Transport & storage sector hits the skids, missing out on the big July bounce-back
Posted by: electime 30th August 2023
The latest Government data shows a generally perky July for most business sectors, but transport & storage companies reported gloomier results. The home delivery expert ParcelHero warns transport businesses are the barometer for the economy and July’s rosy picture could be masking future problems.
The latest Office for National Statistics (ONS) figures show British businesses had a generally upbeat July, with all sectors reporting increased turnover and demand and cost rises finally slowing. However, the home delivery expert ParcelHero says transport & storage businesses reported less rosy numbers than many other sectors. It warns this should set off alarms as the transport sector is frequently the barometer of the UK economy.
ParcelHero’s Head of Consumer Research, David Jinks M.I.L.T., says: ‘The latest ONS Business Insights results reveal many industry sectors had a strong July. Increased turnover was reported by 14.1 per cent of manufacturers, 15.9 per cent of construction businesses and 24.1 per cent of retailers. Overall, 1-in-6 (17 per cent ) of businesses reported that their turnover was higher in July 2023 compared with June. However, delivery and supply chain businesses missed out on this upturn.
‘Just 7.5 per cent of transport & storage companies reported an increase in turnover in July. That’s the worst result of all UK business sectors except real estate (6.4 per cent ). Most transport companies (53 per cent ) reported their turnover stayed the same while a hefty 29.1 per cent actually reported a decrease in turnover. Only accommodation & food businesses reported a larger decrease in turnover (35.9 per cent ) in July.
‘Looking ahead, businesses across all industrial sectors were asked to give their expectations for September. Overall, 18 per cent expect their income to increase, up from the 15 per cent that reported this for August. Meanwhile, 55 per cent report that they expect their turnover to stay the same. However, transport & storage businesses are gloomier. Just 16.7 per cent expect an increase in trade in September, less than the average, with 61.5 per cent saying turnover will probably remain the same and 13.6 per cent predicting a decrease. In contrast, 19.1 per cent of construction businesses and 18.1 per cent of retailers think their September turnover will increase.
‘Overall, the ONS report reveals strong signs inflation is finally easing, with just 1-in-8 (12 per cent ) of businesses reporting an increase in the price of their goods or services in July, the lowest level since peaking in March 2022. Transport & storage companies always operate on notoriously tight margins. In July, just 5.1 per cent of transport companies increased their prices, 70.6 per cent kept them the same and 8.2 per cent actually decreased their prices. In contrast, 15.9 per cent of construction companies put up the price of their services and 17.4 per cent of retailers increased prices.
‘One of the most encouraging results overall for UK businesses was an increase in domestic demand for goods and services. More than 1-in-10 (11 per cent ) of businesses reported an increase in demand compared with June. Once more, however, transport & storage lagged behind. Only 6.8 per cent of companies reported an increase in demand for UK services, with 57.6 per cent showing demand holding steady and 16.1 per cent revealing a drop in demand. In contrast, 12.3 per cent of construction companies reported an uptick in demand and 17.6 per cent of retailers.
‘Any increase in demand for international work for the transport & storage sector was too small to register. That’s in contrast to rises of 3 per cent in manufacturing and 3.6 per cent in retail. Global demand remained the same for 21.8 per cent of transport companies and fell for 8.9 per cent of them.
‘The one bright point for transport & storage sector companies was that the increase in the prices of goods or services they bought was fractionally less than the average for UK businesses. The proportion of British firms reporting increased costs was 30 per cent ; this percentage has fallen over time and is the lowest figure reported since a peak of 50% in March 2022. Overall, 28.8 per cent of transport sector companies said the prices they paid for goods and services increased, 48.6 per cent of transport businesses said their costs had remained the same and 3.4 per cent said their costs were actually down in July. To put that into context, 38.6 per cent of construction companies said the prices they paid for goods and services rose in July, as did 32.5 per cent of retail companies. However, only 15.8 per cent of manufacturers reported an increase in their costs, perhaps highlighting less turbulent times for global supply chains.
‘Despite transport & storage sector companies’ July woes, the domestic and global logistics market still shows longer-term growth. In 2021, it was worth $8 trillion; by 2027, that will be $13.7 trillion. However, it is a fast-changing, agile industry. Since the end of Covid lockdowns, some parts of the home delivery market have yo-yoed. Companies with aging infrastructure and a fixed cost base have struggled. Traders and businesses can find out more about the very latest available delivery options and prices at: https://www.parcelhero.com/en-gb/uk-courier-services
