“Continued progress despite logistical limbo” for UK transport sector

By Chris Robertson, UK CEO, Creditsafe

The growth seen last quarter for the UK’s transport and logistics sector thankfully appears to be continuing on an upward trajectory. With the number of failures recorded across the sector falling by almost 30% and the number of active companies increasing by over 13% compared to the same period a year ago, there is an overall feeling of steadiness that has the potential to continue through Christmas and the new year.

Taking the good with the bad
Some of the most promising signs of growth indicated in the latest quarterly Watchdog report from Creditsafe include the total value of sales, which grew by 6.3 per cent to £210bn, as well as the total number of employees, which increased by almost 16 per cent to 1.4m. In particular, there are some logistics companies whose successes have helped to paint an optimistic picture for the sector. For example, Martin Brower was one of the fastest growing companies, according to the most recent Watchdog report. Perhaps those green shoots really are back on the cards?

However, alongside noteworthy company achievements come equally noteworthy company failures. International shipping vendor Borderlinx, and national distribution company BAP Transport Ltd are listed as two of the largest failures of the last quarter, with the combined turnover of the two companies totalling over £24 million.

Company insolvencies within any industry are unescapable, and there are an array of external factors that may contribute to the failure or success of a business at any one time that are often out of the business owners’ hands. One major factor that cannot be ignored is the ongoing spectre of Brexit, and the possible effects it could have on the UK transport and logistics sector specifically.

While the UK logistics industry has declared that it’s ready to work closely with the government to try to ensure post-Brexit structures don’t ‘stifle supply chain efficiency’, there are still likely to be serious implications on UK businesses.

Lorry driver lotto
Recent developments have caused much additional anxiety across the industry. News that the transport secretary has fewer than 4,000 permits to allocate to almost 40,000 vehicles means it’s very likely that Britain’s haulage industry will face what many are coining a “lorry lottery.” This means that hauliers will have to compete with each other to get hold of fall back “ECMT” licenses (European Conference of Ministers of Transport).

Overall, forecasting the future of the Road Transport sector won’t be an easy feat. When combining the unpredictability of Brexit with the positive sales figures for the sector in Q3, which were up 8 per cent compared to last quarter, attempting to get a handle on the direction of travel for the industry will be challenging.

It is fair to say that a great deal of clarity is required before the transport and logistics sector feels confident in the run up to leaving the European Union in March. However, there are positive financial signs of growth that must not be ignored. Regular company health checks should continue to be a core priority for businesses to ensure that all aspects of their supply chains are robust enough to withstand any external shocks.

Being vigilant and staying up to date on government changes and their impact on business, both inside and outside the sector, will also be key to survival. As much as possible, logistics companies should be taking matters into their own hands so that they can control at least some factors, while building resilience to weather any other unpredictable storms.

Creditsafe’s Q3 2018 Watchdog Report is available for download here.

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