The latest government figures show nearly 20% of transport & storage businesses have no cash reserves left, with ParcelHero warning that home deliveries could be plunged into a pre-Christmas crisis.
ParcelHero stressed that courier and logistics companies must not be allowed to fail before Christmas, or we could face a repeat of the City Link disaster. This saw a major national courier – the sixth largest in the UK – collapse on Christmas Eve 2014, leaving around a million presents and parcels still stuck in its depots.
ParcelHero’s head of consumer research, David Jinks, said: “It’s a shock to discover just how significantly transport & storage sector companies have been impacted by the ongoing financial crisis. At such a volatile time, it’s extremely dangerous for companies to have no cash reserves to fall back on to meet short-term or emergency funding needs. No one wants to see another City Link situation, which left gifts undelivered and around 2,700 drivers and warehouse staff made redundant at Christmas, with a further 1,500 self-employed drivers impacted.
“The crisis facing transport & storage companies is significantly worse than the problems facing their major clients – manufacturers and retailers. By comparison, just 7.9% of manufacturers have no cash reserves left and 26.7% have 3 months or less in hand. Over 48% of manufacturing companies have more than three months of cash reserves to fall back on.”
For retailers, 12.4% of stores have no cash reserves left and 33% have three months or less. Over 30% (31.9%) of retailers have more than three months’ money left.
“These are more concerning figures than those for manufacturing, but they are far from the crisis transport & storage companies are facing,” Jinks added.
“The reason why transport & storage businesses are faring so badly is not hard to see. While 39.5% of them said their costs had increased, only 8.7% had correspondingly increased their prices in September. The competitiveness of this sector means businesses are reluctant to pass on these increases to their customers and risk losing contracts.
“In contrast, 29.6% of manufacturing businesses reported putting up their prices in September and 38.3% of retailers increased their prices. Even 14.9% of companies in the education sector, facing an even more problematic cash flow than transport businesses, raised their prices.”
“The government’s latest Business Insights bulletin, released this Thursday, revealed the underlying reasons why many transport & storage businesses are so squeezed. Of all businesses with 10 or more employees who imported/exported in September, 59% of importers and 54% of exporters reported a significant increase in challenges since the previous month. It’s no surprise that 39% of importing businesses and 29% of exporting businesses cited the change in exchange rates as their major concern.
“Those logistics companies who deliver for retailers and manufacturers trading overseas will be the first to feel the impact of any reduction in trade caused by challenges in overseas markets.”