New end of year figures released in the quarterly Creditsafe Watchdog Report show a bumper month across financial indicators for the transport and logistics sector, counterbalanced by a worrying upward trend in company failures of 178.70% compared to Q3 and up 432.74% compared to the same period last year.
Total sales were up 2.97% over the quarter, supported by 5764 more new companies in the sector than in Q4 2016. Employment levels and wages stagnated, however, with a 4.69% increase in employees in the last 12 months.
The Watchdog report tracks quarterly economic developments across the Transport and Logistics and 11 other sectors (Banking & Financial, Farming & Agriculture, Hospitality, IT, Manufacturing, Professional Services, Retail, Sports & Entertainment, Construction, Utilities and Wholesale).
The top three fastest growing companies in Q4 were all in the rail industry – Arriva Rail North Limited, First Transpennine Express Limited and Network Rail Limited. This can largely be attributed to the largest increase in train fares since 2013 that was announced at the start of 2018.
“There are positive signs of growth across the transport and logistics sector, as both established and new companies have demonstrated strong financial performance this year.”
Company failures in the transport and logistics sector reached their highest level in the last three months of the year, with 602 recorded receiverships in Q4. One of the economy’s most significant failures this year was included in these figures when Monarch Airlines collapsed in early October.
Rachel Mainwaring, Operations Director, Creditsafe, commented: “There are positive signs of growth across the transport and logistics sector, as both established and new companies have demonstrated strong financial performance this year.
“However, the mammoth jump in company failures seen towards the end of 2017, suggests that the sector may have adopted a higher risk ‘fail fast and often’ strategy, sometimes used to describe the disruptive and agile tech sector. As a steady stream of new companies entered the market in 2017, perhaps we are now seeing a significant proportion burn out.”
“In road freight specifically, we have also seen a similar upwards trend across sales, active companies, employment and wages, as well an increase in company failures of 17.89%. With the figures in road freight showing smaller swings, there appears to be less volatility in this area than across the sector as whole.”
The number of County Court Judgements issued is down this quarter across transport and logistics, with a decrease of 17.98%, but up by 14.93% for road freight. In addition, with bad debt owed by road transport companies up 5.28%, the number of companies placed in the very high risk band by Creditsafe has increased by 20.87% in Q4.
For more information and to read the full report: www2.creditsafeuk.com/resources/industry-watchdog/