Fleet News

Cash and congestion are key barriers to growth, says RHA

The two main barriers to growth in the logistics sector which have been identified by members of the Road Haulage Association (RHA) are difficulties in accessing capital/cash flow and the quality of the road network.

"Congestion adds to costs and undermines efficiency. It has been a serious concern for many years and as the industry looks ahead it sees the problem only getting worse," says RHA director of policy Jack Semple.

"The capital/cash flow issue first emerged as a serious concern with the banking crisis of late 2008. Our new survey adds to evidence from the Bank of England and elsewhere that access to cash in the SME sector remains a serious problem and we believe that it threatens the government's agenda for growth.

"The road haulage and distribution sector is particularly disadvantaged. Diesel suppliers require payment within one week or, in many cases, before delivery - and fuel accounts for more than one third of the operating cost of a large truck.

"At the same time, we have mounting evidence that hauliers' customers, and especially very large companies, are taking increasingly long to pay their bills - they are exploiting their market position to use their suppliers as banks, in effect.

"HM Revenue and Customs has hardened its line on deferring VAT payments, increasing risks for firms facing short-term cash-flow difficulties.

"These factors together mean that transport firms are squeezed on both cost and revenue and finding it increasingly difficult to fund growth in their businesses and to investment in new equipment.”

After cash and congestion, the RHA survey identified uncertainty over market conditions, regulation and building a larger customer base as important barriers to growth.

Asked in the survey about a range of factors related to the performance of the logistics industry, the most negative rating was for the willingness of customers and receivers of goods to work constructively with transport companies.

"Members clearly believe that ‘Partnership' is an over-used term and that it often belies reality. Too often, shippers and receivers fail to genuinely consider option that are more efficient - and usually greener - and instead simply squeeze suppliers to commercially unsustainable haulage rates," Semple said.

The survey was carried out in consultation with the Department for Transport, as part of the RHA's contribution to the government's Growth Review.

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