The Strait of Hormuz, the narrow 21-mile passage between Iran and Oman, is far more than a geopolitical chokepoint. For UK haulage operators, disruption can quickly become a fuel-price shock that hits diesel costs, margins and cash flow.
In this article, PKF Littlejohn Advisory’s Ian Jones draws on 30 years’ experience representing hauliers to explain what the uncertainty could mean for haulage demand and operating costs. Plus, the practical steps you can take now, including cash flow forecasting and contingency planning, to stay resilient through volatility.
Strait of Hormuz disruption: what it could mean for UK diesel prices and haulage costs
The current crisis in Iran will have tremors that will ripple across the UK haulage industry with surprising immediacy. The conflict is the kind of supply disruption that acts as a pivotal moment in energy history. We have just experienced the biggest one-day hike in the price of a barrel oil in history. When fewer ships navigate these difficult waters the mathematics for Britain’s haulage industry becomes unforgiving. Diesel costs approximately 40% of a haulage operator’s operational expenses. As Hormuz anxieties push crude prices upward, the effect will cascade through the haulage industry within weeks. A £0.10 increase per litre can translate to hundreds of pounds in additional costs per vehicle each month.
- Diesel is typically around 40% of a haulage operator’s operating costs, so even small price movements can materially impact margins.
- Fuel volatility and shipping disruption can also reduce volumes, creating unpredictable demand that makes fleet and driver planning harder.
- Cash flow projections and contingency plans help you anticipate pressure points and maintain credibility with customers and funders.
The impact will extend beyond simple fuel surcharges as it exposes supply chain fragility and hauliers will face a dual squeeze when shipping schedules become uncertain as retailers and manufacturers respond by reducing orders. Both scenarios destabilise haulage demand and a reduction in inbound container movements means fewer shipments requiring ground transport from ports to distribution centres and then beyond.
Transport companies will experience volatile demand rather than predictable volumes, which is the worst possible scenario for planning and assets. For operators, this structural uncertainty cannot be managed through efficiency alone. A fleet manager cannot engineer away a 20% fuel increase or the delayed arrival of containers.
The current crisis reminds us that the haulage industry is essential but often overlooked as it absorbs geopolitical shocks first and most directly. Until tensions ease, hauliers will operate in a state of constrained circumstances preparing for disruption, vulnerable to supply-side surprises, and ever dependent on the stability of that narrow passage thousands of miles away.
Cash flow forecasting for UK hauliers: projections and contingency planning
In this delicate interaction between finance and haulage, as uncertainty rises and unexpected expenditures loom large, cash flow forecasting becomes one of the most practical tools in a haulage business. Much like a compass guiding a ship through difficult waters, projections provide invaluable insights into a company’s financial health. They enable operators to anticipate challenges, allocate resources wisely and ensure survival and sustainable growth. They can also strengthen your credibility with customers (when you need to communicate price movements) and with funders (when you can evidence a short-term blip and a plan to manage it).
Practical steps: turn planning into a tool, not a gamble
At the moment, the conversations I am having with hauliers are about practical solutions, that means:
- Protecting a business if the unexpected occurs
- Thinking about extracting value from a business without it being diminished by bad timing or poor structure
- Using business planning like a tool, so things don’t feel like a gamble
- Making sure a haulier’s money is working as hard as they are, and
- Putting a sensible plan around retirement
This advice considers the real risk of what is going to happen to a business in today’s circumstances, where the operators have already spent a lifetime working in an industry subject to such industry volatility:
- Produce and update weekly cash flow forecasts to determine funding requirements and pinch points
- If you need to increase prices, do it straight away and explain to your customers why it is necessary
- Focus on credit control and be tough with non-paying customers
- Maintain ongoing dialogue with funders and key suppliers
- Massage payments where possible, i.e. seek agreement to pay rent or VAT in monthly instalments rather than quarterly
- Review your workforce and make economies where possible; consider reducing working hours (with agreement) as an alternative to redundancies
- All non-essential expenditure should be curtailed
Contact our experts for more support
PKF Littlejohn Advisory supports UK haulage operators with financial planning, cash flow forecasting and restructuring advice. For further information, please contact Ian Jones.
