"We could be facing an Armageddon of liquidations," claims major logistics operator

A senior figure at one of the UK's biggest logistics operations has admitted the impact of the COVID-19 pandemic could see businesses face "an Armageddon of liquidations" and a future based on "the survival of the fittest".

The source predicted many transport and warehousing companies with the right strategy would survive the crisis but that it would be "the last nail in the coffin for high street retail".

"We fully expect that some of our fashion customers will never open their doors again," the source, who did not wish to be named, told motortransport.co.uk.

"Some days I come in and feel like an extra in a disaster movie. This is 2008 multiplied by ten.

"Three weeks ago retailers were worried they wouldn't have enough stock for the busy easter period. Now they’re cancelling it when it’s on the water. They don’t want the stock.

"Internet retail is holding up but that will slow down and there will be a question mark in a full lockdown as to whether non-food e-commerce is even regarded as essential."

The source went on to say that most transport and logistics companies would fall back on their warehousing storage revenue: "But if the customer they’re storing for goes bust we’re going to see an Armageddon in terms of liquidations at the end of this," he warned.

"If [RHA chief executive] Richard Burnett tells the government every haulier needs a million pound bailout he can whistle in the wind quite frankly. But the big boys will survive, and the little boys who have got some warehouses will survive."

Describing the current situation in more detail he said: "The warehouse operators are busy and the pallet networks are still doing about half to three-quarters of the seasonal norm. But hauliers should be writing to their hire purchase and leasing companies and asking for payment holidays right now.

"Even though we’ve got money in the bank we’ve withheld our VAT, PAYE and corporation tax payments. If it goes on for months you’ll be glad of that cash in your bank accounts rather than the government's."

"It’s going to be survival of the fittest. It’ll take ten years to flush through the system."

Asked how operators could best react to the crisis, the source said: "The nimble and resilient will survive. There’s no point burying your head in the sand and moaning about it. We’ve sent a load of our fleet that used to do fashion to the food side of the business. We’ve got a good chunk of our fleet working on food distribution. For the food boys, every day is like Christmas!

"But the stock piling will slow down. People can only store so much in their cupboards. So in a funny way the food industry is booming which means the food side of XPO, Eddie Stobart and Wincanton is booming.

"We're fortunate that we work for [some of the major supermarkets] and we’ve ended up helping out the NHS supply chain as well. We are very busy but clearly a lot of general hauliers will see a downturn in volume. The only consolation is everyone is in the same boat."

Asked what longer-term planning operators should be doing, and how long the current situation might last, the source said: "We think longer than three months. When someone like Primark cancels their entire order book worldwide you know it will be longer.

"Even though China has gone back to work, Wuhan is still on partial lockdown, that’s from 25 January to now - that’s over two months. So this three-week lockdown for us will be extended for three weeks, and then another three weeks. Trump’s in cuckoo land if he thinks it’s all going to be over by easter.

"We're drip feeding the public. At some point, the government will have to release some restrictions for a week, but then there’ll be a second lockdown.

"By the time we’re on the way back again it’ll be autumn. Most people will get at best 80% of their salary. And remember the government aren't paying free rent, they're only deferring it. You won't get free utility bills. If you haven’t paid PAYE, or national insurance or VAT returns etc, remember they’re only holidays; you will have to pay at some point. The world will be poorer after this."