Shock figures from the Office for National Statistics released this month reveal that transport and storage sector firms (the category which includes logistics, parcels, haulage and warehousing employers) have a cash crisis. The sector has the lowest cash reserves of any industry, including their manufacturing and retail partners.
The ONS’s Business Insights and Conditions Survey dataset, Wave 123, reveals that, compared to any other sector, more transport & storage companies have no cash reserves, says the home delivery company, Parcelhero.
Parcelhero’s Head of Consumer Research, David Jinks, a Member of the Chartered Institute of Logistics and Transport, says: "Companies were asked: 'How long do you expect your business's cash reserves will last?' Of those who responded who are listed as currently trading, a whopping 36.8 per cent of transport & storage firms say they have no cash reserves.
The position has worsened rapidly since the first time the question was posed in June 2020. At that time, of the transport and storage companies currently trading which responded, the number reporting they had no cash reserves was too small to register in the survey.
"The situation is even bleaker when we compare the transport and storage companies’ cash reserves with their partner firms in the manufacturing and retail sectors," Jinks continued. "Only 10.9 per cent of manufacturing companies currently trading report they have no reserves. Similarly, just 16.4 per cent of currently trading retail sector companies say they have no cash reserves.
"In fact, construction is the only business sector to have anything approaching a similar number of companies with no cash reserves. 25.5 per cent of construction firms reported that they are out of cash reserves. That’s still over 10 per cent fewer than the transport and storage sector.
‘Believe it or not, looking deeper into the figures, there’s even worse news. A further 12.4 per cent of transport and storage firms say they have less than a month of reserves left. In fact, only a meagre 12.9 per cent report they have more than six months of cash reserves. Compare that to June 2020, when a robust 25.4 per cent of transport and storage companies had more than six months of reserves.
Jinks said that the awfulness of the figures is highlighted by the fact that only 5.1 per cent of manufacturing companies say they have less than a month of reserves and a healthy 29.8 per cent say they have more than six months of cash. Among retailers, only 6.3 per cent say they have less than a month of cash reserves and 27.7 per cent have more than six months of cash reserves.
"Perhaps the most telling figures are those of the sector with the healthiest cash reserves. The information and communication sector reported only 7.2 per cent of currently trading companies have no reserves, just a further 1.8 per cent have less than a month’s reserves and a staggering 46.5 per cent of the sector have more than six months of cash reserves. That puts the cash issues facing the transport & storage sector into perspective.
Jinks concluded that it will be those transport and storage companies who are partnered with retailers with strong in-store and online sales that will perform best. Parcelhero’s “2030: Death of the High Street” report, which has been discussed in Parliament, reveals that retailers must develop an omnichannel approach, embracing both online and physical store sales."
