HAULAGE SECTOR GETTING BACK ON RIGHT ROAD

April 1, 2015

By Greg Bolton, head of corporate finance at RMT Accountants & Business Advisors Ltd

With their 18-wheel brand ambassadors regularly seen ploughing the North East’s roads, the haulage industry is one of our most visible sectors, with long-standing regional names such as Elddis, Fergusons, Murray Hogg and George Allison holding their own against the Stobarts and Dentressangles of this world.

It’s an industry that has endured a rougher ride than most over the last few years, with rising fuel prices, perceived unfair competition from overseas and the general economic gloom all conspiring to create very challenging conditions that quite a few haulage firms haven’t been able to overcome.

As the commercial climate has begun to improve more recently, so our hauliers’ fortunes have started to do likewise, with the substantial drop in the oil price over the last few months no doubt providing a very welcome reduction in operating costs.

It was also encouraging to read recent research by insolvency trade body R3 that the North East’s transport/haulage sector currently has the lowest proportion of companies with a higher than normal risk of insolvency of any of 12 UK regions.

Major legislative changes are on the way for the industry, with the Department for Transport currently consulting on proposals to bring more vehicles under its operator licensing and annual test laws and thus extend hauliers’ financial and vehicle management responsibilities.

This will put more emphasis than ever on driving training and development, which has cost implications for hauliers, but which will also enable them to improve their service delivery at the same time.

We’ve also been seeing a number of operators looking to expand their reach by using additional depots, and our feeling is that this might lead larger operators to look to acquire smaller peers who’re based in markets that they want to target and who therefore already have everything in place that’s required.

After weathering the storms of the recession, it might be that some regional firms could be looking to take advantage of this new operational need and sell up while the time is right, and any business owners thinking along these lines need to be planning how they can best manage this process sooner rather than later.

The North East transport industry is definitely going to be one to watch in the coming months, and there are sure to be some interesting developments that will hopefully help it continue its post-recession renaissance.

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