Cut-throat rates denting hauliers' profit margins
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• Hauliers' profit margins slipped in the first half of 1995 despite the national economic recovery, says credit reference agency CCN (formerly Consumer Credit Nottingham). It blames cut-throat competition on rates for the drop from 8.3 to 7.7%.
In its latest quarterly report CCN says the industry's falling profitability is particularly worrying because the price of diesel barely changed. Rates are falling even though costs are stable. Operators did manage to reduce their levels of debt from an average of 79% to 72% of capital invested. But this is still well above the national average of 50% and it leaves hauliers vulnerable to rises in interest rates.
While CCN applauds hauliers for pushing their average return on capital up from 7.7% to 8%, it points out that British industry as a whole pushed its average rate of return up from 9.8% to 11.4%.