Plan Insurance Blog

Record Haulier Insolvencies: Is The Haulage Sector In Crisis?

The UK haulage industry, a vital cog in the nation’s economic machinery, is facing an unprecedented crisis with a record 463 businesses collapsing in the past 12 months.

This staggering figure, more than double the number from two years ago, paints a grim picture of the challenges engulfing the sector.


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The Perfect Storm Confronting the Haulage Sector

The data obtained by accountancy firm Price Bailey under the Freedom of Information Act, shows the number of haulage businesses entering insolvency has surged to alarming levels. This trend underscores a perfect storm of adverse factors squeezing the haulage sector. The challenges faced by the industry are considerable:

  • Aggressive interest rate hikes by the Bank of England, the jump from 3.5% to 5% in the first half of the year which have amplified the financial strain on hauliers who heavily rely on debt to finance their operations. Repayments are likely to have risen steeply
  • Fuel price increases – diesel has jumped by 11% since 17 July 2023, from 144.36 pence per litre to 160.44 pence per litre on 9 November 2023. Although, the prices are below the Mid 2022 peak and this cost will invariably be passed onto clients there will be an almost inevitable cash flow lag from the proceeding month.
  • Wage inflation has been strong across almost all areas of the UK work force in recent years. Gov.uk highlights that median pay increases for HGV drivers reached 13.1% from 2021. Despite significant rises recruitment has remained a challenge in the sector with better pay or benefits being available elsewhere being referenced as the main ongoing reason.
  • The value of new and second-hand cabs and trailers has escalated dramatically in recent times. Examples have been cited in the trade press of units costs jumping from £85,000 (plus VAT) to £115,000. Lead times on the supply of these assets have also extended from 3 to around eight months.
  • With increase values there have been increases in insurance costs for many. (Our expert team of commercial fleet insurance brokers will of course do all they can to help mitigate this impact.)

Unveiling the Alarming Credit Risk Landscape in the UK Haulage Sector

Price Bailey also identify the credit risk score of the UK haulage sector as being equally concerning. 33% of businesses are now deemed maximum risk, indicating imminent collapse and severe difficulty in accessing additional funding. and wage costs, coupled with aggressive interest rate hikes, have made servicing debt increasingly expensive for haulage businesses. The recent insolvencies of well-established haulage businesses, such as Mark Stewart, KNP, Tuffnells, and Cross Transport, underscore the severity of the situation.

The UK haulage sector clearly finds itself at a critical juncture, grappling with a myriad of financial challenges. With the economy struggling, many believe demand could drop. Overheads as a ratio of turnover will be mounting and profit margins for many are already just a couple of percent. The high level of business failures within the sector that Price Bailey highlight is likely to continue.

As the industry navigates this tumultuous period, shrewd management will be crucial to safeguarding its resilience. Those that are truly innovative, exceptional lean and/or cash buoyant will be in the strongest position. The road ahead is undeniably rocky, but proactive measures are essential to prevent further business failures and to ensure the vitality of this indispensable sector.

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