Thousands of road haulage firms across the UK are facing imminent collapse amid the coronavirus crisis and it could have dire implications for the country’s economic recovery.
That was the stark message delivered by Richard Burnett, Chief Executive of the Road Haulage Association (RHA, in an online address to business leaders from Liverpool city region’s maritime sector.
Addressing the audience as part of Mersey Maritime’s weekly online Face-2-Face series of events, Mr Burnett said whole sections of Britain’s road haulage industry had been “decimated” by the COVID-19 crisis as large parts of the economy ground to a halt.
Calling for urgent Government intervention to prop up the stricken sector, which is annually worth £124bn to the UK economy, Mr Burnett said: “Government will have to intervene otherwise the UK recovery will be much slower.”
Around 98% of everything we eat, use and wear will, at some point in the supply chain, be transported by road. More than 2.5m people work in the haulage and logistics industry and 493,600 commercial vehicles over 3.5 tonnes are registered in the UK.
“There has been a wake-up call during the COVID crisis, a realisation that without the integrated supply chain in this country we could not have maintained vital supplies of food and medicines,” Mr Burnett added.
However, while the public perception of hauliers may be focused on the large operators such as Stobart, the fact is that 85% of road hauliers are small and medium-sized enterprises. And it is these businesses, existing on razor-thin margins, who are hurting most due to the current crisis.
Mr Burnett said: “Through the COVID crisis people have started to realise that it is the smaller businesses that have been providing the support for the bigger operators. It is these SMEs that have been keeping the wheels turning.
“On March 15 I spoke to Transport Secretary Grant Shapps about how those hauliers that were supporting the events industry were the first to be hit as large events such as concerts were cancelled. I told him then that we were going to need financial support.”
While the supply chain for essential supplies such as food and medicines has held up during the crisis, hauliers servicing other business sectors have seen work dry up at an alarming rate. Removals, car transportation and construction have been hardest hit.
The RHA surveyed around 12,000 of its members and found that only 5% were maintaining their normal volumes with 83% seeing a significant reduction and 22% having no work at all. Firms had seen 25% of drivers furloughed, 50% of drivers inactive and 46% of the national HGV fleet inactive.
“In the survey, 52% of those who responded said they did not expect to survive for longer than a month,” added Mr Burnett. “That was three weeks ago and now we are already starting to see businesses collapse.
“Their customers are also collapsing, putting more pressure on cashflows, so we are seeing a domino effect. Operators are now failing on a worrying scale. Insolvency numbers are increasing.”
While Chancellor Rishi Sunak has unveiled a number of measures to support businesses, Mr Burnett said the road haulage industry was going to need specific sector support. He revealed that 95% of haulage businesses that had applied for loans under the Coronavirus Business Interruption Loan Scheme had seen their applications rejected by banks.
Specific types of support the industry is seeking includes direct cash injections, business rates holidays, paying 80% of outstanding invoices and a move to a weekly furlough model.
Mr Burnett said Government was now listening to the industry’s concerns. He explained: “Government didn’t really understand the road haulage sector prior to the coronavirus crisis. Now, thanks to us, they know a lot more and we are starting to see plans put together across Whitehall departments.”
Mersey Maritime Chief Executive, Chris Shirling-Rooke, said: “Logistics is a huge and integral part of the maritime sector and our members are fully aware of the importance of hauliers to the UK supply chain.
“We are fully supportive of the RHA’s efforts to persuade the Government to make sure the integrity of the UK logistics sector is maintained. We at Mersey Maritime are giving the sector all the support we can offer.”