Haulage companies are being pushed over the edge by rising fuel prices as they attempt to bounce back from low demand.

The price of diesel in the West Midlands continued to rise this month – up 2.9 per cent to an average of 121.1p a litre – on the back of the rising price of crude oil.

And directors of transport companies in the region say they are seeing their margins squeezed to the limit after years of tough conditions and the recession.

Stourbridge-based Paul Connors was forced to sell his HGV last week after 24 years in operation because of the pressure.

“I have been an owner-driver for 24 years and worked for blue chip companies all around the country, but it couldn’t go on any more,” he said.

Mr Connors, founder of PJ Connors (Transport), which traded as CNC Distribution, said he has been unable to replace contracts lost in the region – despite no shortage of effort.

He said he had seen his margins cut in half over a five-year period as fuel costs have increased and the recession hit.

It cost him around £12,000 a year just to maintain and keep the vehicle on the road.

Now the continual increase in fuel costs has contributed to his decision to sell up.

Mr Connors said: “I have been trying to get work back but since July I have only been working two days a week, and it costs £12,000 a year just to park it.

“The rates are just too thin and the rise in diesel is a big consideration.

“I was doing the sums each week and it became clear I could make more money driving for an agency. Every day I had off I was canvassing all the industrial estates across the West Midlands area but everyone is battening down – there is no investing.

“Companies with 10 or 15 vehicles have got four vehicles standing, and it is going to get worse because there are no incentives for small companies.

“From what I am seeing there is going to be an awful lot of people unemployed over the next 12 months.”

Latest research from the AA shows the price of diesel rose from 117.7p a litre in September to 121.1p in October– a larger increase than the 2.3 per cent rise in petrol prices in the West Midlands, from 115p a litre to 117.7p.

Rising oil prices in early October plus a Government-planned fuel-duty rise on October 1 contributed to the increase.

Barry Proctor, managing director of North Staffordshire haulage firm Barry Proctor Services, said the increase was badly timed, as the recent Government spending cuts already stand to impact on the industry.

Mr Proctor, who employs 30 people and 10 full-time subcontractors and has 23 vehicles on the roads, said: “We deliver bricks and my concern is where the work is going to come from. They are cutting back on building new schools and social housing.

“Then on top of that there is the rise in fuel. A third of everything we make is spent on fuel. With our main customer we have an escalator in place, otherwise we would be struggling. There will be an awful lot of companies with no escalators and no clout to ask their customers for an increase.

“Margins are going to have to be squeezed because other businesses don’t want to pay more.”

The AA added that for UK families trying to digest the impact of Government cuts, this month’s £1.25-a-tank increase in petrol costs has added £5.30 to the monthly fuel spend of a two-car household.

AA president Edmund King said: “This month’s fuel price rises will put pressure on families and inflation targets, although the Government must be keeping its fingers crossed for a stronger pound and less speculation in the oil and fuel markets as it tightens the financial screw.”