What Does 2025 Hold For The Haulage Industry

2024 is a year most hauliers and logistics firms would rather forget.  Throughout last year my truck and haulage insurance clients told me how tough things were out there as costs continued to rise, pressures on wages and a shortage of drivers remained and concerns over cyber security and digital transformation further focused minds.  The question everyone is asking now is what does 2025 hold for the UK’s hauliers and HGV operators?  Some are optimistic.  SEGRO, one of the leading providers of logistics facilities, says there is room for optimism following a challenging 2024 as demand is rising.  The Chancellor’s heavy hint that there will be a third runway at Heathrow and that the signed-off expansion of London City Airport and Stansted, “will be good for investment and trade in our country’ suggest a firm emphasis on infrastructure improvements and growth.  This should be confirmed tomorrow (January 29th) when Rachel Reeves will outline how infrastructure spending can help unlock growth.

The UK’s economy is forecast to grow by 1.7% in 2025 according to the OECD, which would mean faster growth than Spain, France or Germany.  There’s also talk of a potential return to the Customs Union as the Chancellor looks at joining an EU free trade group.  These positives are to be welcomed by a logistics industry that has been affected more than most by the effects of Brexit.  So much for the future though, what are the threats and opportunities of the here and now?  From my research and having taken soundings from my haulage insurance clients, I think that things that will shape the UK’s logistics and haulage industries this year are:

  1. Digitisation – also known as digital transformation, has been gathering pace for some time, but with AI now a mainstream tool, 2025 will likely be a year of fundamental change.  More and more hauliers will find their systems integrating with digital freight platforms to connect with shippers and optimize routes, and being able to operate in real-time and even provide predictive analytics, could allow shippers to streamline their operations, driving efficiencies and helping to reduce costs.  In a world of relatively high fuel costs where every mile matters, digitization could mean the difference between flourishing and failing.
  2. Cyber-security – cyber-attacks are soaring in the UK.  The UK Cyber Crime Statistics for 2024 revealed that 7.78m cyber-attacks were carried out in the UK at an average cost of £3,320.  While cyber insurance can help pick up the pieces, prevention is always better than cure and given that 84% of these attacks were based on phishing scams where cyber criminals seek to gain basic data to hack systems, there’s a lot that haulage firms can do in terms of training and awareness.  Sadly, as the demise of Knights of Old showed, the industry isn’t taking the threat seriously enough.  Digitisation will bring ever greater reliance on digital systems and hauliers need to ensure their systems are robust.
  3. New EU import rules – from the 31st of January the new EU-to-GB Safety & Security requirements come into effect, introducing Entry Summary Declarations (ENS). This is particularly important for transport operators, as the ‘owners of the active means of transport‘ are legally responsible for making declarations.  For goods arriving in the UK by roll-on roll-off ferry, for example, the haulier is responsible as the load is accompanied by a driver.   Every shipment imported into Great Britain from the EU will require a Safety and Security Declaration, and businesses must ensure that the relevant declaration is submitted to customs before goods arrive at the border.  Post-Brexit haulage firms have had to deal with many EU-UK changes, and while this isn’t the most significant, it’s a change most could do without.
  4. The drive to net zero continues – 2024 saw great strides in the search for sustainable logistics.  New electric lorries, eHGVs, came to the market with improved ranges and load capacities, and the prospect of hydrogen fuel technology was boosted by the announcement of a multi-million-pound government-funded development programme and the release of road-ready hydrogen trucks from Hyundai, Toyota, and DAF Trucks.  While most hauliers are more concerned about the cost of diesel, some are making the switch to eHGVs and we saw our first requests for electric truck insurance last year.  2025 will see a rush of new vehicles launched and billions invested in hydrogen power as the industry looks to go green.
  5. Diesel prices – while predicting UK fuel prices is about as easy as predicting the weather, it seems likely they will continue to fall from their 2022 peak.  UK fuel duty has been frozen and with a continuing surplus in Brent Crude prices should come down.  Potential political spanners in the works include Trump being back in the White House.  On the one hand, he could start imposing tariffs which inevitably end up pushing up prices.  On the other, his stated aim to, ‘Drill baby, drill’ could swamp the oil market and push prices down further.  If he can bring the war in Ukraine to an end, and if so on what terms, Russia could come in from the political and economic cold and increase supplies further.
  6. Driver shortages – the RHA’s latest figures show that there are still around 55,000 HGV driver vacancies in the UK.  This has come down from its peak of nearly 100,000 vacancies, but it’s still a problem that hauliers are struggling to deal with.  Government-backed training schemes have helped as have improved hours and working conditions.  Some point to the advent of driverless trucks and AI solutions, but these are years away, and with another 10,000 drivers expected to retire in 2025, this remains a significant challenge.
  7. Market consolidation – in the early 1980s, the Thatcher government looked at the UK’s haulage industry and found that its fragmented nature was a good thing and that small firms provided an efficient marketplace.  Fast forward forty years and costs, driver shortages, and the need for operational efficiencies and savings have seen greater consolidation.  2025 is likely to see this trend continue.  While the number of haulage firm insolvencies fell in 2023 and 2024 from their 2022 peak of 785, they are still historically high.  With pressures remaining and the growing need to look at decarbonising, many smaller firms are likely to disappear as bigger firms seek to gain market share.

2025: A Year For Optimism For UK Hauliers?

I think 2025 is a year for quiet optimism, or at least less pessimism for the UK’s haulage industry.   With the government making noises about supporting growth (when aren’t they?), fuel prices likely to fall, technology driving ever greater efficiencies, lower inflation, and a cautious increase in consumer confidence, it could be a year of respite.  While it won’t be plain sailing, it should deliver fewer shocks than we have seen in the previous five years.

Aaron
Aaron Hodson
Founder of Instatruck

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