Haulage Companies and the Financial Crisis

Haulage Companies and the Financial Crisis

Don’t worry – this isn’t going to be an in-depth financial analysis of the state of haulage companies in the current economic climate! Instead, it is a few ‘on the street’ observations, garnered from what people are saying on forums and blogs around the internet.

Haulage Recent years

Back in 2007, the world was a pretty relaxed sort of place. Yes, it’s true, that times are nearly always tough for haulage companies, with competition fierce and baseline costs in a seemingly never-ending upwards spiral. Yet, all things being considered, the few years up to and including 2007 now seem to be something of halcyon days.

Different haulage and freight companies have slightly differing views on this but many report seeing the first shakes in the economy towards the end of 2007; certainly by mid-to-late 2008 the crisis was in full swing and having its effect on the haulage industry. 2008-2010 were tough years for our business, even though people kept telling us through 2010 that the recovery was underway. Although for some of the period, we benefited a little from reductions in global oil prices, the reality for many was that this was more than offset by the reductions in business opportunities as a result of the recession.

Haulage Looking forward

Just about every night on television, you’ll be able to see various economic experts pontificating upon what they think will happen in the year or two ahead. Given their track record over the past three years, one must have some doubts as to whether their predictions will be even close to the eventual reality. Trying to use a little commonsense rather than abstract economic theory may lead to a few speculative thoughts about the immediate future for haulage companies:

• It seems intuitively unlikely that 2011 is going to be a significantly better year, economically speaking, than 2010. Some might argue that it may be even tougher.

• In the latter part of 2010 and earlier part of 2011, we have seen significant hikes in the price of oil on the international markets and significant cost increase at the pumps. It is extremely difficult to see this as anything other than very bad news for our industry and the economy as a whole.

• Many experts are predicting further significant increases in unemployment and, for once, intuition seems to suggest they may be right. This is likely to lead to further downward pressures on pay levels across the economy as a whole.

• It seems as if inflation is continuing to rise and is well above target levels. This is being driven by a higher international commodity prices, fuel prices and VAT increases.

Current speculation is that interest:

Rates will be raised to try and control inflation, though quite how this is meant to reduce the prices of the basic materials and energy that we import seems to be unclear. Rising interest rates has been used in the past to suppress domestic borrowing demand, yet given that area seems fairly flat, some are questioning just how this is meant to reduce inflation that is being driven by factors outside of our nation’s Haulage control.

What it will do is lead to an increase in the cost of borrowing in the UK (e.g. mortgages and business development loans etc) and drive a rise in sterling on the international markets that could reduce the competitiveness of our exports. Once again, an increase in the cost of borrowing and in the price of UK exports, are not things normally regarded as good news for haulage companies.

The bottom line Haulage

It’s always nice to conclude a forward-speculation type article on a positive note so, while there seems little doubt that 2011 and possibly even the next 2-3 years, will be as tight and difficult as were 2009/10, haulage companies are in general a tough lot and more than up to facing the challenges head-on – as they have done for many years.

Norman Dulwich is a Correspondent for Haulage Exchange, the leading online trade network for the road transport industry across the UK and Europe. It provides services for haulage companies to buy and sell road transport and delivery work in the domestic and international markets.

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About the Author: Duncan Barret