A Logistical Nightmare
It’s easy to point to established trends when we talk about corporate insolvency statistics, and whilst work here covers a broad spectrum of industries, in the last fortnight we have been engaged by three small, separate and unconnected companies all requiring assistance and working specifically within the Logistics industry. It struck me as a little odd; is it a coincidence? Or a sign that the wider problems affecting small scale logistics operators in the UK that are evident are actually getting worse?
Digging In To The Figures
With a little reading around, I found there was a 14% rise in insolvencies within the industry in 2024, a figure compounded by the fact that these figures are DOUBLE the number of Logistics operators entering some form of procedure only two years prior. Moreover, the Department for Business and Trade estimated a THIRD of all companies in the sector are ‘high risk’.
Of course, the Pandemic saw a surge in small businesses setting up to meet the huge demand for home delivery as online shopping skyrocketed. Many took out Government backed Bounce Back Loans expressly for the purpose of setting themselves up in business to do this. But post-Covid the double effect of a return to high street shopping (a 6% decrease in online shopping over three years) with the overall fall in index volume of retail sales has curtailed the longevity of the corner of the market small scale operators work within. They are now increasingly edged out by bigger organisations with greater spending power that have been able to more easily absorb the rise in interest rates and subsequent higher leasing costs we see across the industry.
An added factor has been an increase in online retailers often now charging return costs in order to reduce their own losses. The old ‘Try it on and return it if necessary’ tactic now comes at a price to the purchaser, and the knock on effect is a more considered approach to buying so that return deliveries are not taking place, shrinking the opportunities for work even further.
What has been especially noticeable in the cases that have been presented here are the fine margins that these operators have to work with, and how more often than not a single seemingly small Debtor withholding payment quickly creates a downward spiral that is almost impossible to escape.
