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HGCA Haulage Survey 2004

The annual HGCA Haulage Survey aims to discover the costs of transporting grains across the country with the results used by the Rural Payments Agency for Intervention payment calculations. UK average haulage rates have risen over last season by between 3% and 8%, depending on journey length. The increase in rates is partly due to higher variable costs incurred by hauliers and partly due to the disruption of usual trade flows of trade following poor wheat crop quality.

Results

The average UK journey cost has risen by 42 pence per tonne, an increase of 6.5% on 2003. Rates have risen for all journey lengths but rise more sharply with longer journey distances. UK average rates for journeys below 25 miles have risen by 20 pence per tonne (+4.4%) whilst journeys over 125 miles have risen by 69 pence per tonne (+7.8%) over 2003 results.

The results show an increase in rates for nearly all regions and all journey lengths. The biggest average rise in rates occurred across the North West for journeys over 125 miles (+17.6%), whilst the South West showed the most consistent rise in rates for different journey lengths, all being above 13.5%.

The notable exceptions are for short journeys (<25 miles) in the North West, (-10.6%) and for 125 mile journeys across the East Midlands (-3%).

Influencing factors on rates

There are 3 main factors that have conspired to push up haulage rates this season. Firstly poor wheat crop quality for much of the Midlands and northern regions that distorted usual trade patterns, secondly the sharp appreciation in international crude oil prices and thirdly more onerous legislation governing the number of hours driven by hauliers.

Crude oil futures prices averaged $29 / barrel in November 2003. The same futures prices for November 2004 averaged $43 / barrel. Whilst diesel prices have not risen by the same magnitude as crude oil, pump price increases of around 10% have been witnessed. Since diesel constitutes a significant part of variable costs to hauliers, so this cost burden has been passed on to consumers through rate increases.

The most significant factor affecting haulage rates this season is the diverse nature of the wheat crop quality. The 2004 Cereal Quality Survey highlighted the poor crop quality for most regions geographically north of the Wash. Demand for good quality bread making wheat in this region is strong since some of the UKs largest mills are located in Manchester and Liverpool. These mills are usually able to secure a proportion of their raw materials locally producing relatively short journey lengths. This has not been possible this season as the bulk of wheat supplies across the Midlands and Yorkshire consist of feed wheat. Suitable supplies have had to be trucked in from more southerly counties where crop quality was less affected by the persistent harvest rainfall. This has added to overall journey distances. Since fewer long journeys can be made than short ones so the supply of available lorries for hire has fallen, pushing rates higher.

In tandem with diesel costs, labour is a significant variable cost to hauliers. Imminent EU legislation intends to limit the number of hours lorry drivers are able to work each day / week, adding to overall costs and helping push journey rates higher.

Conclusion

Unanticipated factors such as poor wheat crop quality and higher costs to hauliers have pushed up haulage rates this season by up to 17% on 2003. These costs will have to be met by producers since the price of grains is determined at the point of consumption, rather than at the point of production.

cereals.ahdb.org.uk