Royal Mail

Royal Mail

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It’s been a difficult year for the road transport industry, but our annual survey of company performance highlights the professionalism and tenacity of operators in facing up to the challenges.

There’s no doubt that the past year has been a tough one for the transport industry. After a recovery from the impact of Covid, the industry has had to deal with low growth in both retail and manufacturing combined with soaring inflation.

The success of many companies in responding to these challenges can be seen in the Profit Growth table led by operators such as Culina and Turners of Soham.

However, the overall performance of the industry, as shown in the Key Averages table, is noticeably down on the previous year. A major component of this decline is the parcel sector. During the Covid crisis parcel operators were beneficiaries of the rapid growth in home shopping as well as delivery of Covid kits. Not surprisingly, the end of Covid saw something of a decline that not even a stellar performer like DPD could totally compensate for.

Not only that, the strikes at Royal Mail which pushed the business into a £436m loss last year, have left sector profits looking unexpectedly thin.

At first sight, the one parcel company that appears to have bucked the trend is Yodel, but it is worth noting that is has not yet released results for last year. Yodel is owned by the Barclay family which has been struggling with a mountain of debt, and there has been speculation in the financial press that Yodel will be sold as soon as a suitable buyer is found. As things stand, Yodel has extended its financial year from June to December. This means it is obliged to publish figures for 2022 by the end of this year.

The year has also seen the demise of some famous names. Tuffnells, the big green parcel machine, called in administrators in June blaming the impact of Covid, inflation and increasing competition. A number of the depots have been taken over by rivals such as DX.

Another well known operator, KNP Logistics was pushed into administration in September following a cyber attack.

Overall, smaller operators have proved to be remarkably resilient in the face of tough trading conditions. Of the 42 companies with turnovers of less than £50m, 22 have seen profits grow. That is a feat achieve by only six of the 15 companies with turnovers of more than £500m.

And there is evidence that companies are continuing to invest. According to the Logistics Confidence Index, published in October by Barclays and BDO, some seven out of 10 logistics leaders say “significant capital spending is likely or very likely” over the next 12 months.

Although there are still headwinds to be faced in the coming year, there is evidence that the domestic economy, at least, is calming. Inflation is easing, and worries of a deep recession have largely gone away with modest growth forecast for the coming year. The ingredients are there for the industry to see a resurgence in performance.