How has COVID-19 affected the haulage industry?

In this article, we will be covering how COVID-19 has affected the haulage industry. The data we will be using in this article is from a series of surveys undertook by the Road Haulage Association (RHA) in April 2020. In this survey, the RHA surveyed 4,500 firms in the haulage industry and the survey results can be found here.

 

How many trucks are inactive?

 

In the first survey, the RHA asked respondents how many trucks they had inactive. The RHA categorised these results by sector. The sectors where there were the most trucks inactive include, removals (96% inactive), car transporting (89% inactive), and, somewhat surprisingly, medical (75% inactive). Whilst these were the worst affected haulage sectors in the UK, initially, a total of seven haulage sectors have seen over 50% of their trucks become inactive due to COVID-19. This was believed to be due to health and safety reasons, or a lack of demand for products in these sectors. The least affected sectors include agriculture & fishing (22% inactive), food (32% inactive), waste management (33% inactive).

 

Across the whole industry, 25% of drivers were furloughed, and 46% of trucks were inactive during the early part of lockdown.

 

Cash Flow

 

With such disruption to activity, it was inevitable that the finances of many haulage firms would suffer a negative impact. 15% of haulage operators surveyed had applied for the Coronavirus Business Interruption Loans Scheme (CBILS), but 95% had their applications rejected. This left many haulage operators struggling to survive with only 8% seeing their cash flow as normal. 73% have seen their cash flow significantly reduced, 23% reduced to an unsustainable level, and 13% of firms have said that they are using their overdraft. 56% of operators were intending to or have accessed funds from the coronavirus job retention scheme.

 

If you would like any advice on how to effectively manage your cash flow, please read our cash flow article here.

 

Work Volume

 

In the survey, the RHA also asked hauliers how their volume of work had been affected. Only 5% reported their work volume was normal, and 22% of hauliers had zero work. A massive 83% reported that volume had significantly reduced or worse

 

88% of haulage businesses reported that backloads had significantly reduced or worse which was a further hit to operating efficiency.

 

 

Conclusion  

 

To conclude, the haulage sector has been hugely affected by the coronavirus pandemic. A very small amount of firms reported that it was business as usual. 5% reported a normal work volume, and 8% reporting a normal cash flow. The survey responses suggest many haulage firms have seen a drop in demand due to COVID-19. Very few respondents saw very little hope for the long term future.

 

Paul Wormald transport partner at Hawsons commented: “This is a very illuminating piece of research carried out by the RHA and it illustrates the way a key industry for the whole economy operates on a knife-edge. With only 12% of respondents saying that could survive in the long term at the volumes of work seen earlier in the summer, it is clear that the sector has faced some major challenges. Although activity may have increased since April, the economic future remains uncertain, and with furlough schemes set to end in the autumn, and paydays beginning to fall due for self-assessment, VAT, and various government-backed loan schemes during the first part of 2021, it is imperative that haulage firms plan their cash flow through what is sure to be an equally challenging period of time.

 

How we can help?

 

Please visit our COVID-19 support hub page for a summary of government support. We would also recommend using the Coronavirus Business Support Finder here.

 

At Hawsons we have a dedicated team of Transport & Logistics accountants at our offices in Sheffield, Doncaster, and Northampton. With our experience in the transport and logistics sector we are able to develop a close understanding of your business and, through active year round involvement, we can help you anticipate and deal with challenges quickly and effectively.

 

 

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Paul Wormald

Partner, Doncaster

01302 367 262

[email protected]