º£½ÇÊÓƵ

The Midland haulage industry is facing its toughest ever year and could be the forgotten victim of the retail downturn, it has been claimed.

The sector, already reeling from huge fuel price rises in 2005, could be about to face even more testing times, said Tony Mitchell, managing director of Warwick-based Cranfield Recovery.

Mr Mitchell's views were echoed by the Road Haulage Association, which represents many of the estimated 100,000 people who work in the Midland logistics industry.

* Tell us your view on this story. Get in touch by , or by sending a *

Mr Mitchell said: "The rise in fuel prices has brought great pressure on the sector and it has been a very hard year.

"Fuel represents around 30 per cent of an operator's costs, so it has had a huge impact. Statutory changes in working hours and driver management have added to the problems.

"To top that, the influx of foreign lorries is also having a huge impact. There are 10,000 foreign vehicles working in the º£½ÇÊÓƵ every day and they are, with the odd exception, exempt from charges and taxes because they bring their fuel with them.

"Hauliers, large and small, play a huge role in the logistics operation of high street stores and I am concerned that the downturn in retail which is forecast to see several high-profile victims once the sales have finished will be very bad news for the industry."

Mike Farmer, regional director of the RHA, said the Midland industry was facing a particularly tough time.

He said: "We are expecting a hard 2006. Margins are always tight - an average of three per cent - and they are going to be squeezed even more.

"With shops buying less stock, it is going to have a knock-on effect for many firms. I can see an increase in many of the smaller firms saying enough is enough and packing up."

Dylan Kent, managing director of Warwickshire haulage and warehousing firm, Draycote Continentale, said the sector was facing more pressures than before.

"We run 37 vehicles travelling across the º£½ÇÊÓƵ and Europe and there is no question that it will be a tough year for the industry. We pay higher fuel prices than any other European country because of the amount of tax which is levied by the Government and that means that, when other factors come into play, º£½ÇÊÓƵ operators are hit more than most.

"We are fortunate because we are in a strong position but we know of others who are not so well placed and 2006 will be especially testing for them."

Mr Kent said the true cost of the Road Transport Directive, or Working Time Directive, which limits the amount of time drivers could spend on the road, had not yet been fully felt.

"Foreign competition will not be the only area of pressure on costs," he said. "As work becomes more scarce, º£½ÇÊÓƵ operators themselves will be bidding against each other for work, and that too will see slim margins cut still further, and ultimately, some businesses will close rather than continue to compete for whatever work remains.

"Big organisations will also dictate what they are prepared to spend on transport and use foreign operators rates as a negotiating tool. Look at the supermarket chain Lidl - that contract has gone to a foreign operator rather than a º£½ÇÊÓƵbased business."