Industry Talk

Regular Industry Development Updates, Opinions and Talking Points relating to Manufacturing, the Supply Chain and Logistics.

Rocky ride for transport & storage companies in the run-up to the election

New Government figures show transportation & storage sector companies (including couriers and logistics operators) faced a number of setbacks in April and May. Notably, they are also more cautious about their prospects for this month compared to most industry sectors.

Today’s Office for National Statistics (ONS) Business Insights Survey reveals turnover fell for 12% of transport & storage sector companies during April, and domestic demand for their services fell by 6.5%. The sector acts as a barometer for the overall economy, so this will concern Prime Minister Rishi Sunak, having just called a snap election.

A number of issues are at play behind these headline figures that are inhibiting the sector’s ability to bounce back. Transport & storage companies faced a number of significant challenges during April. 24.2% said the cost of labour for staff such as drivers and distribution centre workers was a problem. On top of this, 6% still reported a shortage of available labour as a continuing issue. That’s why Parcelhero is supporting industry demands for increased apprenticeships and training in the logistics sector from whichever party forms the next UK Government.

Significantly, as we enter a general election, the lacklustre economy has significantly contributed to business problems. 11.6% of transport & storage companies said that, in the period 19 April to 19 May, economic uncertainty impacted their business turnover.

Crucially, 9.1% of transport sector companies reported insufficient domestic demand for their services in April and the first half of May. That reflects wider problems in the UK economy affecting retail and manufacturing that have ripple effects across the transport sector.

Looking ahead to this month, things seem a little brighter, but still lacklustre. 10.4% of transport & storage businesses said they thought their turnover would increase in June, while just 5% thought their turnover would decrease. 53% said they expected their turnover to stay the same and a sizeable 31.5% were unsure what to expect.

‘While the fact that over 10% of companies expect improved turnover this month might present some comfort for transport companies, they seem significantly less optimistic than their partner companies in retail and manufacturing. 19.8% of manufacturing and 19.6% of retail firms said they expected their turnover to increase this month. However, compared to transport & storage sector firms, a higher number of these companies expressed concerns. 16.3% of manufacturing and 13% of retail companies actually expect their turnover to decrease in June.

As we prepare for the forthcoming election, it’s clear from these rollercoaster figures that a period of economic stability is what most transport & storage companies require as, indeed, do their manufacturing and retail clients. For courier and postal industry companies, costs and a flat economy are also supressing demand in this key post-Covid period. Looking at the issues facing transport & storage sector companies in the run-up to the election, a wise adage springs to mind: “It’s the economy, stupid.

A stable economy will also help the post-Covid realignment of the retail sector that is key to transport & storage companies’ own success. It will be those retailers with strong in-store and online sales that will ultimately triumph in a post-Covid world.

Parcelhero’s influential report “2030: Death of the High Street” has been discussed in Parliament. It reveals that retailers must develop an omnichannel approach, embracing both online and physical store sales.