Transport Cost Management in 2025: Strategies for Haulage & Logistics Profitability

The insolvency epidemic is devastating the transport sector

The UK transport and logistics industry is facing its toughest period in decades. In 2022, the number of road transport operators that entered insolvency was 417, rising to 494 in 2023. This worrying trend continued in the first half of 2024, with 170 road transport operators filing for bankruptcy, highlighting the severe financial stress companies face.

In 2024, 33% of UK haulage businesses were classified as being at maximum credit risk, up from 22% in 2023. The reasons are clear: a perfect storm of inflation, rising interest rates, escalating input costs, and prolonged market pressures that are eroding already thin margins.

Why traditional cost management approaches fail

Many transportation businesses still rely on outdated or reactive cost management methods that identify problems only after damage to cash flow has occurred.

Common weaknesses include:

• Lack of granular visibility across different cost categories
• Focus on obvious costs while hidden costs accumulate.
• Inaccurate forecasting and delayed reporting
• Reactive cost monitoring that identifies problems too late

Fuel cost volatility: The monthly margin killer

Fuel remains the single most significant variable in transport costs. Although fuel surcharges are introduced, these lag behind real-time price movements, creating immediate margin and cash flow exposure.

Weekly price rises often cannot be recovered until the following month’s rate review — by which point losses have already accumulated.

Many global events also drive volatility in diesel prices and supply chains; however, the impact of these can be mitigated through forward-buying, fuel hedging, and real-time telematics data.

The hidden cost killers destroying profit margins

The squeeze on transport profitability isn’t only about fuel. Beneath the surface, multiple operational cost categories have spiralled upwards with revenues unable to keep up and close the gap.

• HGV operating costs (excluding fuel) rose 4.5% in 2024 alone
• Average vehicle acquisition costs jumped from £85k to over £115k, with delivery delays exceeding eight months
• According to the UK Government, insurance premiums increased by c 21% over the last two years
• Higher interest rates have hit debt-financed operators the hardest
• Maintenance costs are rising due to parts shortages and mechanic scarcity

Capital cost explosion: The fleet renewal crisis

Fleet renewal has become a significant financial challenge. New vehicle costs have increased by more than 35% in just 18 months, and extended delivery times are disrupting replacement schedules.

Operators face a no-win scenario: either maintain ageing fleets with rising maintenance costs or invest heavily in new vehicles, which come with higher financing rates and tighter lending terms. This capital cost dilemma is reshaping fleet strategies across the industry.

The compound effect of small margin erosion

In a sector where average profit margins hover around 2–3%, even modest cost increases can be catastrophic. When multiple cost pressures hit simultaneously, businesses enter a margin death spiral and are unable to recover losses through pricing in a hyper-competitive market.

Real-world cases demonstrate how a £0.05 increase per litre in diesel or a 3% insurance hike can significantly impact annual profitability for mid-sized hauliers.

The data blind spots that kill businesses

Without granular, real-time data, operators struggle to pinpoint where money is truly being lost.
Key failings include:

• No real-time cost tracking or early warning systems
• Poor cost allocation by contract, route, or customer
• Limited understanding of true cost per mile or delivery
• Poor integration between finance and operational systems

Cash flow management failures

Proactive cash flow forecasting and bank relationship management are vital to staying ahead of these pressures.

Even profitable businesses can fail when working capital dries up. Extended payment terms from major customers, seasonal fluctuations, and covenant compliance issues all contribute to liquidity crises.

So, the question is, how do road transport operators navigate these choppy waters?

Building systematic cost control for survival

The solution lies in systematic, data-driven cost control, not reactive crisis management.
By embedding technology and analytics into everyday operations, transport operators can detect cost issues before they become fatal.

Key strategies include:

• Real-time cost monitoring and dashboards
• Predictive analytics for early problem detection
• Telematics-driven fuel efficiency and driver training
• Preventive maintenance to reduce emergency repairs and the high costs associated with these.

Deploying technology solutions to pave the way for cost optimisation

Modern fleet management systems now deliver measurable gains, such as:

• Route optimisation delivering 10–15% in fuel savings
• Telematics, tracking driver behaviour and vehicle performance
• End-to-end and integrated fleet management platforms providing full visibility across all operational areas.
• Automated reporting and exception alerts that reduce admin time

Using strategic cost management best practices

Sustainable cost control requires continuous discipline:

• Benchmarking against industry standards and competitors
• Scenario planning for fluctuating costs and market conditions
• Strong supplier relationships and negotiation frameworks
• Contract pricing models that protect against cost volatility

Building Resilience: Hatmill’s Methodology for Surviving the Cost Crisis

The transport industry’s cost pressures are no longer cyclical—they are structural. Rising fuel costs, insurance premiums, maintenance, and capital expenditure continue to squeeze margins, making traditional reactive approaches insufficient for survival.

Hatmill’s Transport Methodology provides a structured framework to help transport operations respond to these pressures and protect their P&L. It breaks operational excellence into six interconnected workstreams, each one providing a lens through which companies can assess their resilience and readiness to survive the transport cost crisis:

• Data — providing visibility and insight for proactive decision-making
• Planning & Processes — aligning workflows with business objectives and optimising efficiency
• Systems — integrating technology to automate reporting, optimise routes, and reduce inefficiencies
• Warehousing — managing inventory and storage costs to support lean operations
• Operations & People — improving driver performance, staff engagement, and overall productivity
• Feedback & Communication — closing the loop to ensure continuous improvement and informed decision-making

By systematically addressing each of these areas, this approach allows transport operators to gain a comprehensive view of risks, costs, and operational efficiency, enabling them to be proactive in protecting margins, optimising resources, and emerging stronger from today’s financial pressures.

This article is part of a broader series introducing Hatmill’s transport methodology and its five pillars: Service, Safety, Compliance, Cost and ESG. Visit the Hatmill Transport pages to find out more or contact us if you’d like to discuss how our methodology could help you.

References

1. UK Government – Monthly Insolvency statistics.
2. Motor Transport – Administration Watch
3. Business Rescue Experts – Haulage and Transportation faces a rocky Road in 2024
4. Grant Thornton – Haulage sector faces significant headwinds
5. Road Haulage Association (RHA) Annual Cost Survey 2024
6. Road Haulage Association (RHA) – Haulage Cost Movement report 2024
7. Society of Motor Manufacturers and Traders (SMMT) – Truck Fleet Renewal Report 2024
8. UK Government / Financial Conduct Authority (FCA) report on motor insurance pricing
9. Logistics UK Fleet Technology Report 2024