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A third of hauliers
Page 6
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face crisis in 2008
Next year will be tough, especially for smaller firms, and experts warn that one in three hauliers may not survive. Roanna Avison reports.
A THIRD OF ALL UK operators will struggle to survive 2008 as trading conditions remain tough.
Plimsoll Publishing warns that the financial standing of about 33% of operators is such that unless they act now to improve their finances they may not stay in business.
David Pattison. senior analyst at Plimsoll,says the industry has been going through a series of struggles that have put it under increasing pressure: "There is some evidence that some operators are passing [higher fuel costs] on to their customers. but we are also seeing that smaller companies are not able to pass on as much of the fuel costs as the larger companies. The smaller companies are struggling to grow their business at all, while the bigger ones are growing at 6-7%.
"And [extra fuel costs] take a bite out of profitability."
Pattison says this is unusual because historically the smaller, niche companies have been more profitable than their big,ger counterparts:"Clearly, as we saw with Reid [see panel, below], commercial costs are terrific. "The amount of equipment hauliers need and the investment required to keep it up to scratch is not small, plus the cost of credit is increasing — and with fuel prices increasing, the combined affect on relatively slim margins is incredible."
Pattison points out that many hauliers are operating on a margin of less than 3%: "And if you knock off [extra] fuel costs, finance charges and other extra costs there's nothing left." By highlighting the dangers faced by a third of operators, Pattison says Plimsoll is trying to warn them to take action.
"There are signals within the business that allow you to take the right measures now Lo prevent your business getting into these problems," he points out."Based on our ratings system we put a third of freight companies in the UK in the 'danger' category, based on their financial circumstances.
However, Pattison is confident that a good number of operators in the 'at risk' category will pull themselves out of the danger zone: "Companies fall into danger but find they can improve."
He concludes that the consensus is next year is not going to be an easy year and "this will put extra pressure those that are already finding things tough".