The haulage industry across Europe is grappling with severe financial difficulties, leading to an increasing number of companies entering administration or ceasing operations. This trend is evident in the UK, Germany, Belgium, France, and Poland, where economic pressures, high operational costs, and reduced demand are taking a heavy toll on businesses in the sector.
UK’s Truswell Haulage: administration and job losses
Truswell Haulage, a historic transport company operating since 1940, has entered administration, succumbing to the adverse market conditions that continue to impact the haulage sector. The company, which managed a fleet of over 50 heavy goods vehicles across several locations in the UK, including a site in Lanarkshire, was forced to take this step after facing significant financial difficulties, according to a recent article by Financial News.
The administrators appointed by BDO attributed the collapse of Truswell Haulage to a combination of reduced demand and rising operational costs. These factors resulted in severe commercial losses and ultimately led to the loss of 86 jobs. An extensive sales process was undertaken in a bid to find a buyer for the business, but no offers were received, leaving the company with no viable path forward. As Financial News explains, this marked the end of a long-standing presence in the haulage industry.
In an effort to improve its financial situation, Truswell Haulage had previously entered into a sale and leaseback agreement for its Barnsley warehouse, generating £3.4 million. Despite this capital injection, the company could not reverse its fortunes. The acquisition of Truswell Haulage by OTIF Distribution in 2021 initially showed promise, with a growth in turnover to £12.2 million for the year ending July 2022. However, pre-tax profits saw a decline of £43,000 to £388,000, highlighting the deep-rooted financial issues that mere expansion could not address.
UK road haulage insolvencies on the rise
The situation faced by Truswell Haulage is not unique. According to an analysis by Motor Transport, nearly half of all haulage companies established since 2019 have entered insolvency proceedings or closed down. Approximately 62,234 out of 125,801 firms have ceased trading, highlighting the significant challenges within the sector.
Official figures from the Department for Business and Trade revealed that 494 hauliers entered insolvency in 2023. This number is nearly double that of two years earlier, and it is estimated that 33% of businesses in the sector are now deemed at maximum risk, up from 22% in the previous year, Motor Transport found.
Several major haulage firms, including Bridgetime Transport, Youngs Transportation, AAD Transport, Gwynedd Shipping, S&J European Haulage, Linkline Transport, and Cartwright Bros, have all entered administration this year, reflecting the widespread financial strain.
The Road Haulage Association (RHA) also emphasised the increasing insolvency rates, calling for government support to alleviate the financial burden on haulage businesses. Richard Smith, RHA Managing Director, highlighted the challenges posed by rising operational costs, including fuel prices, which constitute a significant portion of expenses for the sector.
The financial pressures have resulted in a deeply concerning trend, with the number of haulage company insolvencies surpassing those seen during the financial crisis of 2008. The RHA is urging policymakers to work with the industry to support businesses that are vital to the UK’s economic growth.
Germany’s road haulage sector under financial pressure
The challenges facing the haulage industry are not confined to the UK. In its latest market report, the European Freight Association of International Freight Forwarders (ELVIS) AG warned that many companies in Germany are struggling to cover their costs. According to the analysis conducted by ELVIS AG, hauliers are finding it increasingly difficult to meet their expenses, leading to a reduction in fleet sizes.
Nikolja Grabowski, CEO of ELVIS AG, highlighted the critical situation in the freight forwarding industry.
“The German economy has yet to gain the expected momentum. Although the first signs of recovery were noticeable in the spring, they have since lost steam,” Grabowski said.
Despite a slight increase in total mileage and a marginal excess of cargo space, companies remain cautious about the future due to the tense economic environment.
The ifo Institute’s indicators for the “Freight transport by road” sector have worsened, with the business climate rising by 3.1 per cent, the business situation by 1.8 per cent, and business expectations dropping by 4.1 per cent in July compared to the previous month.
“These declines are a clear signal that transport and logistics service providers continue to face significant challenges,” Grabowski added.
High material costs and wages remain major concerns for the industry. While diesel costs have decreased, ELVIS views this as a temporary trend. Grabowski explained that the reduced costs are primarily due to special payments, such as year-end bonuses, which distort the overall picture.
The association advises against further cuts to fleet sizes, warning that this could lead to a shortage of available capacity when the seasonal autumn recovery begins, potentially causing freight prices to surge. The situation highlights the precarious position of German haulage companies as they navigate a challenging economic landscape.
Haulage industry struggles in Belgium and France
The situation in the haulage industry is also dire in Belgium and France. According to data from L’Institut Transport Routier & Logistique Belgique (Belgian Institute of Transport and Logistics), the third quarter of this year saw a record-breaking number of bankruptcies in the transport sector, the highest since the Great Depression. Sixty-eight Belgian hauliers went bankrupt in the third quarter alone, a record since the 2008 financial crisis. ITLB expects the number of bankruptcies of Belgian hauliers to exceed 300 by the end of the year, which would be twice as high as the average for the years 2014-2021.
In Belgium, small companies are the most affected, struggling to spread fixed costs and facing reduced bargaining power. Philippe Degraef, director of the Belgian transport association Febetry, emphasized that Belgian carriers are in a tough spot with no prospect of improvement. High wage costs, competitive international markets, and economic uncertainties are contributing to the financial strain.
In France, the transport sector is grappling with rising costs and poor demand, leading to a significant increase in company bankruptcies. According to the Association of Transport and Logistics Companies in France (Union TLF), 603 transport company bankruptcy cases were opened in the second quarter of this year, a 45% increase compared to the same period last year and a 73% increase over the last two years.
Also, in Poland, the number of restructuring proceedings initiated in the first half of 2024 was significantly higher than in previous years, underscoring the widespread difficulties in the European haulage industry.