In a normal free market system if your costs of production go up you raise your price.

That assumes a stable ratio between demand and supply and wholly variable costs.  In other words, it assumes that the seller of services can choose to sit on his/her hands and do nothing/lose nothing rather than operate at a loss.

Real life isn't quite so tidy.  The lease payments on the rigs have to be made whether you work that week or not.   So you can't afford to turn down any work that pays more than the cost of the diesel, because £5 towards the repayments is better than £0.

(In fact, you possibly can't afford to turn down work that pays less than the cost of the diesel, because you want to be at the front of the transport manager's mind when the market, you hope, picks up.)

And the supply/demand ratio isn't stable.  There's an oversupply of drivers, which is only going to get worse as the cost of fuel forces supermarkets to take a look at their food miles, and that's also driving the price paid to the hauliers down.

I feel incredibly sorry for them.  Many of these drivers will have the financing for their rigs secured on their houses.  We do need a lot less trucks on the roads, but that's going to be made up of an awful lot of personal tragedies.

To me, it's a situation analagous to the fishing industry.  The independent hauliers have capital sunk into a business that just isn't viable any more, is in all our interests to reduce, and they deserve a fair subsidy to get out of it.