Haulage needs protection from enormous challenges
We in the Irish Road Haulage Association (IRHA) estimate 47,200 people are employed in the freight transport, distribution and logistics sector, accounting for 2.5% of total national employment, writes Verona Murphy.
Brexit is a major worry. Each week, €1.2 billion worth of trade in goods and services is carried out between Ireland and the UK. In addition, more than 80% of road freight to Europe travels through the UK. Anything that might act to disrupt this trade will be damaging to Irish road haulage activities and consequently to the Irish economy.
But just as worrisome is the mooted equalisation of the cost of diesel and petrol. It would be a huge blow for the haulage sector.
Fuel costs are a very significant overhead for licensed Irish hauliers — up to 35% of the operating cost of a vehicle. Licensed hauliers have no alternative but to use diesel. They do not have substitutable alternative fuel sources which they can choose as prices fluctuate.
Diesel is the most cost-effective, carbon- and energy-efficient fuel for use in heavy road transport.
Diesel offers the best combination of power, torque and cost efficiency. Other fuels require more space or weight, reducing payload and increasing the number of journeys. Even in the US where cars and light commercials are predominately run on petrol, heavy-duty trucks run on diesel.
Furthermore, diesel as a fuel has slower combustion characteristics as compared to petrol. So, they produce higher torque at low speeds, which is the primary requirement of a heavy goods vehicle. High torque is needed to move heavy loads. The diesel engine remains the only viable option for Irish hauliers.
In simple terms, diesel is the only readily available fuel source for hauliers and any proposal to equalise the excise duty between diesel and petrol will lead to an immediate 10% increase in the fuel costs of our members.
The argument currently dominating discourse suggests diesel is a bad fuel, no matter what. It is being perpetuated by respected institutions and think-tanks, yet completely misses the point that the road haulage industry has no alternative but to use diesel and that modern trucks are leading the way in slashing air quality pollution levels.
It also ignores the vast investment by truck manufacturers in designing highly efficient diesel engines in line with Euro 6 standards.
There have been huge investments by truck manufacturers to reduce air quality pollutant levels to near zero.
The Diesel Rebate Scheme was introduced in 2013 by Minister Michael Noonan.
The intention is to sustain operators through fluctuating oil prices and to bring certainty to the cost base for haulage operators when contracting to provide haulage services into the future. This certainty in turn benefits exporters by helping to control transport costs and reduce at least one aspect of the variable component to costs.
Under the scheme, Revenue will repay a portion of the mineral oil tax on fuel provided that the purchaser is a qualifying road transport operator who meets specific conditions.
The scheme has not worked effectively since it was introduced, as the applicable floor for diesel rebates was set too high at €1. The IRHA believes that for the scheme to make a substantial difference in current conditions, the floor should be reduced to 85 cent per litre.
Additionally, we believe that the maximum rebate available under the scheme should be increased from 7.5c to 15c per litre with a maximum rebate of 15c per litre once the price of diesel reaches €1 excluding Vat.
This proposal is based on current conditions. Should fuel price equalisation be contemplated, the diesel rebate scheme must be used to recompense the haulage industry in full for that increase.
Fuel price equalisation will not produce any positive environmental benefits from the national road haulage fleet, but will inflict grievous financial damage to a sector already facing huge costs and massive uncertainty.
