The road haulage sector has had its fair share of major challenges in recent years, ranging from global and geopolitical issues such as the consequences of the pandemic and the Ukraine war, right across to the UK’s crumbling road network and the impending hike to costs from last October’s Budget.
Our road haulage sector report shares how these factors are finally starting to show in the industry’s finances. Whilst most key indicators are moving in the wrong direction, what is most striking, is that there is a sharp reduction in the overall size of the industry in financial terms.
The scale and scope of the Road Haulage market sector
According to the Road Haulage Association (RHA), 89% of goods are moved by lorry, including 98% of food, agricultural and consumer products. Of the remainder, its movement involves at least some element of motor transport, especially the more problematic ‘last mile’ portion of the journey.
Industry statistics for the UK vary between different sources, but those provided by the RHA include:
- Its contribution to UK GDP is £13.6bn a year or 5.6% of UK GDP.
- There are 58,262 road freight enterprises in the UK.
- The number of HGV drivers is approximately 300,000.
- The transport and storage industry more widely employs 1.86m people, or 5.4% of the labour force.
- There are around 437,000 registered HGVs.
Financial characteristics
There are currently 29,432 UK-registered companies, which state that they operate as road hauliers according to Companies House records. This is a fall of 4% in the six months since August 2024. Between them, they have:
- Total assets of £12.9bn (down 14% compared to £15bn in August 2024).
- Total borrowings of £2.05bn (lower by 16% from £2.45bn in August 2024).
- Total net worth of £5.9bn (lower by 12% from £6.8bn in August 2024).
These are significant reductions in the quantum of the industry in financial terms, which suggests that haulage companies are either reducing the size of their fleets and limiting the scale of their operations, or else they are holding back on renewing and upgrading their vehicles because of the many challenges we describe later in this report and through understandable caution in such uncertain times. To some extent, it may also reflect the painful reality that many operators are incurring losses.
Financial risk profile
We have used the database maintained by the financial health monitoring specialists, Company Watch to analyse the latest financial statements filed at Companies House by every company registered in the UK, which operates in the road haulage sector. Our research covered a total of 29,432 companies:
Overall financial health
Overall, our road haulage companies have an average financial health rating of 40 out of 100, which is well below the economy as a whole for which this is closer to 50. This average rating is lower than the figure of 41 per our previous three reports.
Failure risk
Our research highlighted another worrying statistic. Company Watch uses complex analytics to generate a financial health score (H-Score®) for companies out of a maximum of 100. An H-Score of 25 or less indicates that the company concerned has a one in four risk of going through a formal insolvency process or a significant financial restructuring leading to stakeholder losses during the next three years.
Out of our research, 11,338 (39%) are in the Company Watch warning area with a score of 25 or less. Across the economy as a whole, the expectation is that no more than a fifth should be in the warning area. This is a slight deterioration since August 2024 when 38% of companies in the warning area and November 2023 (37%).
Borrowings
Debt does not appear to be a major issue in the sector, with its £2.45bn of borrowings representing gross gearing of only 16% and net gearing of 35%. More significantly, borrowings continue to fall and are dropping faster than previously, averaging £70k per company now compared to £80k in August 2024 and £84k in November 2023.
Even so, reducing debt levels allied to shrinking asset levels is not a positive sign in an industry where constant investment and re-investment is fundamental to its business model.
Zombie companies
Fortunately, there is no significant ‘zombie’ company issue. Only 2,085 companies (7% of our sample) had negative balance sheets, where the liabilities exceeded the value of their assets by at least £20k. Their combined deficits only totalled a relatively modest £187m, although this was some 10% higher than in August 2024. Typically, the percentage of zombie companies in other sectors we have analysed recently has been between 12% and 18%.
Negative working capital
A more concerning finding is that 4,427 (15%) of haulage companies have negative working capital of at least £20k. This means that their short-term liabilities due for payment within a year exceed their ‘quick’, easily realisable assets such as receivables, inventory and cash. This is a further deterioration since August 2024 when the figure was 4,154 (13%) and November 2023 when it was 3,813 (12%)
The overall working capital shortfall of these companies is £706m now, compared to £834m six months ago and £778m in November 2023. A deficit position on working capital represents a vulnerable financial profile. This is an undesirable and risky financial model for too many companies in the industry.
Business failure levels
Historically, insolvency levels in the road haulage market sector have been modest and remain so. There were just 861 formal insolvency filings of road haulage companies in England and Wales in 2024, equivalent to only 4% of all corporate insolvencies in the period.
Nevertheless, road freight companies have a high level of vulnerability not just because of their financial rating discussed earlier in this report, but because of their cash position. Data published by the Office for National Statistics in January 2025 have revealed that more than a third of transport and storage companies have no cash reserves. The ONS figures showed 36.8% have run out of emergency funds and a further 12.4% said they had less than a month of available financial resources left. This is the lowest level of cash reserves of any UK industry.
Challenges faced
In June 2024, the trade body Logistics UK published its Logistics Report Summary 2024, which examined the operational state of the broader logistics industry and the major issues with which it was grappling last spring and summer. These have not changed significantly since then and included:
- Fluctuating fuel prices.
- Continuing input cost inflation for materials and labour.
- Driver shortages – estimated to be 60,000 currently.
- Unreliable road networks.
- Climate change and the consequential rise in extreme weather events.
- Obstacles to achieving sustainability (net zero) targets:
- High cost of low energy fuels.
- Inadequate charging infrastructure for EVs.
- Inconsistent regulatory framework.
Over and above these factors, the accelerating impact of technology and especially AI is creating strategic and operational challenges. Whatever its potential benefits may be, technology and how best to adopt it will be proving highly disruptive for many road haulage businesses.
The way ahead for road haulage
Our report identifies a worrying shrinkage in the industry in financial terms. The double-digit reductions in total assets and net worth should be a matter for real concern, reflecting as they do a fall in investment, a drop in capacity and possibly, significant losses being incurred at a time of so many challenges for hauliers.
Within the finances themselves, the sector’s overall risk profile has deteriorated and its increasing trend towards trading with significant working capital deficits only increases its vulnerability. At 39%, the very high percentage of haulage companies in the Company Watch warning area is a clear indicator of the sector’s struggling finances and a harbinger of even tougher times ahead.
A sluggish UK economy and the continued impact of Brexit will inevitably continue to present problems for road haulage, which is so fundamental to the UK’s internal and external trade. In both the short and medium terms, it will continue to be a time for caution and heightened risk awareness by those running road freight and logistics businesses.
Despite the low level of formal insolvency filings, this is an active sector for turnaround and consensual restructuring solutions to financial and commercial issues, which do not involve a formal insolvency filing.
If you would like to read previous reports about the sector, we have road haulage market sector reports for August 2024, November 2023 and March 2021.
If you would like to discuss any of the points in the report or believe you have been affected by any of these issues, you can speak to one of our Partners who can discuss options with you.
We have offices nationwide and by contacting us on 020 3326 6454, you will be able to get immediate assistance from our Partner-led team.