Why are transportation costs rising?

Recent years have been an extremely difficult time for the people of Poland, Europe and the rest of the world. The outbreak of the coronavirus pandemic has brought with it gigantic political and social consequences, such as the disorganization of the functioning of the economic system, the need for isolation, a revolution in the labor market, a crisis in health care, price increases for products and services, hindered or banned activity in some sectors of the economy.

We haven’t had time to return to normalcy after the two-year fight against the pandemic, and the specter of a new war has appeared on the horizon, this time fought no longer on the human-virus line….

Armed conflict in Ukraine and its impact on the cost of international transportation

Thearmed conflict within Ukraine, dubbed the “granary of the world,” is no longer a blow, but a blow so strong that our country will not be able to recover from it for a long time. Sanctions imposed on Russia – the Ukrainian aggressor – have caused a rupture in the supply chain and chaos in the world market. Literally everything in our country is getting more expensive: food, fuel, building materials, apartments and houses, and the cost of operating them. The inflation rate is now 12.3% (April 2022 statistics) – the highest in 24 years. The average price of fuel in May 2022, is about 34% higher compared to prices at the beginning of the year.

Transportation costs vs. other sectors of the economy

Transportation is an industry that is strongly linked to many sectors of the economy. Factors determining transportation prices include the cost of servicing vehicles, the availability of spare parts for them and the cost of the vehicles themselves – and the prices of new tractor-trailers, buses and semi-trailers are also going up. In addition, waiting times are lengthening, making them slowly becoming a scarce commodity… and rising demand is driving up the price of the product….

Cost of exhaust aftertreatment fluid drives up transportation costs

Most trucks and buses are diesel-powered vehicles, for which it is necessary to use AdBlue exhaust gas after-treatment fluid to reduce the negative environmental impact of these exhaust gases. Due to the increase in the price of gas, which is necessary for the production of AdBlue, this fluid has become about 300% (!!!) more expensive in recent months, and there are also regular interruptions in its supply, so carriers buy it “in stock.” In the case of companies such as LCL Spedition, where the average age of a vehicle does not exceed 1.5 years and care for environmental protection is given priority, interruptions in the supply of AdBlue, in the worst-case scenario, can immobilize the entire fleet.

Why are transportation costs rising?
Why are transportation costs rising?

Increases in driver salaries

Another reason why transportation costs are rising are salary increases for professional drivers due to the requirements of the Mobility Package, which is a set of regulations governing road transport within the European Union. It is estimated that the average salary of drivers, has increased by about a third. The first six months of this year ended with increases in most companies.

Changes in regulations affecting transport costs

A real revolution in the transport industry was brought by the current month – since May 21, new regulations are in force, resulting from changes in the Road Transport Law and the Mobility Package. Any company performing international commercial transportation of goods with vehicles from 2.5 to 3.5 tons GVW must now have a transport license and excerpts for each vehicle – this means additional costs and more paperwork. By July 2026, it will become mandatory to equip vehicles with digital tachographs and comply with regulations regarding drivers’ driving and rest times. Obtaining a license for the carriage of goods by vehicles up to 3.5 tons costs PLN 4,000 (for a period of five years) or PLN 8,000 (for a period of ten years). For a permit to practice the occupation of a carrier, one must pay PLN 1000. One extract to a license costs PLN 440 (for a period of five years) or PLN 880 (for a period of 10 years). So it’s easy to calculate that transport companies that base their business on bus transportation face a serious expense. Many small companies and sole proprietors have been unable to bear these costs. The disappearance of some carriers from the market has reduced supply, which in turn results in an additional increase in the cost of transport services.

Taking all of the above factors into account, the best we can expect in the coming months will be a stabilization of the situation in the transport market… although the thought of stabilization may turn out to be only a fervent wish. Higher transportation costs mean higher prices for food and other products. In order not to end the article on a negative note, we would like to remind you that despite the difficult reality in which we currently operate, summer is coming and the thought of a vacation may be able to sweeten our worries of the weekday.

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