The transport sector is showing increasing signs of financial strain, according to insolvency specialist Begbies Traynor.

The firm’s Red Flag Alert research revealed a 16% rise in the number of road freight companies showing financial distress.

The research, which monitors the financial health of UK road freight companies, found increased cost pressure from rising fuel prices and the uncertainty created by Brexit has resulted in 2,487 companies classified as under significant financial distress in Q1, compared with 2,153 in Q4 2016.

Begbies Traynor partner Julie Palmer said: “Levels of financial distress have increased significantly over the past year, and nowhere more so than in the transport and logistics sector, which continues to be hit by fuel price inflation.”

Begbies Traynor executive chairman Ric Traynor said rising energy and food prices, along with a fall in the value of sterling and uncertainty surrounding Brexit, is continuing to put additional strain on the UK supply chain.

He warned against firms adopting a wait-and-see approach.

“They will need to rapidly invest to improve efficiency or renegotiate prices with customers to avoid the risk of falling into severe financial distress in the coming months,” he said.