The International Road Transport Union (IRU) the world road transport organisation, has launched a 17-point emergency plan for governments to tackle rising fuel prices and their impact on transport networks, energy security and decarbonisation plans.
Diesel prices are up by 63% globally since January 2021, spiking since the Ukraine war and with no end in sight to volatility. Fuel price rises have hit operator margins by 9% in two months, but their net profit margins are often little more than 3%, according to the IRU.
Escalating fuel prices are driving inflation through the global economy, and supply chains face blockages. The rising risk of small operators going bankrupt will further breakdown mobility and logistics networks, and mean they are less able to invest in new vehicles to decarbonise, the IRU says.
Radu Dinescu, IRU President, said: “Road transport operators are facing a cash flow crunch, especially the 90% who are small and medium sized firms. Volatility in diesel prices and inflexible commercial terms mean they have little room for manoeuvre and bankruptcies are climbing. This will damage road transport network capacity and efficiency, impacting supply chains, inflation and the broader economy. We need to act now.”
IRU’s emergency plan includes 17 government actions to support road transport operators, especially in alleviating fuel price volatility, and to realign decarbonisation roadmaps to the new realities of increasing energy insecurity.
Among the measures, IRU is calling for an adjustment mechanism on fuel excise for commercial transport operators, to provide short-term certainty and avoid the partial collapse of road transport networks and inflation. In Germany this month for example, a temporary excise reduction of 87% would mean an operator breaks even instead of losing money.
Due to enormous differences of up to 96%, IRU is also calling for all modes of commercial transport to pay the same fuel tax to keep decarbonisation plans on course, as well as accelerate efficiency measures via collective road transport and eco-trucks.
Amid greater energy insecurity and a growing imbalance between fuel supply and demand, all low and zero alternative and existing fuels also need to remain in operational use. Governments should review decarbonisation policies carefully to plan a more gradual shift to renewable fuels, beyond battery electric vehicles, and scale back market distortions, such as road user charging and zero emission zones that exclude already operational low carbon fuel options such as biodiesel and bio-LNG.
Umberto de Pretto, IRU Secretary General, said, “IRU’s emergency plan steers government action in key areas to make sure that road transport continues to underpin economic growth and social health, avoid excess inflation, and keep our industry and transport in general on track to meet our decarbonisation targets.”
The emergency resolution was adopted by IRU members, with input from the commercial road transport sector in all global regions.
Author: John Loughran