ICSM Business News: A toxic mixture of Brexit, fuel price hikes, driver shortages and tax rises are forcing some hauliers out of business
Motor Transports journalists have been reporting on a number of high-profile business collapses in the logistics industry this summer. The reasons given for the businesses being wound up vary but include all or some of the same reasons. Brexit has been widely reported by the main-stream media as having had a major impact on recruitment as many European drivers have returned home leaving a crisis in the numbers of HGV drivers available. When Toogood International Transport and Agricultural Services, has collapsed into administration and ceased trading Brexit was given as one of the main causes of its demise. The queues of HGVs recently seen at Dover has seen delays for deliveries across the Channel with some European firms refusing to cross the water as the delays can make delivery times impossible to guarantee.
Fuel prices have rocketed and show no signs of coming down to any great degree. Lesley O'Brien, director of Freight Link Europe, said that the cost of running an HGV had risen £20,000 in a year. Ms O’Brien told the BBC’s Today programme: “This certainly is a crisis as we’ve seen fuel prices escalate over the last year by 50% and no sight of a stop, so we absolutely as an industry need to keep on top of this. As a country we need to understand we need to support our transport industry which is the infrastructure of the whole economy,” she said.
Ms O’Brien said fuel was a third of her business’ running costs. This time last year, it would cost about £41,000 a year in fuel for an average articulated lorry at her company, but with prices soaring it now costs more than £61,000 a year.
Motor Transport reported that the hikes in fuel prices were behind the end of the family-run European perishable foods haulier Whites Transport Services who blamed soaring fuel and energy costs for its decision to wind down the business.
And Tim Wallace in the same trade publication reported on another casualty – this time Covid was the culprit. He wrote: “West Midlands haulier Adam Jones and Sons collapsed into administration and closed down after racking up losses of more than £450,000 due to the Covid-19 pandemic, according to insolvency experts. The Halesowen business was forced to appoint administrators on 24 May, just three years after it was acquired by investment firm OTIF Holdings and its closure led to 50 redundancies. In a report to creditors, FRP Advisory said the company had endured a number of challenges, including the pandemic in 2020, ‘which resulted in a significant reduction in profitable routes’. It said: ‘Whilst the draft accounts to 31 July 2021 record an increase in turnover to £9.2m (up from £6.5m in 2020), the company incurred a loss of £453,512 for the same period. This was largely due to Covid-19 and the well documented nationwide transport issues, including driver shortages and increased fuel prices.’”
The Eastern Daily Press reported earlier this year that a credit score analysis carried out by Norwich-based accountancy firm, Price Bailey, revealed that: “30% of the nation's haulage companies were within the maximum risk category, meaning that they are highly likely to be subject to winding up petitions or intention to dissolve notices in the next 12 months. Over the last year the number of hauliers considered maximum risk has doubled, rising to 28,557 from 14,020 at the end of March 2021.”
Air freight haulier Saints Transport goes into administration
Saints Transport has entered administration after struggling with the impact of the Covid-19 pandemic on the aviation sector.
The company has appointed Paul Ellison and David Taylor of Reading-based KRE Corporate Recovery as its administrators.
The Heathrow-based firm is the largest privately owned air freight specialist in the UK, employing around 350 staff and operating a fleet of 200 trucks.
The company also specialises in high value security loads, temperature controlled transport, hanging garment carriers, nationwide airside capabilities, art logistics, events work and dedicated European haulage.
In its latest annual results to 31 December 2020, which were published in September last year, the family firm revealed that turnover was £12.3m for the year, compared to £11.3m in the six months to 31 December 2019, with pre-tax losses standing at £167,006, the same amount as reported for the six months to 31 December 2019.
In its strategic report to the results the company said at the time it was confident it had sufficient resources available to meet its obligations and to enable it to continue to operate for the “foreseeable future”.
However the report also warned that “given that a degree of uncertainty exists within the economy as a result of Covid-19, and the greater impact this could potentially have on the haulage and aviation industry in which [the company’s] main customer operates, there is a material uncertainty surrounding both the recovery time and the impact of any further restrictions”.
Read more
- Saints Transport confident it can weather Covid-19 storm despite further losses
- Saints Transport chairman leads MBO in loss-making year
- West Midlands haulier wound up and 50 staff made redundant as Covid takes its toll
It had also noted a “degree of uncertainty” surrounding the nationwide shortage of qualified HGV drivers.
The report revealed that it had entered into a “Time to Pay Agreement” on 16 March 2021 with HMRC, in respect of the sum of £1,507,470 relating to older VAT and PAYE balances.
It also noted it had received £1,839,106 from a “connected party, in relation to the outstanding debt, “which will not be repayable on demand or for the foreseeable future”.
The report added: “Furthermore, the directors have guaranteed that no further drawdowns will be made on the loan note facility for the foreseeable future, to ensure the company holds sufficient cash to settle creditors as they fall due.
“As a result of these considerations, the directors continue to adopt the going concern basis of accounting in preparing the financial statements.”
Despite its confidence that the company would survive these challenges last week, on 3 August, Saints Transport called in the administrators.
A response to a request for comment to both the company and from the administrators has yet to receive a response.
Whites Transport Services to close
Family-run European perishable foods haulier Whites Transport Services has blamed soaring fuel and energy costs for its decision to wind down the business.
Founded in 1992 by haulage veteran Ray White, the Hungerford-based company owns 18 Scania and Volvo trucks and a range of refrigerated trailers, which it estimates to be worth up to £4m.
Ray's son, Pete White, transport manager at the firm, told MT that cost pressures had made the decision inevitable but confirmed that all the firm's drivers had already found new positions.
“As a family it’s what we want,” he said. “We’ve achieved everything we want to achieve and we feel that with the residuals as high as they are, and the uncertainly with what’s to come with energy prices and fuel prices, we just want to take the money and run."
White said the firm had decided not to implement a fuel surcharge, saying it “wasn’t’ fair” for customers to absorb extra costs: “We just discussed it month by month," he said. "We didn’t demand anything. We just came to an agreement. Our attitude to transport is common sense.”
He added that he expected many smaller operators to close in the months ahead: "I’ve had a dozen hauliers message me to say they feel exacty the same," he said. "They think it’s a good time to get out. But it only works if you’ve got a decent amount in the bank or a lot of assets to sell.
“We would probably have made more money by selling the business,” he said, “but we wanted to make all the decisions ourselves.
“We’ve built up a very tidy sum of assets in our trucks and trailers and the sale of the equipment is where the majority of the money is going to come from."
Contrary to some reports, White insisted Brexit had nothing to do with the decision: "That made things busier and more difficult for us but we just feel our equipment is so valuable that’s it’s the optimum time to cash in," he said. "Without even trying I've sold about £1.5m of it already."
Collapsed haulier had debts of £450,000 after losing Pallet-Track membership and key contract, report reveals
West Midlands haulier Adam Jones and Sons collapsed into administration and closed down after racking up losses of more than £450,000 due to the Covid-19 pandemic, according to insolvency experts.
The Halesowen business was forced to appoint administrators on 24 May, just three years after it was acquired by investment firm OTIF Holdings and its closure led to 50 redundancies.
In a report to creditors, FRP Advisory said the company had endured a number of challenges, including the pandemic in 2020, “which resulted in a significant reduction in profitable routes”.
It said: “Whilst the draft accounts to 31 July 2021 record an increase in turnover to £9.2m (up from £6.5m in 2020), the company incurred a loss of £453,512 for the same period.
“This was largely due to Covid-19 and the well documented nationwide transport issues, including driver shortages and increased fuel prices.
Read more
- West Midlands haulier wound up and 50 staff made redundant as Covid takes its toll
- Palletforce signs Adam Jones Group to enhance customer service
“Additionally, the company lost its membership with Pallet-Track, which resulted in the loss of one of its largest contracts.”
FRP added that Adam Jones and Sons secured a coronavirus business interruption loan of £250,000 in an attempt to ease its financial pressures and additional financial support was provided by associated company Kenyon Road Haulage.
However, the haulier continued to suffer losses and its management accounts to February 2022 detailed a loss of £450,853.
A sale of the business was viewed to be unachievable due to its debt burden and immediate cashflow requirements and creditor pressure was building with several county court judgments and two winding-up petitions received.
The company operated a fleet of more than 70 HGVs out of three operating centres, providing haulage and distribution services across the UK.
Assets of collapsed haulier sold to Hub Freight in pre-pack deal
A Colchester haulage firm collapsed into administration after Covid-19 lockdowns destroyed its logistics work for touring musicians.
Argo (Cargomasters) also came under significant pressure from the landlord of its warehouse after rental arrears accumulated during the pandemic.
The haulier had undertaken a range of transport work over the years, but due to it taking on warehousing space it had recently diversified into delivering online purchases to customers.
A large proportion of its client base also consisted of logistics support for musicians in the UK and Europe; work that was significantly impacted by Covid, hitting its turnover.
In a report to creditors, the administrator said the company, which was formed in 1993, discussed with the landlord how it could deal with the arrears and trade its way out of the financial situation when the lockdowns began to ease.
However, the report said: “The landlord was adamant that any payment plan to cover these arrears could last no longer than 12 months.
“Given the building was now too large for business purposes and other subtenants had left the premises, the director concluded that the company could not afford to agree to such terms and decided to seek professional advice.”
As a result, the company entered administration on 28 June, but its assets were immediately sold for £55,000 in a pre-pack deal to Hub Freight, whose director was the company secretary and son of Argo (Cargomaster)’s founder Ray Stephens.
Administrator Andy Barron at Parker Andrews said £5,500 had been received to date from Hub Freight and the remaining £49,500 would be collected in monthly payments of £5,500.
Major South-West haulier ceases trading as Brexit and Covid take their toll
One of the UK’s leading independent, family-owned transport firms, Toogood International Transport and Agricultural Services, has collapsed into administration and ceased trading.
Advisory firm Mazars said the Pucklechurch, Bristol haulier had been struck by a range of problems, including Brexit and Covid-19, which had made for a difficult trading environment.
However, more recently it was faced with a loss of international freight work, the ongoing driver shortage and then substantial increases in fuel prices.
Its cash flow difficulties meant that the directors decided the business, which had been trading since 2006, had to be placed into administration.
All employees have now been made redundant.
Toogood operated a substantial warehousing and office facility in the South West and it was recently the primary shirt and club sponsor of the Bristol Bears Rugby Club.
Read more
It ran a total of 11 HGVs and 12 trailers out of two operating centres on the Pucklechurch trading estate.
Mark Boughey, administrator at Mazars LLP said: “We are sorry to see a prominent South-West company like Toogood International Transport and Agricultural Services cease trading.
“The business had traded very successfully for a number of years but suffered from a string of external factors that have ultimately resulted in the directors taking the difficult decision to enter administration.”
“The headwinds of Brexit, Covid-19, driver shortages and, more recently, the fuel and energy crisis, have had a devastating impact on the sector,” he added.
“Once the conclusion was reached that the business was no longer viable, the directors were keen to act quickly and prevent the position for creditors worsening and appointed administrators.
“We are working closely with the company and its key stakeholders, and it is hoped a buyer will be found for part or all of the business.”
These are some recent casualties:
LOGISTICS: COURIERS, HAULAGE, ROAD, RAIL, SHIPPING, STORAGE
ADMINISTRATORS APPOINTED
TOOGOOD INTERNATIONAL TRANSPORT AND AGRICULTURAL SERVICES LIMITED 05683971
SAINTS TRANSPORT LIMITED 00938694
SMV TRANSPORT LTD 09792159
TMA COURIERS LTD 12457011
COMPULSORY LIQUIDATOR APPOINTED
D & S STORAGE LIMITED 01470681
JSK HAULAGE LIMITED 10108218
CREDITORS’ VOLUNTARY LIQUIDATION DEEMED IN CONSENT MEETINGS
ELITE COURIERS SW LIMITED 11202436
GLT TRANSPORT LIMITED 11787033
YORVIK COURIERS LTD 44746
LIQUIDATORS APPOINTED
A TO B LOGISTIC SOLUTIONS LIMITED 12437479
KINGSTON TRANSPORT (SUSSEX) LIMITED 00613037
MIROSLAW TRANSPORT LTD 12220880
PARCEL CONNECT UK LOGISTICS LIMITED 09940453
SCANWELL LOGISTICS (UK) LIMITED 06135625
YORKSHIRE TRANSPORTERS LTD 13287025
MEMBERS VOLUNTARY LIQUIDATIONS
BALTIC CONTAINER SHIPPING (UK) LIMITED 06132793
LONGHAM DISTRIBUTION LIMITED 03439178
SHEARWATER MARINE LOGISTICS LIMITED 44746
PETITIONS TO WIND UP
TEASDALE BULK HAULAGE LIMITED 08411733
YORVIK COURIERS LTD 13281345
WINDING UP ORDERS
AVC LOGISTICS LIMITED 07015424
EAGLE EXPRESS COURIERS LIMITED 09505760
LANCASTER DISTRIBUTIONS LTD 11412035
WINDING UP DISMISSAL
LINNEY REFRIDGERATED TRANSPORT LTD 09955489
+++++++++++++++++++++++++++++++++++
ICSM CREDIT
For information on ICSM visit www.icsmcredit.com or call 0844 854 1850.
ICSM, The Exchange, Express Park, Bristol Road, Bridgwater, Somerset TA6 4RR. Tel: 0844 854 1850. www.icsmcredit.com. Ian.carrotte@icsmcredit.com
About ICSM Credit
ICSM Credit has more than four decades of experience as a credit intelligence group whose members gain inside information about firms in trouble allowing them to avoid bad debts and rogue traders. To join costs less than a tank of fuel - while at the moment there's a special free temporary membership offer during the Covid-19 crisis which gives access to free legal letters. ICSM also has an effective debt collecting service which has a global reach - ask for details from Paul.
For details about ICSM Credit call 0844 854 1850 or visit the website www.icsmcredit.com or email Ian at Ian.carrotte@icsmcredit.com on how to subscribe and to join the UK’s credit intelligence network to avoid bad debts and late payers. Follow ICSM Credit on FaceBook, Twitter and YouTube and Ian Carrotte on LinkedIn.
To keep up to date subscribe to the FREE ICSM Credit Newsletter to hear all the latest insolvency news and to see who has gone out of business click on the orange panel on the top left of the home page of the website www.icsmcredit.com or send an email to Ian.carrotte@icsmcredit.com
For details for the work of the journalist Harry Mottram visit www.harrymottram.co.uk