Written by: Keith Tully
Reviewed: Tuesday 20th December, 2016
The transport sector has become the North West of England’s most financially distressed field of operations.
That’s according to a new set of figures on the subject compiled by the UK’s insolvency and restructuring trade body R3, which now believes there to be around 2,100 financially distressed transport businesses in the region.
Until recently, technology businesses were statistically the most likely to face serious financial problems in the North West but the transport sector is now regarded as being the most perilous for individual companies.
R3’s numbers suggest that around 40 per cent of all transport businesses in the North West have a higher than average risk of failure, which is almost twice the figure for manufacturing and hotel businesses.
Roughly 26 per cent and 27 per cent respectively of pubs and restaurants in the region are regarded as having a higher than average chance of facing insolvency, with the corresponding figure for the construction sector put at 28 per cent.
Behind the transport sector, the field within which businesses have the highest chance of being distressed in the North West is technology and IT, with 36 per cent of the region’s companies in the sector currently deemed to be at higher than average risk of insolvency.
Richard Wolff from R3 describes the transport sector as being “highly competitive” and has highlighted several factors he believes have made the industry a more challenging one in which to operate in recent quarters.
“Haulage firms will have been feeling the squeeze this year due to the rise in fuel prices and the introduction of the National Living Wage in April, as well as continued problems of late payments by bigger customers,” he said.
“Meanwhile there have been a lot of new entrants in the sector, with increased demand for courier firms due to the rise in internet shopping and platforms such as Uber and Deliveroo making it easier to start up new businesses.
“Transport companies and other companies which offer logistics as a principal part of their core services need to scrutinize costs and cashflow to ensure they remain viable and be careful not to rely on debt funding that they cannot afford to repay.”