Anybody driving anywhere over the Christmas holidays might not notice that the haulage and transportation industry is under severe pressure purely judging by the number of lorries they see on the motorways.
But sadly this is an undeniable fact as the transportation sector finds itself buffeted from all sides without much protection.
New data focusing on the haulage industry alone shows that the number of hauliers entering insolvency has risen by 173% in two consecutive years up to 30 September.
In 2020/21 there were 225 insolvencies. This rose to 363 in 2021/22 and now 463 in 2022/23.
Transportation & storage insolvencies
| Year | No. of Insolvencies |
| 2019 | 545 |
| 2020 | 435 |
| 2021 | 532 |
| 2022 | 785 |
| 2023* | 641 |
Figures from The Insolvency Service *up to and including September 2023
Looking at the transportation industry as a whole we can see that the Covid affected year of 2020 saw the number of insolvencies take a dip by around 21%. However this reduction did not last long as they began to rise consecutively from 2021.
2023 is predicted to surpass the previous year’s number of insolvencies. If we compare the first three quarters of this year with the same time period in 2022 we can see that it has seen an 115% increase.
Further data looking at the credit risk of the haulage sector revealed that 33% of businesses in the sector are now deemed to be at maximum risk, up from 22% 12 months ago.
Businesses in the maximum risk category are considered at imminent risk of collapse and will find it almost impossible to access extra funding unless directors provide personal guarantees.
The haulage sector has felt increased pressure following an abundance of adverse factors, including soaring overheads, driven by fuel and wage rises, this combined with interest rate hikes which have made servicing debt increasingly expensive.
The recent policy decisions saw the Bank of England interest rate begin the year at 3.5% but has been raised aggressively over the past few months to combat inflation finishing at 5.25% before being paused last month.
According to the RAC, the price of diesel has jumped by 11% since July from 144.36 pence per litre to 160.44 pence per litre in November. Unlike other businesses in a similar predicament, most hauliers have managed to pass on the cost of fuel to customers in the form of a fuel surcharge.
However, the amount is usually reviewed monthly, meaning that sharp rises in fuel prices in a matter of weeks cannot be recovered until the following month.
In addition to the rise in fuel, the cost of new and second-hand cabs and trailers has grown exponentially over the last 12 months as well as an increase in insurance costs. For example, units costing £85,000 plus VAT with three months delivery last year are now costing £115,000 with at least eight months delivery.
Chris Horner, insolvency director with BusinessRescueExpert said: “We’ve seen a perfect storm of high inflation and interest rates hit vulnerable industries such as transportation fully in 2023.
“While there may be some gradual reduction in inflation next year, this is by no means a guarantee and the sector remains vulnerable to other economic shocks.
“Haulage, for example, is a low margin business so successive interest rate rises have been punishing. Many hauliers rely on debt finance to fund everything from fleet acquisition to day-to-day running costs so they were particularly vulnerable to these increases.
“Along with rising overheads as a proportion of their turnover, diesel costs have started to rise once more following a fall from their peak in the summer of 2022. These increases have helped reduce any profit hauliers would have made on margins of just a few per cent.
“If there is an underlying theme to this decade already, it’s that the unexpected can and will happen so directors need to be prepared for worst case scenarios coming true.”
If you are in the haulage industry and feel your skills could give Santa a run for his money this festive season but unfortunately you lack his infinitive resources it may be beneficial to get some professional advice.
We offer a free initial consultation to any director or business owner who wants a better understanding of what options are available to them to help their business.
Whether they are looking to protect and strengthen an existing business undergoing hard times or to close down an unviable one – our expert advisors will be able to guide them through a range of choices that they could follow depending on their particular circumstances.
We are here to help at whatever stage you and your business are at, all you have to do is get in touch first.