Uncertainty continues for the transport sector | Creditsafe News
Creditsafe Industry Watchdog Q1, 2018

Uncertainty continues for the transport sector with a large drop in retained profits

New figures released today show that retained profits in the transport and logistics sector decreased by 96% compared to the same period a year ago

In addition, the volume of bad debt owed to the sector reached over £2.8m, up 74.1% compared to last quarter. In contrast, the rate of company failures in the sector slowed over the last three months, while the number of active companies reached its highest volume for over a year, up 34.3% year-on-year to 128,583, suggesting that there’s a mixed picture ahead for the industry.

The Watchdog report tracks quarterly economic developments across Transport and Logistics and 10 other sectors (Banking & Financial, Farming & Agriculture, Hospitality, IT, Manufacturing, Professional Services, Retail, Construction, Utilities and Wholesale).

Retained profits for the sector dropped to £162m, and the volume of bad debt owed by the transport and logistics sector (suppliers bad debt) also showed a worrying upward trend with an increase of 70.8% since last quarter. In addition, the number of companies owing money to suppliers was up an equally substantial 78.9%. Similarly, the number of County Court Judgments (CCJs), issued when a company fails to pay debts, increased by 37.1% since the last quarter.

Data from Creditsafe in Q4 2017 showed a jump in company failures in the transport sector of 178.7% - a major increase compared to past quarters. However, there are signs of stabilisation, as the number of failures from the first quarter of year decreased 4.7%, resulting in a total of 574 companies entering liquidation in Q1.

Also suggesting some rebalance in the industry are the numbers of active companies, which increased 34.3% to 128,583 companies compared to the same period a year ago, and employment was also up 2.2% for the quarter and 8.5% for the year.

Rachel Mainwaring, COO at Creditsafe, commented: “The transport and logistics sector has seen a lot of uncertainty over recent months and clearly this has had an impact on retained profits. While there are still some worrying signs in terms of levels of bad debt, it looks like some of the instability seen over recent quarters is reducing.

“It’s certainly not plain sailing from here – Brexit remains an issue of major concern for the sector, particularly when it comes to freedom of movement – but hopefully the sector can jump on some of the Spring-like signs of growth and lift itself out of the slump.”

Despite facing heavy criticism for its gender pay gap, which showed that women were paid on average 45.5% less than men, Easyjet is the fastest growing company in the sector this quarter. Statistics from Creditsafe also show that across the transport industry only 21.8% of board directors are female, demonstrating that there is still substantial progress to be made by companies in this space.