Van Shortages Will Impact Courier Industry Growth
Phile West
Director
The courier industry in the UK is facing a significant challenge with the ongoing van shortage, which is akin to trying to navigate a ship through a storm without a compass. As vehicle rental costs continue to rise, many companies find it increasingly difficult to expand and meet customer demands.
Experts have expressed cautious optimism, suggesting that the delivery van shortages may soon ease. However, the reality remains stark: commercial rental contracts have seen increases of 30% to 40% in the past year alone. According to the Society of Motor Manufacturers and Traders (SMMT), the UK experienced a decline of 20.6% in new light commercial vehicle registrations by the end of last year, marking the lowest levels since 2013. This drop is primarily due to a global shortage of semiconductors, compounded by geopolitical tensions, model changes, and structural shifts within the industry.
SMMT’s chief executive, Mike Hawes, emphasized that the decrease in van production stems from persistent supply chain disruptions and broader economic challenges. He stated that if the courier sector delivers effectively for the economy, society, and the environment, collective action is essential, particularly concerning charging infrastructure and fiscal frameworks to encourage more van purchases.
In 2023, the LCV market is projected to contribute an additional £1.6 billion to the British economy, with a further £2.4 billion expected in 2024, assuming around 330,000 new van registrations.
However, Martin Smith, managing director of Pegasus Couriers, noted that while the news of production increases is encouraging, the escalating rental costs hinder growth. Pegasus Couriers operates about 600 vans and serves clients like UPS and Yodel across Scotland, Ireland, and Northern England. Smith mentioned how last year’s spike in demand and costs forced many companies, including his own, to revise operational and expansion plans.
Phil West, Director at Pegasus Couriers, echoed these sentiments, highlighting that ongoing rental price hikes could severely impact the industry. The courier sector plays a vital role in boosting the economy, and the previous year’s rental price increases prompted many businesses to adjust their growth strategies. To combat rising costs, Pegasus Couriers has proactively negotiated better rates with suppliers, including fuel providers and insurance companies.
The British Vehicle Leasing and Rental Association (BVRLA) has also voiced concerns over the impact of limited production on business growth. Chief Executive Gerry Keaney indicated that many members are now realigning their goals to adapt to the new market realities while focusing on compliance and technological advancements.
As the courier industry grapples with these challenges, the hope remains that solutions will emerge to help navigate through this turbulent period. The journey ahead demands resilience, collaboration, and innovative strategies to ensure the industry can thrive despite the current obstacles.
