflationary pressure set to bite over the autumn, a guaranteed, permanent freeze on fuel duty would allow our members to recover from the impact of the pandemic and start to focus on how best to make the switch to alternative fuels on the road to Net Zero.”

For more information on decarbonising your business visit: Route to Net Zero