The UK haulage and freight sector has faced a number of challenges over the past few years – inflation and fixed costs have rocketed, and the uncertain legacy of Brexit has made UK exports less lucrative to EU importers.
Now, as we move towards a more sustainable future, the impetus lies with UK fleet operators and haulage businesses to update their operating practices in line with our net zero goals. However, with the myriad challenges facing the sector, making the significant internal investment required can be a challenge.
Here, the asset finance experts at Anglo Scottish take a look at the 2024 landscape for the UK’s haulage businesses and consider some of the facilities available to increase agility, grow sustainably, and adapt in the face of change…
The outlook for UK haulage
A number of UK haulage firms have entered administration over the last six months – in September 2023, Lloyd Fraser, one of the UK’s largest milk haulage firms, was forced into administration. That same week, multiple members of the KNP Logistics Group suffered the same fate.
A variety of firms have also entered administration in the first month of 2024, with Harleston-based Bomfords Group and Suffolk’s Magnus Group amongst the companies forced into administration.
Road haulage has come under further threat in recent months with the Transport Secretary’s commitment to growing the UK’s rail freight industry by 75% by 2050. Part of this claim hinges on the removal of petrol HGVs from UK roads.
Combatting these issues
In spite of these cases, there are examples of UK logistics and haulage businesses using external funding facilities to improve their future outlook and spearhead further growth.
In recent months, family-run companies like the North West’s Fox Brothers and Northamptonshire’s Linkline Transporthave benefitted from the injection of third-party funding. This helps to spread the cost of further investment in the company and fast-track growth plans.
“In line with rising overheads, maintaining financial agility is utterly vital for today’s haulage businesses to survive and ultimately thrive,” comments Carl Johnson, UK Sales Director at Anglo Scottish Asset Finance. “Often, firms are unaware of the available options to help them become more competitive going forward, and which of these options are best suited to their circumstances.”
Utilising invoice finance
Businesses working in the haulage sector are often susceptible to cash flow issues, thanks to the common practice of invoicing. 87% of businesses complain that their invoices are paid after the due date, highlighting that over-reliance on invoice payments is becoming a serious issue for businesses.
Late invoice payments make it difficult for haulage or logistics businesses to maintain a healthy cash flow, which can hamstring the company in the event of unforeseen costs such as breakdowns or collisions.
Invoice financing allows your business to access up to 90% of the value of your unpaid invoices. This enables your business to become more agile and adaptable in the face of potential difficulties.
Accessing favourable terms
Opting for third-party funders over more traditional sources of finance, like banking institutions, could provide your fleet with the flexibility required to remain agile in the current market. A wider range of funding arrangements are likely to be available, with a greater range of options for firms in different financial circumstances.
Anglo Scottish notes how haulage businesses can combine different lending facilities, such as asset finance, with more traditional commercial loans to diversify risk. Longer lending terms or lower interest rates may also be available, depending on a business’ situation.
“Given that the UK’s economic outlook is still uncertain,” says Johnson, “it’s unsurprising that firms are reluctant to invest in their fleets. Flexible lending terms for asset finance agreements can help alleviate some of the pressure on these firms, with contract hire agreements increasingly used by haulage fleet bosses to reduce the risk to their fleets.”
Transitioning to electric
A report from the Green Finance Institute in November 2023, found that we must take “urgent action” to electrify 500,000 HGVs across the country in order to meet the UK’s net zero goals. With HGVs constituting 20% of the UK’s transport emissions, haulage firms have a key role to play in decarbonising the UK’s roads.
Dedicated green finance arrangements, in the form of green loans and green bonds, can be a valuable facility for fleets looking to become more sustainable going forward. Under these agreements, your company can access finance agreements that are specially tailored for
“There may be additional benefits for haulage companies operating within the UK and the EU,” notes Anglo Scottish’s Renewables Specialist Charlotte Enright. Under the EU’s Carbon Border Adjustment Mechanism, EU countries must submit information on any carbon emissions created through the production and importation of certain goods.
“Making the switch to an electric fleet would limit the emissions attached to a given export, making it more lucrative for EU importers,” comments Johnson. “It’s not just green loans that UK haulage companies stand to benefit from. Using these facilities in combination is a great way to insulate your company against the challenges facing the haulage sector.”
Photo by Roger Bradshaw on Unsplash
