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7th April 2011, Page 14
7th April 2011
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Which of the following most accurately describes the problem?

Responses to March’s Trucking Britain Out Of Recession survey reveal an industry toughing it out

MARCH MAY HAVE been the month in which the government did as much it could within its power to limit the spiralling cost of fuel, but it was also the month in which irms like Joseph Rice and Sons, Derek Linch Haulage, Hurst Transport, and FW Mason & Sons all collapsed.

Within that context, it is perhaps no surprise that the overall picture painted of the transport industry by last month’s Trucking Britain Out Of Recession survey is not as rosy as that which emerged in February (CM 3 March).

This month we focused on ‘inancial’ relationships, ie relationships with banks, suppliers and subcontractors. Given that we hear much of the worst of the industry, we were surprised that 9% of respondents were able to report that their company’s relationship with its bank is better than 12 months ago; more in line with our expectations, 62% of their relationship with their bank was about the same as a year ago, while 13% said it was worse.

Again against our expectations, logistics/contract distribution irms have had a tougher time with their banks than hire and reward hauliers as the table below shows: the former type of operator provided a greater variance in response, with just 5% enjoying an improved relationship and 17% enduring a poorer relationship.

The greatest incidence of operators reporting a poorer relationship – 20% – was recorded by those with 11 to 50 vehicles.

We then asked operators if their overdraft had been reduced in the past 18 months: nearly a ifth (17%) said yes. Some intriguing variances are thrown up by drilling further into the data: for example, hire and reward hauliers were almost twice as likely to have their overdraft reduced as logistics/contract distribution irms – 22% and 12% respectively.

Similarly, the larger the leet, the less likely an operator was to have its overdraft cut: just 11% of leets with 51 vehicles or more versus 19% of leets with one to ten vehicles.

It’s no surprise that operators serving the sector most affected by the recession, namely the construction industry, were more than twice as likely to have their overdraft cut than those operators serving the retail/wholesale sector: 29% compared with 13% respectively.

Supply and demand

More than a third (36%) of operators told us their suppliers had altered credit terms in the past 12 months. Indeed half of all hire and reward hauliers had experienced this, while just a quarter of logistics/ contract distribution irms had.

Once again, operators serving the construction industry were most likely to have had their credit terms altered: 44%.

Given the volatility in the market, we were a little surprised that only 25% of respondents had rationalised the number of subcontractors they use in the past 12 months. But then again, the biggest cuts would have been made with the irst wave of the recession.

The criteria by which operators cut their subcontractor base were predictable: ● “Credit worthiness, performance and availability.” ● “We kept the most reliable.” ● “We kept the ones that did the job correctly and on time.” ● “On price and compliance.” ● “Overall performance, ie health and safety, environmental, cost.” ● “We kept the subcontractors who were willing to work with us and who understood what we were trying to achieve.”

Optimism falls

Given the ever-escalating cost of diesel and the number of businesses that continue to struggle and collapse, it’s no surprise to report that optimism took something of a battering in March, falling to its lowest level since this survey started. A total of 68% of respondents said they were either very optimistic or fairly optimistic about the prospects for their business over the next 12 months, while 31% were either not very optimistic or not at all optimistic, thus generating an optimism index score of +37, poorer than the previous record low of +39 in May 2010.

Logitistics/contract distribution irms are more optimistic than hire and reward hauliers: their optimism scores are +43 and +17 respectively. Indeed, the dichotomy between small and large leets could not be more pronounced: +16 for leets with up to 10 vehicles compared with +52 for leets with between 11 and 50 vehicles, and +78 for leets with 51 vehicles or more.

This knock-back is relected in the number of respondents who say their business has already

started to recover from the recession and those who expect their business to recover within the next 12 months: 34% and 23% respectively, which compare relatively poorly with February’s outcomes of 36% and 30%. ■

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