France’s leading freight transport and logistics industry body, Union TLF, has called for immediate action to protect small and medium-sized (SME) road haulage firms which for the past 18 months have been experiencing persistent difficulties.
A lack of demand and a sharp rise operating costs has led to a cash flow squeeze and insolvencies in the sector are now at an all-time high.
In the absence of demand, business sentiment in the sector has been below its long-term average for 21 consecutive months, Union TLF noted.
At the same time, production costs for haulers continue to rise sharply: +5.4% year-on-year in July 2024, excluding diesel, according to road transport research agency, the Comité National Routier.
Added to this has been regular social unrest in France, such as protests and strikes related to state pension reform, that have hit the sector hard while bad weather and port blockades have also penalized business.
Those that were expecting a boost to road haulage from the recent Paris Olympic Games have been left disappointed. Indeed, 41% of the companies surveyed indicated an unfavorable effect from the global sporting extravaganza while half of the respondents reported additional costs. This autumn, more than 50% of company managers say that the lack of demand is limiting their activity.
Tax Burden
One of TLF’s key demands is for the French government to reduce business taxes on labor, production and fuel, bringing them closer to the European average.
Another is to maintain support for the ‘greening’ of truck fleets through mechanisms for additional depreciation, direct aid for the purchase and leasing of vehicles with lower emissions and for the installation of recharging infrastructures.
Commenting on the growing crisis in the sector, Union TLF president, Eric Hémar, said: “We are struck by the gap between the political debate in France this autumn and the reality of our businesses. The economic crisis has been hitting our sector hard for over a year now. This situation is jeopardizing many businesses, particularly the smallest ones. There needs to be a wake-up call that gives priority to defending the competitiveness of our companies and full employment.”
However, France’s public finances are under extreme pressure, and it is far from sure that the country’s SME road haulers will grant the relief package they are looking for.
The crisis affecting the French road haulers is also reflected in other European countries, among them the UK where trucking firms, around 90% of which are in the SME category, are facing a skills gap, an ageing driver pool and the economic consequences of a deteriorating road network and one blighted by a significant level of road congestion. Margins, traditionally relatively low in the sector, are reported to have plunged to just 2%, with some firms operating at a loss.
In a document published in July this year, the UK Road Haulage Association (RHA) revealed that 500 haulage firms collapsed in the last 12 months, more than double the number two years ago.
At the end of last month, the RHA’s managing director, Richard Smith, highlighted “an exceptionally difficult time for our industry with record numbers of insolvencies as many operators are no longer able to cope with relentless cost pressures and continuing drops in volumes they’re moving.”
Emissions
He made it clear that relieving the tax burden on the industry will support growth and said the RHA is urging the UK government to extend full expensing (a tax allowance) to the cost of leased asset vehicles which would support more investment in zero-emission vehicles and infrastructure.
“We’re also calling on ministers to introduce an emissions-linked rebate on fuel duty to make UK businesses more competitive with their counterparts across the Channel (in the European Union) while incentivizing the uptake of low-carbon diesel alternatives like HVO – which can reduce emissions by 90% - would speed up decarbonization.”
The RHA also looking to combat the chronic lack of drivers and overall skill shortages in the sector as a whole through recruitment and training initiatives to attract a new generation of logistics professionals.
