Nearly half of all new haulage companies formed since 2019 have closed or become insolvent, revealing significant challenges in the sector.
- The data indicates 49.2% of newly established road freight companies have ceased operations, equating to over 62,234 closures out of 125,801 firms.
- Financial instability is rampant, with 494 hauliers entering insolvency in 2023 and 33% of businesses now deemed high risk.
- Cargo transport companies face the highest closure rates at 54.4%, highlighting the immense pressures within this segment.
- Warehousing and storage related firms fare slightly better but are not immune, holding a 42.4% business mortality rate.
The road freight industry has experienced a seismic shift in stability for new entrants, with 49.2% of companies founded since 2019 no longer in operation. This equates to approximately 62,234 closures out of a total of 125,801 firms, underscoring the volatile nature of the sector.
Diving deeper into 2023, the Department for Business and Trade reported 494 hauliers entering insolvency, marking a stark highlight of financial distress permeating the industry. Furthermore, the risk assessment revealed that 33% of businesses are now designated as maximum risk, a significant increase from 22% in the preceding year.
The analysis by Breakwells Transport suggests that cargo transportation is particularly strenuous, boasting a business mortality rate of 54.4%. In contrast, firms dealing with warehousing and storage, though not exempt from challenges, demonstrate a marginally lower closure rate of 42.4%.
Julie Breakwell, Director of Breakwells Transport, instructs potential entrepreneurs to perform comprehensive market analysis due to the high costs, intense competition, and unpredictable fuel prices that beset the industry. She stresses the importance of establishing realistic financial expectations to mitigate future risks.
Legal professionals have also issued cautions to directors against relying on ‘corporate rescue’ strategies, often touted as solutions to escalating debt problems, following the Insolvency Service’s decisive action against companies exploiting distressed firms.
The current landscape for new road freight companies remains fraught with challenges, requiring strategic planning and financial diligence.
