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The Freight Transport Association Ireland along with our partners, BWG, Bank of Ireland and ENPROVA, in conjunction with specialist research agency Analytiqa published the fourth annual Managers Guide to Distribution Costs report 2022 on 29 November 2022. Understanding distribution costs is essential to supporting a dynamic and resilient supply chain. This report has become the De facto guide for all those involved in the management, procurement, or ownership of freight transport services. Having an understanding of all the operational costs and the ability to benchmark across your industry can justifiably provide you with the confidence to support your decision-making drive efficiencies and productivity within your business that led to improved performance and profitability. These are challenging times, the Managers Guide to Distribution Costs is designed to provide businesses within the freight distribution and logistics sector with access to essential operational costs data to enable quick decision making that delivers resilience allowing your business to always be ready to react to sudden changes to the operating environment and supports the philosophy of always be ready for the unexpected!

The report covers analysis on the following categories, Finance (insurance, truck purchasing and leasing costs and financial and strategic performance); Fleet & Transport Costs; Procurement, Energy & Eco-Training (vehicle procurement, alternative fuels, reporting and monitoring fuel consumption); Employment, Wages & Training (drivers salaries, transport staff salaries, training and HR expenditure). This year’s report highlights that transport costs (day to day running of the transport operation, that include transport managers salary, tachograph analysis costs, maintenance and fuel costs) has increased by 17.7% compared to 3.6% in the previous

report. 83.3% saw an increase of over 5% with 41% of this group seeing an increase of over 10%. Despite continuing uncertainty and lack of clarity over future fuel choices – Natural Gas (CNG) remains the most popular form of alternative vehicle solution being explored by companies (36.4% of respondents say they are actively investigating the use of natural gas vehicles) and interest in this form of solution has grown year on year. Of companies that have embraced the use of alternatively fuelled vehicles in their commercial fleets, 60% are operating only one or two such vehicles on average. This suggests that whilst interest remains strong, companies are still ‘feeling their way’ when it comes to the adoption of alternative fuels in their fleet.

In their attempts to save money on fuel, almost 70.0% of respondents identified that their commercial vehicle fleets make use of DRS (Diesel Rebate Scheme), whilst almost 40.0% of companies have fuel escalators in place in customer contracts, a transparent method of dealing with fluctuating fuel prices, as a surcharge both increases and decreases in line with the actual fuel prices paid.

With skills shortage and particular a driver shortage contributing to a challenging operational environment for businesses that are already dealing with record inflationary pressures we see in this year’s report that driver salaries have increased by 11.6% on the previous report with 60% of drivers over the age of 40. For distribution companies we see that drivers account for on average 35% of costs in 2022 compared to 39.25% of costs in the last report. Fuel

Pictured (l-r) Aidan Flynn, FTA Ireland; Minister Hildegarde Naughton; Mark Crowe, BWG; Paddy Sweeney, Enprova; Owen Clifford, Bank of Ireland and Mark O’Bornick Analytiqa accounts for on average 39% of costs in 2022 compared to 33% of costs in the last report and fleet insurance accounts for on average 3.9% of costs in 2022 compared to 4.4% of costs in the last report. Other costs such as tyres, maintenance, and depreciation accounts for on average 22% of costs in 2022 compared to 23% of costs in the last report. The increased cost of doing business dictates that a sensible strategy is required from all within the freight distribution and logistics sector. It is important to be judicious in understanding the cost of operations and flexible to deal with the knock-on consequences of record inflation figures, such as increased wage demands, increased cost of energy and other products and services. The 2022 Managers Guide to Distribution Costs Report serves as a good barometer of operational costs of commercial fleets. The report should be used to support business planning and strategy development, tender submissions and assist procurement personnel to benchmark costs that will provide more of a thorough understanding of the complexities and costs involved in running safe efficient and professional commercial fleets. The report can be downloaded from the Freight Transport Association Ireland Website here: https://www.ftai.ie/ wp-content/uploads/2022/11/LR-FTAIManagers-Guide-to-Distribution-CostsReport-2022.pdf

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