Business, Freight News, Road

Sales up, but more firms go bust, say analysts

[ January 17, 2018   //   ]

Increased sales and a rise in companies active in the transport sector in the last quarter of 2017 was offset by a surge in company failures, according to analyst Creditsafe’s Quarterly Watchdog Report.

Transport company failures were up 178.70% compared to the third quarter of 2017 and no less than 433% compared to the same period last year.

The Watchdog report tracks quarterly economic developments across the Transport and Logistics and 11 other sectors.

It found that total sales for the transport were up 2.97% over the quarter, witgh 5,764 more new companies in the sector than in the last quarter of 2016. Employment levels and wages stagnated, however, with only a 4.69% increase in employees in the last 12 months.

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.

Operations director at Creditsafe, Rachel Mainwaring, 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’re 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 17.9%. 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 was down 18% during the last quarter of 2017 across transport and logistics, but up by 15% 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.