Financial pressures for many - a deep dive into couriers

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#EV, #Fleet
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Couriers and their van

Right Fuel Card recently surveyed a range of businesses across their SME customer base to discover how positive they feel about the next 12 months and gain their insight into EV technology. Due to the current cost-of-living crisis, many businesses are struggling financially, so it’s unsurprising that 60% of respondents that work as couriers are not confident about the next 12 months.

Financial strain for many businesses

As a result of the covid-19 pandemic, demand for couriers increased substantially as more people were purchasing goods online. The number of food deliveries has doubled compared to pre-covid levels which has provided more job opportunities for drivers in this industry. However, as covid restrictions have now been relaxed, it’s expected that the demand for couriers will begin to decrease as many customers have returned to shopping in person.

The cost-of-living crisis has also had an impact on demand as more consumers are looking to cut their outgoings, leading to a drop in online sales. This means couriers may lose business and profits, which will impact those who are self-employed most as they’re often paid per delivery. Large businesses have also been affected by this lack of demand, with Deliveroo experiencing huge losses already this year.

Due to their tax and employment status, couriers must carefully manage their finances and complete a tax return to declare all earnings to HMRC. This task can be time-consuming and cost businesses money if not handled properly, so it’s important that self-employed couriers fully understand which business costs are not taxable by HMRC.

Couriers may be able to claim:

  • Fuel costs
  • Vehicle repair and servicing costs
  • Road tax
  • MOT costs
  • Vehicle insurance
  • Courier insurance
  • Vehicle hire costs
  • Parking and toll fees

However, there can be confusion about who is responsible for paying these taxes. Some couriers work for larger companies such as Evri (formerly known as Hermes) but are still technically classed as self-employed and so will need to complete an annual Self Assessment. This can be challenging for couriers who don’t know the process behind filling in their tax returns or are unsure about how to calculate the amount of tax they need to pay.

Still too many barriers for EV technology

From 2030, the sale of new petrol and diesel cars will be banned in the UK to help reduce emissions and protect the environment. Couriers that use new vehicles will therefore need to start investing in greener alternatives before this date. However, this survey highlighted some of the key concerns that couriers have about EV technology with 98% of couriers who responded not willing to make the switch in the next 12 months.

  • Insufficient driving range. One of the main concerns that respondents had about EV technology is that the driving range is too limited for those that are constantly on the move. In comparison to petrol and diesel vehicles, EVs have a far shorter driving range which will be challenging for couriers that need to embark on long-distance journeys. This can cause additional stress for drivers as they’ll be more likely to experience ‘range anxiety’ and will need to carefully plan out routes in advance to ensure that they can reach a suitable charging point.
  • High purchase cost. Many couriers are already facing financial pressures due to the rising costs of running their fleet. As EVs are substantially more expensive to purchase than their diesel and petrol counterparts, couriers are struggling to find the funds to invest in them.
  • Slow charging times. As couriers embark on several trips every day, it would be impractical for them to wait for long periods of time for their vehicles to recharge, particularly if their deliveries are time-sensitive.
  • Inadequate charging infrastructure. The lack of publicly accessible charging points is a deterrent for couriers who have concerns that they won’t be able to conveniently recharge their vehicles when needed. This will affect those that work in rural areas the most as they’ll struggle to find a local charging point and so may need to invest in a home charger. Not only can this be expensive to install but relies on drivers having access to off-road parking which is not always possible.

Courier firms are likely to require assistance from the UK Government before they’re able to adopt EV technology, as many do not have the financial means or resources to invest in these new vehicles. A greater selection of electric vehicles needs to be available for SMEs and these need to be affordable and have a more extensive driving range than current EVs on the market. If these barriers are tackled by vehicle manufacturers and the Government, then couriers will be more likely to adopt EV technology before the 2030 ban.

Right Fuel Card remains committed to supporting our courier customers. As well as an opportunity to reduce fuel costs, the weekly invoiced access through our online account management system provides an easy solution to for couriers to reclaim VAT on fuel. Just as our courier customers will eventually be looking to switch to alternative fuels in the future, we’re already looking to increase our product range to meet the changing needs of our customers, with the aim of being able to offer a wide range of cards which, reflecting the wider range of fuels that vehicles will be using in the years ahead.

To discover our selection of fuel cards using our simple comparison tool, alternatively, you can contact our team at 0113 202 5110 to discuss your options further.

Note: The survey was conducted in June 2022, receiving 1156 responses.

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Matt Dodds
Head of Strategic Sales and Partnerships

With over 14 years of experience across two of the leading fuel card companies in the UK, Matt Dodds joined RFC Edenred to help lead the development of products to support our customer's move to EV and other alternative fuels, a transition he feels passionately about.