Differences in diesel fuel prices can significantly distort competition both between and within domestic
road haulage markets. This is well illustrated by the case of the UK, where diesel fuel prices are by far the
highest in the EU. The paper examines the effects of high and rising fuel prices on cabotage penetration in
the UK road freight market and reviews a series of measures that have been proposed to ‘level the playing
field’ between British and foreign hauliers. Within domestic haulage markets, carriers also vary in the
extent to which they can recover fuel price increases from shippers. The paper reviews recent empirical
evidence on this subject collected in the UK and outlines several methods of compensating hauliers for
fuel price rises.
