You’d assume that the UK delivery business sector is experiencing a boom, especially with the rising demand for online orders all over the country. As it happens, many companies are struggling at the moment – particularly smaller ones as they try to compete with the global powerhouses of DPD, UPS, etc. Several factors are making the job of a homegrown delivery business harder than ever, and many of the industry’s key figures have identified the following problems.
Increased Fuel Costs
While this is, hopefully, a temporary matter, the rising fuel costs associated with the USA-Iran war have made live hell for UK delivery businesses. Petrol prices soared to over 160p per litre earlier this year – and diesel was even higher than that, topping out at over 200p per litre. According to historical data, this period saw the highest price for fuel since December 2022, but that was due to the global pandemic.
When you run a business that’s built around driving vans and trucks all over the country to deliver packages, you depend on fuel prices being reasonable. Even though this can be chalked off as an essential business expense on a tax return, many UK delivery companies are struggling with cash flow issues. Each fill-up costs considerably more than it used to – and, let’s face it, than it should – which eats into the operating cash levels.
As stated, this should be a temporary issue that will be resolved as the Straight of Hormuz opens and the war de-escalates. But, for now, it’s one of the major problems assaulting small delivery companies.
Low-Emission Requirements
The UK is increasingly opening up Clean Air Zones and areas where vehicle emissions must be below a certain level to avoid paying fines or fees. It’s all part of a wider initiative to improve sustainability and cut back on carbon emissions, particularly in built-up areas. For delivery companies that often need to travel through busy cities, this throws up a particular conundrum.
Many businesses are having a tough time dealing with the low-emission requirements in Clean Air Zones, meaning they have to deal with additional charges for making deliveries. As of right now, the only two viable options for a delivery company are:
- Hybrid vehicles
- Fully electric vehicles
The problem is that there aren’t many hybrid vans around, and if you go full EV, then you’re unlikely to complete an entire shift with a full charge, meaning you have to spend time charging the battery back up. Consequently, delivery companies are stuck between a rock and a hard place: you either invest a lot of money in good PHEVs that meet emission requirements or you deal with Clean Air Zone fees and congestion charges.
In any case, you’re either spending a lot of money upfront to purchase or lease the right vehicles, or you’re spending it on fees every single day – and both eat into your bottom line to cause cash flow and profitability issues.
A Shortage Of Specialist Vehicles
In the not-so-distant past, many small delivery companies were able to carry out deliveries using a car. Quite a few businesses did this as a way of reducing operating costs; they’d hire drivers and let them use their private vehicles for deliveries. It worked well, but now there’s a problem: the market has a growing need for more specialist vehicles.
For starters, major delivery companies are already on record stating that they’re seeing more deliveries than ever. This means the overall quantity of daily packages and parcels is through the roof, and this forces delivery companies to invest in proper delivery vans, moving away from the cost-saving idea of getting drivers to use personal vehicles.
But that’s not even the main problem. The wider issue looks at what people are getting delivered these days, and there’s an influx in deliveries that cover:
- Medication
- Food
- Flowers
- Several other perishable items
Whether it’s someone’s prescription medication that they ordered online, or the ever-popular food boxes like Hello Fresh and Gousto, delivery companies can no longer rely on “traditional” vans to do the job. Instead, they must have a refrigerated van that’s capable of regulating the temperature and keeping items fresh. Most delivery companies didn’t invest in these vehicles to start with, so now there’s a mad rush as everyone tries to get their hands on them.
The companies that are unable to find suitable specialist vehicles are stuck without a way to perform to the best of their abilities. They either have to reduce their services or find ways to upgrade the existing fleet of vans.
Growing Customer Expectations
The need for specialist vehicles can easily be linked to another problem in the delivery network industry: customers have higher expectations now than they used to. When delivery companies first started to make deliveries, customers were happy to receive goods within a couple of working days. Now, and you can thank Amazon Prime for this, everyone expects to be able to order something online and receive it the next day.
It’s created a logistical nightmare for companies all over the country – and that’s before we get into the growing demand for same-day deliveries, too. Also, as noted above, customers have higher expectations when it comes to what a company can deliver these days. Food deliveries are more common than they’ve ever been, as are medication-based deliveries.
This has all created an industry where UK delivery businesses need to meet very high demands or risk being cut away. Brands want to work with delivery companies that can meet their customer’s expectations, as they know that slow deliveries, or deliveries that result in the packages being spoiled, will damage their own reputation. As a result, delivery businesses have to invest more money to keep up with this demand, which is tough.
All the while, you’ve got the massive delivery networks that try to lap up most of the work. It’s become harder than ever for a small UK-based delivery company to start up and make an impact in this sector, particularly when you consider the problems explained above.
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