Leadership1 publisher3 min readPublished
Record £2 diesel threatens school coach services, operators' trade body warns
Coach operators say record diesel above £2 a litre could force cuts to services, including home-to-school transport. Unlike England's local bus operators, coach firms get no help with fuel costs, so the rise falls on businesses that are mostly family-run.
The Board Room · Leadership desk
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What happened
- Hauliers are paying an extra £350 a week for each truck compared with before the Iran war, according to the Road Haulage Association.
- The RHA's managing director said hundreds of transport businesses have already gone bust this year.
- G7 leaders said on Friday they would release up to 100m barrels of their emergency diesel and crude oil stockpiles.
- Brent crude fell by nearly 1% on Monday to just over $101 a barrel.
- Hauliers are asking the government to pause planned fuel duty rises and to offer a rebate on diesel costs.
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Why it matters
- exposure Families who rely on home-to-school coaches are the users most exposed, because school transport is the only service the CPT names among the possible cuts.
- precedent Any fuel help granted to coaches would give haulage and van operators a ready case for the same treatment, widening the government's bill.
- cost Shippers on fixed haulage contracts currently have the fuel rise absorbed by their carriers' margins; the cost is likely to return at renewal from any haulier still trading.
The coach warning is a forecast from a trade body that wants public money, and I would weigh it as one. Alison Edwards, director of policy at the Confederation of Passenger Transport, said fuel costs had "surged this year to unsustainable levels, pushing coach operators' already tight margins to breaking point" [3]. "Without intervention, soaring prices will mean difficult decisions on the availability of services, including home-to-school transport, and the viability of businesses," she said [4]. She did not say how many operators or routes are at risk [4].
That interest does not make the warning wrong. Edwards said 85% of independent coach operators are family businesses and that the industry "needs help" [5]. Her request is narrow: temporary support with the cost of diesel [5].
Haulage supplies the scale. Richard Smith, managing director of the Road Haulage Association, said: "Businesses in our sector operate on slim profit margins, typically about 2%, so the continuing high fuel costs are a huge challenge for us" [7]. Rhys Hackling is managing director of Direct Connect Logistics, which runs 22 lorries out of Oxfordshire, Northamptonshire and Warrington [12]. He put the firm's monthly fuel bill at "knocking on £65,000", against about £50,000 normally [13]. The increase is roughly £15,000 a month, or 30% [1]. Over a year it comes to about £180,000 [2]. At a 2% margin, profit covers an increase of that size only when annual revenue is about £9m or more [3].
Contracts decide who pays first. Hackling said many hauliers work on fixed contracts with customers, so rising fuel costs squeeze or wipe out their margins [14]. "Somebody somewhere is having to pay for this, whether it's the haulage firm or whether it's the consumer," he said [15]. Smith made the same point. "If haulage, coach and van operators can't pass these costs on, they struggle," he said [9].
The relief available this week comes from abroad. The G7 stockpile release was partly a response to Donald Trump suggesting a ban on US diesel exports, and it appears to have averted that threat [17]. The threat mattered for Britain. Roughly a third of the diesel it imports comes from the US, and its refineries produce too little to cover domestic demand [18].
The government's public line is about a different risk. Transport minister Keir Mather said the UK's fuel supply is "inherently resilient" and that people "shouldn't be concerned about shortages" [20]. Operators are describing cost [3]. The nearest fixed decision point is duty: the 5p cut in fuel duty has been extended to the end of the year, and the RAC wants it expanded [11]. A choice made this quarter on duty sets the price coach and haulage firms pay from January [11].
What to watch
- A government answer to the CPT's request for temporary diesel support for coach operators.
- Whether forecourt diesel falls back below £2 a litre in the weeks after the G7 stockpile release.
- Any operator confirming cuts to home-to-school coach routes, which would turn the CPT's warning into a record of lost service.