Vibrant transport sector offset by 432 per cent increase in company failures, new research finds

New end of year figures released in the quarterly Creditsafe Watchdog Report show a bumper month across financial indicators for the transport and logistics sector, counterbalanced by a worrying upward trend in company failures of 178.70 per cent compared to Q3 and up 432.74 per cent compared to the same period last year.

The Watchdog report tracks quarterly economic developments across the Transport and Logistics and 11 other sectors (Banking & Financial, Farming & Agriculture, Hospitality, IT, Manufacturing, Professional Services, Retail, Sports & Entertainment, Construction, Utilities and Wholesale).

Total sales were up 2.97 per cent over the quarter, supported by 5,764 more new companies in the sector than in Q4 2016. Employment levels and wages stagnated, however, with a 4.69 per cent increase in employees in the last 12 months.

Company failures in the transport and logistics sector reached their highest level in the last three months of the year, with 602 recorded receiverships in Q4. One of the economy’s most significant failures this year was included in these figures when Monarch Airlines collapsed in early October.

Rachel Mainwaring, operations director at Creditsafe, commented: “There are positive signs of growth across the transport and logistics sector, as both established and new companies have demonstrated strong financial performance this year.

“However, the mammoth jump in company failures seen towards the end of 2017, suggests that the sector may have adopted a higher risk ‘fail fast and often’ strategy, sometimes used to describe the disruptive and agile tech sector. As a steady stream of new companies entered the market in 2017, perhaps we’re now seeing a significant proportion burn out.”

“In road freight specifically, we have also seen a similar upwards trend across sales, active companies, employment and wages, as well an increase in company failures of 17.89 per cent. With the figures in road freight showing smaller swings, there appears to be less volatility in this area than across the sector as whole.”