Bad debt up 20% for road transport sector

The UK road transport sector saw a 20% surge in suppliers’ bad debts in the second quarter of 2017, according to the latest Creditsafe Watchdog Report.

The report, which tracks quarterly economic developments across the transport sector, revealed bad debt owed to the sector leapt to £3.3m in Q2, up from £2.7m in Q1.

In the same period, bad debt owed by the road transport sector increased 2% to just over £1m (Q1 2017: £998,190).

The report reveals that while the number of road transport firms considered a very high credit risk rose by 1% to 452, the number of companies considered a high risk rose 10% to 298. The amount of firms considered a moderate credit risk increased 18% to 22,213 (Q1 2017: 18,890).

The rise in bad suppliers’ debt and credit risk comes as industry turnover fell 3% to £36.2bn
(Q1 2017: £37.6bn) in the period.

Creditsafe operations director Rachel Mainwaring said: “It is concerning to see large rises in bad debt in the road transport sector.

While the amount of bad debt owed to the sector increased only slightly, it raises questions about credit health.”

However, the sector saw a 4% boost in retained profit to £501.6m (Q1 2017: £482.9m).

In the same period the sector saw a 10% rise in active companies to 50,720 (Q1 2017: 46,211) and a 28% drop in the rate of company failures, down from 65 to 47. However, the number of new companies entering the sector fell to 2,654 (Q1 2017: 2874) the report revealed, indicating a slowing down of sector growth.

Top performers in the sector in Q2 include XPO Logistics Supply Chain, which saw turnover rise by £112.9m in the period, followed by Tuffnells Parcels Express, which increased turnover by £63.5m.