Logistic businesses face soaring operating costs, FTAI survey finds

Logistics businesses have seen their overhead expenses rise by 6.5 per cent over the past 12 months, according to a report released by the Freight Transport Association of Ireland (FTAI), the business organisation representing all aspects of the sector.

The Manager’s Guide to Distribution Costs 2019, produced in partnership with KPMG, BWG Group, Enprova and Analytiqa, compiled detailed information from contributors to understand how the costs of staffing, warehousing, operating vehicles, and haulage rates have changed.

Aidan Flynn, General Manager of FTAI, comments: “With the possibility of the UK crashing out of the EU without an agreement in place becoming more likely every day, logistics businesses are facing a challenging road ahead. To stay competitive, resilient and profitable in this uncertain economic environment, they must have a full understanding of their day-to-day operational costs. The first of its kind in the Republic of Ireland, The Managers Guide to Distribution Costs 2019 will enable commercial fleet managers to benchmark their operating costs against industry averages. This is essential to maintaining efficient, sustainable and robust operations, in the view of FTAI.”

This comprehensive survey of operational costs with respondents from the haulage, logistics, distribution, manufacturing and retail sectors is critical for industry in terms of efficient logistics and future strategic planning.

Mr Flynn explains some of the key findings: “The survey found that logistics businesses have seen their overhead expenses rise by 6.5 per cent over the past 12 months and more than 40 per cent of respondents saw their transport costs increase by more than five per cent over the same period. The price of fuel is continuing to rocket, now accounting for more than 30 per cent of all operating costs.

“The Managers Guide to Distribution Costs 2019 is packed with crucial information that year-on-year will be benchmarked to become a vital ingredient in every transport manager’s plans and reference points.”

Fintan Walshe, Director – Deal Advisory at KPMG Ireland added: “This report is hugely significant both in its timing and findings for the haulage, logistics and distribution businesses. It is a practical document setting out some of the actions to take for a ‘no regrets’ approach to Brexit preparations. It highlights the increased importance of working capital management and details the actions to be taken by businesses to improve efficiencies and reduce costs.”

The survey also uncovered that the average insurance cost for an articulated truck is €4,363 and that 53.8 per cent of respondents have seen an increase in their insurance premiums of more than five per cent over the past 12 months.