In the past 12 months, a staggering 463 British haulage businesses have faced collapse, surpassing twice the number recorded just two years ago, as revealed by data acquired by accountancy firm Price Bailey.

Data obtained by Price Bailey through the Freedom of Information Act indicates a sharp increase in insolvencies among haulage businesses. The numbers surged from 225 in 2020/21 to 363 in 2021/22 and further spiked to 463 in the most recent 12-month period, marking a substantial 173% rise over two years (ending on 30 September). Price Bailey also conducted an analysis of the credit risk score in the UK haulage sector, revealing that 33% of businesses in the sector are now classified as maximum risk, up from 22% a year ago. Businesses in this high-risk category face imminent collapse and encounter significant challenges in accessing additional funding unless directors provide personal guarantees.

According to Price Bailey, a combination of adverse factors is putting immense pressure on the haulage sector. This includes escalating overheads due to fuel and wage increases, coupled with interest rate hikes that have escalated the cost of servicing debt. Recent policy decisions have further impacted the sector, with the Bank of England interest rate starting the year at 3.5% and aggressively reaching 5% by the end of Q2. Many haulage businesses, reliant on debt for financing fleets, premises, and operational costs, are grappling with increased debt payments following each rate hike.

Matt Howard, the head of the insolvency and recovery team at Price Bailey, expressed concern: “Business failures among hauliers are rising at a rate unheard of in more than a decade. We are witnessing a perfect storm of high inflation and interest rates at a time when many haulage businesses are on life support.” He added, “Haulage is a low-margin business, and aggressive interest rate hikes this year have exacerbated the situation. Many hauliers depend on debt finance for everything from fleet acquisition to day-to-day running costs, making them vulnerable to rising interest rates. Rising overheads as a proportion of turnover are pushing many haulage businesses into the red, and business failures are likely to continue rising throughout the second half of the year.”

Recent casualties in the haulage industry include Mark Stewart in Humberside, which reported a loss of £200,000 in its latest accounts up to the end of October 2022, employing 25 people at the time. KNP also went into administration a month before Stewart’s demise, employing over 750 people with a substantial fleet and distribution space. In June, Tuffnells had to call in administrators but has since been partially acquired by logistics tech platform Shift. Cross Transport in Birmingham also faced failure in the same month, operating a fleet of 200 vehicles across the UK.

The RAC reports an 11% increase in diesel prices since July 17, 2023, rising from 144.36 pence per litre to 160.44 pence per litre on November 9, 2023. Price Bailey notes that, while most hauliers pass on fuel costs to customers through a fuel surcharge, the monthly review cycle means that sudden fuel price spikes within weeks cannot be recovered until the following month. Howard highlighted, “Diesel costs, which had decreased from their peak in the summer of 2022, have started to rise sharply again over the last few months. Geopolitical tensions in the Middle East could accelerate that trend, piling more costs on embattled UK hauliers. In many cases, the fuel price rises seen over the last few months will have completely wiped out any profits hauliers would have made on margins of just a few per cent.”

Price Bailey also underscores the soaring costs of new and second-hand cabs and trailers over the past year, accompanied by a corresponding increase in insurance costs. For instance, units costing £85,000 plus VAT with a three-month delivery last year now cost £115,000 with at least an eight-month delivery period.

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