The year ahead
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As 2012 gets under way, the Latest Trucking Britain survey shows operators forecasting another tough year
Words: Justin Stanton
AS 2011 WORE ON, most business leaders voiced the same warning: 2011 was tough, but 2012 will be tougher still. And looking at the data produced from December’s Trucking Britain Out Of Recession survey, we can’t help but agree with them.
The good news is that more than a third (35%) of operators expect an increase in volumes this year, while more than a quarter (26%) expect an increase in proit. Nearly half expect volumes and proit in 2012 to be the same as they were in 2011. However, more than a quarter (27%) expect a fall in volumes and nearly a third (31%) a fall in proit.
On balance, that appears to be an acceptable outlook. However, we can compare this latest data with the previous year’s, ie the outlook for 2011 when surveyed in December 2010: overall, that showed that 49% expected an increase in volumes and 40% an increase in proit; and just 11% expected a drop in volumes and 19% a drop in proit.
Returning to the current data, the sector to be in is retail: 43% of operators in this sector expect an increase in volumes this year and 33% a boost in proit.
And, almost inevitably, the big
ger the leet, the more positive the outlook: 43% of operators with more than 50 trucks expect a volume increase, compared with just 28% of operators with no more than 10 trucks.
Given that operators are not as positive about 2012 as they were 2011, it’s no surprise that vehicle acquisition plans are not quite as irm as they were a year ago. Those expecting to acquire new vehicles reached 49%, compared with 50% a year ago, while those expecting to acquire used vehicles reached 28%, down from 38% a year ago.
Biggest concern for 2012
We asked respondents about their biggest concerns for their business in 2012. Predictably, the economy and the price of fuel dominated re sponses. Here is a lavour of those responses: “A rise in running costs along with a slowdown in production, this then giving us an increase in the number of hauliers willing to cut rates. A renewed pressure from foreign hauliers undercutting the current rates, which are unsustainably low.” “Being forced to make redundancies of good staff.” “Exports to Europe down, with a knock-on effect to UK manufacturers and then UK hauliers.” “Customers’ liquidity, and payment of bills on time.” “Government and trade associations’ failure to address the crippling fuel duty rates. Over-regulation, particularly industrial relations/employment law. Continuing instability in the Middle East affecting world oil prices.” “Increasing fuel prices continue to place pressure on margins, any further increases will be detrimental to the proitability of the business, particularly at a time when customers are unwilling to accept rate increases.” “My biggest concern is the issue of rising costs in particular fuel, this linked to the market’s inability to generate competitive price increases, and inally mix in the pay demands of the unions.” “My main concern is that conidence falters again and then volumes decline. Swift decline in volumes is perhaps the most dificult thing for a transport business to face given our high overheads and low proit margins.” “Scaremongering by the press of another recession.” “The impact on our customer base of wider economic conditions around the Eurozone and UK plc, thereby producing challenges that are, to a greater extent, outside our control.” “Uncertainty of volumes and therefore the resource needed, while having to take account of new agency worker regulations. Also the impact of the Olympic Games (and other events) during our busiest period.” “We have a new, very large (for us) contract starting in the new year. With a ive-month lead-in for new trucks and some of our older ones being banned from London from 3 January, we will be initially reliant on hire vehicles, which could be a problem. Otherwise, 2012 is looking good for us.”
Best for your business
We also asked operators what the best thing for their business would be in 2012. Again, fuel dominated: this time a reduction in its price was the common wish. It highlights how tough transport can be that one respondent gave this answer: “Be offered a contract with a fuel stabiliser.” Here’s a lavour of the other responses, some of which are predictably light-hearted: “A boom in the economy, people spending more and a cut in fuel duty.” “A rebate from the government on fuel by means of an essential user rebate. The tightening of legislation on foreign hauliers working in the UK, an understanding of the importance of road haulage, and investment into our industry by means of tax relief.” “A stable year with no macroeconomic shocks, thereby giving us the conidence to continue to invest within the business.” “All the cowboy, get-rich-quick waste disposal companies have decided to cease trading!” “Banking industry starts to provide inance products again at reasonable rates.” “Cancel the Olympics.” “Costs stabilise, whether that be fuel, insurance costs, overheads etc, and that we retain all our existing customers as we reach contract renewals, as well as capturing new business. We have to retain our current diverse customer base and help them grow their businesses, because that way we increase our sales and subsequently, deliveries.” “Economy to start growing, and as our biggest customer is involved in construction, it would be helpful if the government invested in capital projects. I would like a dual carriageway to Scotland’s capital. Now I really am in fantasy land.” “The government to halve fuel tax for haulage companies.” “Government funding for training young drivers. Any tax breaks would be more than welcome though.” “The best thing for our business in 2012 will be the Olympic Games.” “The best thing is for our customers to renew contracts, giving us added security and also conidence to upgrade the vehicle leet. The other best thing is a drop in fuel prices, although sitting here now I can’t really see that happening!” “To continue the good relationship we have with our clients, and to make sure their service is irst class and above their target levels!” “Win the lottery.” “Yodel goes out of business.”
Optimism setback
Given that expectations for 2012 are not that great, it’s hardly surprising that conidence has taken a knock. October’s and November’s surveys showed optimism levels rising from September’s low of +33; however, December produced a new record low of +31 (see chart below) as 65% of respondents said they were either very optimistic or fairly optimistic about the prospects for their business over the next 12 months, while 34% were either not very optimistic or not at all optimistic.
Again, it’s no surprise that hire and reward hauliers are the least positive bunch, with an optimistic/not optimistic split of 59/41; the split for logistics and contract distribution irms was 80/20, while for own-account operators, it was 69/32.
• The next Trucking Britain survey is online now. Go to www.commercialmotor.com/ truckingbritain to take part.