Small driver agencies say rising oil and energy costs are squeezing independent recruiters' margins and hitting cash flows, suggesting smaller operators are beginnning to struggle to pass on the cost of the increase to consumers.

Andrew Briggs, managing director of independent Smarter Recruitment, warned that the transport industry would see casualties this year.

He told Recruiter: "The transport industry will slowly but surely collapse. Oil is not going to get cheaper. The big boys like Wincanton and DHL are buying out smaller clients and they can dictate what 'you' charge. Rising costs in the transport industry is forcing clients' budgets and we are the first people to take the squeeze."

Briggs said an independent in 1980 was making £200 per lorry load, compared to just £110 now because costs like fuel, duty, insurance and tax have risen phenomenally.

He added: "The likes of DHL can buy wagons and fuel in bulk, which shields them from exposure. And others have to pay full whack down the line. And you have one man bands who are undercutting everybody else."

So what is the solution? Reducing temps? Recruiters can take out indemnity insurance and default on the debt if clients are not meeting invoices for staff billing.

However, Briggs added: "You can't get indemnity insurance against the smaller clients because they are seen as too much of a risk.

Nine out of 10 companies within the transport sector get a zero credit score because it is a volatile industry."

But rising demand for oil has been a boon for the oil and gas sectors.

Larger suppliers of drivers and hauliers say rising oil and energy costs are not killing demand.

Recruiters who were braced for a slowdown have not seen any reduction in demand for drivers since oil hit the $100 (£50) a barrel mark.

Steve Hill, operations director at ExtraStaff, said: "Rate cuts because of the high oil prices haven't hit recruitment yet. We were expecting it as the economy slowed and the balance of supply and demand changed, but demand for drivers is still high."

A spokesman for Driver Hire told Recruiter: "None of our offices have had anybody come to them to renegotiate rates because demand is still strong."

Mark Tully, chief operating officer at NES UK, said recruiters had enjoyed significant and increasing revenue streams over the last 24 months, demand in the UK from both engineering, procurement and construction (EPC) and owner operators continues to be strong and clients predict market trends will continue for the next three years and beyond.