Transport overtakes tech as North West's 'most distressed' sector

Transport is now the most distressed sector in the North West, according to new research.

Data from UK insolvency and restructuring trade body R3 has shown that transport industry businesses have overtaken those in the tech sector for risk of failure during the next 12 months.

More than a third (40%) of the transport companies in the region, equivalent to more than 2,100 enterprises, are believed to have a higher-than-normal risk of collapsing in 2017.

Considered one of the fastest growing in terms of overall business numbers, the sector includes haulage, delivery and courier firms.

The level of business risk in transport is nearly twice as high as it is for manufacturing and hotels, where 21% of companies have a higher-than-normal risk of failure.

The figure, using data from the Bureau van Dijk business information database, is also “significantly” higher than professional services (at 31%), construction (28%), restaurants (27%) and pubs (26%).

In terms of the total number of businesses at risk, the technology and IT sector came closest to transport, at 36%.

R3’s North West chair Richard Wolff, the head of corporate recovery and insolvency at law firm JMW, said transport is a “highly competitive sector” where margins are “constantly under pressure”, adding: “Haulage firms will have been feeling the squeeze this year due to the rise in fuel prices and the introduction of the National Living Wage in April, as well as continued problems of late payment by bigger customers.

“Meanwhile there have been a lot of new entrants in the sector, with increased demand for courier firms due to the rise in internet shopping and platforms such as Uber and Deliveroo making it easier to start up new businesses.”

He continued: “Again, competition can make it difficult to cover overheads, whilst new firms in themselves are more vulnerable than established businesses and less likely to have reserves to fall back on.

“Transport companies and other companies which offer logistics as a principal part of their core services need to scrutinize costs and cashflow to ensure they remain viable and be careful not to rely on debt funding that they cannot afford to repay.”