WANTED: A LACK OF INTEREST
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eople are still struggling with the past recession and are having to keep their margins low to keep the business." The latest report on road haulage from financial analysts Plimsoll holds few surprises: for most operators it's a case of "tell us something we don't know". What may surprise you is the fact that small hauliers are as efficient (or as inefficient) as the big boys (see news story, page A). It seems that the bottom 25% of operators—defined as those with annual sales of around 21m—had a return on revenue of 3%; the top 25% of companies—those with annual sales of at least 220m—had a return on revenue of 4%. Right now to make any kind of profit in road haulage is cause for celebration, but those figures are appaling. No wonder the banks won't touch road hauliers with a bargepole.
Given that rates are no better than three years ago, while competition for customers is tougher than ever, the latest 0.5% interest rate increase will not kelp truck operators or truck manufacturers. Many pundits, not least the Chairman of the Conservative Party, would argue that at 5.75% interest rates are not high enough to cause distress to borrowers. But most pundits, including Jeremy Hanley, aren't running a hire-or-reward 38-tanner on HP. While we're on the subject of pundits, Plimsoll's assertion that "smaller businesses haven't had such a bad time of it compared to the big companies" is at odds with the fact that the biggest decline in 0-licence holders has been in the 1-5-vehicle sector, which is traditionally the most vulnerable during a recession.
One difference between small and big operators is that the big boys may still have something in reserve: small hauliers simply can't absorb any more losses.The latest increase in interest will make it even harder for hauliers to generate more than the current return on revenue and make it even harder to stand firm on any kind of rate; never mind a sensible one. Rest assured, if the Chancellor has raised interest rates on the basis that British industry can take it, then watch out at the next Budget when Future tax cuts will be paid for— in advance.
Would anybody like to bet on VED and fuel tax going down?