What will happen ?

Question

How far will the government go before it realises its ruined haulage firms . with fuel prices .can anyone give there thoughts on the implications of less firms offering to moves goods round the country.

Answer 1

Why you blame govt?The Haulage companies have to pass on the increased price of petrol to their users/customers.Smaller firms will have reduce their profit margin or merge with bigger firms.Another solution is establishing of Transhipment Centres by Govt so that running distance and empty return of trucks can be avoided.This will cut costs by half.

For example A and B are two locations having  in between huge and regular cargo movements.In the middle of A and B a Transhipment Centre C is established.There will be loading &un loading at C.Trucks starting from A unload at C and will be taking over goods of trucks coming from B.Similary trucks from B will take unloaded goods from A trucks.Associations of truck owners /haulers can establish transhipment centres.

I have seen big transhipment centres in India,Africa ,Pakistan,Sri Lanka etc,where they are functioning successfully for the past several years

Answer 2

First of all its not "how far the government will go" their best plan of attack to help gas prices is to focus on paying back the national debt and shoring up the dollar.  As for your question, it is highly unlikely that number of haulage trucks will disappear or even shrink.  However, there may be many haulage companies that restructure or go out of business.  The number of trucks that are on the road are more or less fixed in the short and medium term.  As such there will not be less trucks doing haulage, but there may be major restructuring in the haulage sector.  For instance, say a company has 10 trucks and goes out of business because of rising fuel costs.  The trucks dont just disappear, they will be sold piece meal at a fraction of what they previously cost so that the creditors of the failed company can recoup some money.  The trucks now cost less and thus the new company (or more likely another larger company) can make a profit even with the higher fuel costs.  In the long run, the companies that are still around can simply pass along their extra costs down the supply chain until you ultimately pay for it through higher cost of products.

Answer 3

It means more freight will go by rail and sea, which will mean less pollution and fewer carbon emissions, which can only be a good thing.

Answer 4

I don't think goods will be transferred to rail or sea because we don't have the infrastructure for a such a large undertaking. Either haulage firms will go broke, which I hope not, or they will pay the higher fuel costs which will work their way through to the consumer and thus inflation.

Answer 5

What I don't understand is why haulage firms are so reluctant to pass on their fuel price rises to customers. Everyone knows diesel is getting more expensive, so customers would be reasonably sympathetic to a fuel surcharge or similar, as charged by airlines. If your carrier goes bust you're in trouble, so no one wants to drive their haulage firm to the wall.

They're all in it together, so if a big company raises its prices the rest will follow.

Competing on price is a very foolish business strategy, especially for smaller companies. Competing on quality of service makes much more sense. Charge a reasonable price for excellent service and you make a nice living. Charge the cheapest price around and you get plenty of work, but you go bust.

Answer 6

On what basis do you allege that it is the government that has "ruined" haulage firms with fuel prices?  Do you have no concept at all of the economics of the oil market?  Is the UK government to blame for the fact that fuel is currently massively more expensive in every single country in the world?  They must be more powerful than I had thought!

If haulage companies are suffering, well, I'm sorry for that - but these things happen.  Markets have up times and down times - and this is one of the latter in the distribution sector.  Other industries (farming, fishing, mining, shipbuilding and steel to name but five off the top of my head) have experienced tough times over the years - probably more so even than the poor hauliers.  It's just life.  Get used to it and stop whingeing, is what I say.

The world faces far bigger problems than the profitability of the logistics sector.  If escalating transport costs mean that it no longer makes economic sense to transport goods long distances, then hoorah - new life will be breathed into local economies and the environment will benefit from less pollution.

Answer 7

It wont be the end of world. Firms will find a way to adapt, some will go under, but that's inevitable. Hopefully the increasing gas prices will weed out inefficient firms and force the remaining firms to decrease costs as much as possible.