A difficult road ahead?

According to research conducted by accountancy and consultancy firm Moore Stephens, the number of insolvencies among UK delivery and logistics companies has jumped by 20% in the last year (221 in 2014 compared to 184 in 2013) leading the firm to question the sustainability of the current logistics model.

Jeremy Willmont, Moore Stephens’ Head of Restructuring and Insolvency says: “The accelerated growth of e-commerce has boosted the fortunes of some logistics companies but left others struggling to keep up…smaller, weaker players are being forced out at a faster pace…”

Moore Stephens identify that there has been a generational shift in purchasing patterns with younger consumers ordering multiple items at any one time and expecting to be able to return any unwanted items without any extra costs. Such a change in patterns causes strain on any logistics business, but smaller companies are finding such practices virtually impossible with the costs of upgrading integrated IT systems being prohibitive.

The falling cost of fuel would be anticipated to result in reduced overheads for logistics companies which in turn would be anticipated to produce higher margins. However, Moore Stephens have identified that whilst fuel costs are falling, any saving is being passed onto the consumer by way of reduced delivery costs. Philip Bird, Logistics Specialist at Moore Stephens, states in relation to falling fuel prices that “The retailers have had the ‘whip hand’ due to excess capacity in the sector, and have been able to negotiate contracts that place more of the risk on the side of the delivery providers

Read the full article on our website dedicated to road haulage»

With thanks to Jeremy Willmont and Philip Bird- Moore Stephens

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

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Gavin Jones

Partner - Head of Business Restructuring

I act for banks and asset based lenders, insolvency accountants and boards of directors in relation to both formal and informal insolvency procedures, turnaround and restructuring and in relation to security issues.