While there has been much positive news for the logistics industry over recent months, a mixed reception has been given to a new report from accountants Price Bailey. The report contains data that suggests that almost a third of UK hauliers are at imminent risk of collapse.

The reasons lie in rapidly increasing HGV driver wages and record diesel prices, with 28,557 out of 96,102 UK haulage companies having Delphi Risk credit scores that reside in the ‘Maximum Risk’ category. This status makes the task of accessing funding without guarantees from directors, a difficult one.

A Figure That Has Doubled in 12 Months

This worrying news is made all the more so when you consider that the figure of 28,557 is double where it was just 12 months ago, when it sat at 14,020 in March 2021. The report also added that many haulage companies are being forced to absorb cost increases caused by wage demands and oil prices, restricting already-thin margins.

It goes on to warn that road freight’s increasing cost is being exacerbated by the fact that many bulk cargo operators agreed lengthy contracts in preparation for what was believed to be a ‘hardening market’. Caused by Brexit and then Covid-19, they’re locked into a set price-per-mile that’s well below the current going market.

Increasing Cash Flow Pressures

Speaking about the issues, Price Bailey partner John Warren had this to say…

“In the long run hauliers can put up prices but those locked into fixed-price contracts will just have to bite the bullet for now. Many of our haulage sector clients are having to wait up to 90 days to get paid on top of seeing their fuel bills jump by thousands, creating a cash gap and potential solvency issues.”

This is far from being the only financial pressure that hauliers are facing either, as the cost of both new and used HGV cabs and trailers have majorly increased over the last year. This has led also to increased insurance costs. It would seem then that things are looking bleaker than many imagine…or are they?

“Very Alarmist” – Rod Mackenzie

However, there are some in the logistics industry that feel that this report is painting a much more serious picture than actually exists. Speaking about the report, Rod Mackenzie from the Road Haulage Association (RHA) had quite a different take on matters…

“I’ve not seen any evidence, anecdotal or otherwise, of this sort of problem in the industry. Certainly, times were tough last year with the driver shortage, but many firms are reporting record work with business booming, although the rising cost of fuel and wages is obviously a massive headache.”

“Not surprised” – Moreton Cullimore

Further muddying the waters, Moreton Cullimore – RHA chairman & MD of the Cullimore Group – has stated that he wasn’t surprised about what the data was saying at all…

“There was a spike – a boom if you like – but that has definitely backed right off. While hauliers are busy, the increase in costs has not been reflected in the ‘selling price’ in an industry of low margins.

I am significantly concerned for my transport company and others because all I see is our costs at their highest and our selling price not increasing at the same rates; there isn’t a comfort zone in the middle to cope with the difference.

If we raise our rates we won’t get the work and there are too many clearing houses and multinationals that will just do it for rates that an independent can’t do it for as they don’t have the scale of the others.”

Overcoming Uncertainty & Industry Challenges

No one said that returning the UK’s logistics industry back to health would be easy and this report shows that the need for pragmatism is greater than ever. Whether the issues faced are as bad as claimed or not, there’s no doubt that there will be more challenges ahead. However, together, as an industry, we believe they can be overcome.

At HGVC, we’ll continue to strive to combat the ongoing HGV driver shortage in the UK, with industry-leading, scalable HGV licence acquisition programs. With our nationwide network of training centres, staffed by the most experienced trainers in the business, we’re well placed to help, no matter how large or small your requirements are.

To find out more about us and how we work, we encourage you to take a moment and browse our website. Alternatively, to speak to us directly, either click ‘contact us’ or call us on 0330 818 8888 and a member of our team will be happy to discuss your needs.