Wednesday 20th Sep 2017 - Logistics Manager

Logistics businesses hit hardest by inflation

Logistics businesses & industrial transport will be hit hardest by financial distress caused by inflation in fuel and food, according to new research by consultancy Begbies Traynor.

The research found that significant distress in the sector had increased by 46 per cent year-on-year.

Overall financial distress in the supply chain has increased by 26 per cent in the last year.

UK inflation increased to 2.3 per cent in March, which is the highest level since September 2013.

According to the consultancy, cost pressures are expected to jump further after the latest National Living Wage increase.

“Levels of financial distress have increased significantly over the past year, and nowhere more so than in the Transport and Logistics sector, which continues to be severely hit by on-going fuel price inflation,” said Julie Palmer, partner at Begbies Traynor. “Given the scale of the increases in distress during Q1, it would appear that food suppliers, logistics firms and wholesalers are yet to fully pass on these rising costs to their customers.

“But it is only a matter of time before we start to see this coming through, especially given the added margin pressures associated with the new National Living Wage.

“Once those costs ultimately feed through to consumers, we’d expect further pressure on sectors exposed to discretionary spending such as retail, bars and restaurants, travel and leisure.”