The UK Road Haulage sector is seeing a steady recovery in business values as the pandemic recedes. However, new storm clouds continue to gather on the horizon and turbulence is already being felt by hauliers across the land.
Fuel prices are ravaging both consumer and business confidence. The continuous hiking of prices at the pump are being acutely felt across the haulage market. With the RAC already warning the population to prepare for prices to breach £2 per litre, the cost of running a single truck has risen by £20,000 in the last year alone. Any gains in business values from the post-pandemic bounce are likely to be erased in short order.
Added to the fuel cost crisis is the continued dearth of lorry drivers. Post-Brexit, the reduction of drivers continues to haunt the market. Government threats to increase taxes unless conditions are improved for drivers, risk adding to inflation. In an industry where average profit margins have struggled to breach 2% over the past 5 years, hauliers would need to further hike prices, adding further inflationary pressure throughout the economy.
Then there is Brexit itself. The continuing slow-motion disaster unfolding on the M20 in Kent has seen disaster relief agencies brought in to help drivers stranded by the UK becoming the first country in history to voluntarily erect new trade barriers with its main trading partner. While haulage rates are at multi-year highs, the hit to profit margins is only going to get worse in the coming months.
Despite these major headwinds, values in the sector have been swept along with the post-pandemic growth across the world. Overall valuations are up 5.1% in the latest year. That compares to a 0.3% increase across the wider transport sector and 2% across the whole economy.
Unfortunately, the increase in business values is not being shared across the market. According to the latest Plimsoll Analysis of every leading player in the UK haulage sector, only 293 firms have seen year-on-year value rises. Elsewhere, a worrying 566 major hauliers have seen their values fall by 10%. Can those adding value over the most recent year sustain their rises and will those already shedding value stem their losses in the face of the rise in fuel costs?
Within the industry, there is a growing divide in valuation performance based on size. The 10 largest companies within the market have increased their average value by 17%. In contrast, companies under £4m turnover have, on average, shed 2% of their value in the same period. In fact, the only group of haulage businesses to shed value were those at the bottom of the pecking order. How will they cope as conditions deteriorate?
The final area worth mentioning is the niches within the wider sector. The latest Plimsoll Analysis shows that Car Transporters saw a 6% fall in average values, victims of the slowest car sales market in 30 years. Elsewhere, oil tanker drivers, temperature-controlled distribution and, of course, couriers all saw nearly double-digit increases in average value.
The Plimsoll Analysis makes clear that the haulage industry enjoyed the bump from the end of restrictions but is coming under increasing pressure. Without an end in sight to the disruption affecting the market, conditions could get much worse. To help our readers make sense of some of the impacts we are offering a free report looking at business value trends across the market.
For a free copy of the latest Insights Report looking at the latest trend in values across the UK road haulage market, just head to - https://landing.plimsoll.co.uk/road-haulage-insight.