Aidan Flynn: High costs weigh on freight hauliers

To protect Ireland’s supply chain and service it with compliant vehicles, it is vital the Government provides clarity on the preferred fuel to be used, and fast tracks a nationwide refuelling network.

There is a lot to be positive about the freight distribution and logistics sector, however, Ireland's national and international supply chains still face many challenges. 

Aside from the drive to decarbonise, the past year has been about trying to manage rising operational costs, remaining competitive, and trying to come to terms with skills and driver shortages.  

Inflation may be easing somewhat but the cost of manufacturing and distributing goods remains high throughout the supply chain. 

The FTA Ireland Managers' Guide to Distribution Costs Report has identified several key trends, including the fact that haulage rates are not increasing along with other business costs. That means haulers are being left without sufficient capital to invest in new technology.

Vehicle supply issues and an unwillingness to commit to an alternative fuel over another have slowed down purchasing new vehicles, which could hinder Ireland’s path to a net zero economy. 

The Climate Action Plan 2023 report, which put a special focus on the haulage and heavy goods freight sector for the first time, highlighted the abatement required from the heavy goods firms to deliver a reduction of around 10% in emissions by 2030. That will be no mean feat. 

The demand for freight will increase in the next few years, with volumes projected to grow by over 90%, while Ireland’s population is projected to increase significantly. 

With economic pressures affecting all areas of the economy, managing costs should be the number one priority for all firms in Ireland’s supply chains. On the other hand, managing cash flow is essential to navigate an increasingly volatile marketplace where 43% of respondents face cash flow problems from delayed payments from clients.

Dealing with challenges is within the competency of the sector and defines our ability to be competitive on a global scale. Supply chains are complex undertakings that extend beyond the scope and capabilities of a single organisation. Significant work and effort is needed to build and maintain a supply chain network. 

Ensuring the stability and viability of all links at times of high operational and energy costs must be a priority. 

Operational efficiencies

Working collaboratively will be critical to the future success of the freight distribution and logistics sector in Ireland. 

The answer to many of the challenges requires reviewing the costs of doing business at more regular intervals, working in collaboration with partners and stakeholders, and assessing every link in the supply chain equally. In short, additional costs must be matched through increased operational efficiencies, productivity, and increased income streams.

The FTA Ireland Managers' Guide provides buyers and providers of distribution services access to essential operational cost data that enables quick decision-making. The figures should allow businesses to be always ready to react to sudden changes in the operating environment.

Supply chain businesses need to be magnanimous in understanding the cost of operations and flexible enough to deal with the knock-on consequences of sustained increased operating costs.

There is still much to be done, but with operating costs still at high levels, and inflation having such an impact, it is vital that logistics businesses are supported in their drive toward decarbonisation.

They must be given as much notice as possible to make a smooth transition to new fuel options. Irish commercial fleet operators want to decarbonise, but cannot commit huge sums of money to buy new vehicle types that may end up being the equivalent of investing in the Betamax video recording technology.

To protect Ireland’s supply chain and service it with compliant vehicles, it is vital that the Government provides clarity on the preferred fuel to be used, and fast-tracks a nationwide refuelling network.

Aidan Flynn is chief executive at business group, the Freight Transport Association Ireland