Covid and Brexit hits transportation and storage harder than any other sector, report reveals

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The latest Office for National Statistics (ONS) Business Insights report has revealed the shock news that the transportation and storage industry has been hardest hit of all sectors by Covid and Brexit. The home delivery firm, ParcelHero, says that even hotels, food services, arts and entertainment have fared better.

ParcelHero’s Head of Consumer Research, David Jinks, who is a Member of the Chartered Institute of Logistics & Transport, says the logistics and supply chain sector is a trusted barometer of the economy and that these results come as a shock.

“The report – Business insights and impact on the UK economy – reveals that, between 17-30 May, 9.6% of ‘Transportation and storage’ category companies reported they had now closed permanently; 15% were still temporarily shuttered and just 75.4% had resumed trading,” said Jinks. “These trading status figures are grim reading and highlight the double whammy of the pandemic and Brexit on the transport and supply chain sector.

“To put the results into context, we might have expected the ‘Accommodation and food service activities’ sector to have been significantly more damaged by lockdowns than transportation and storage,” Jinks continued. “After all, no one was able to go on holiday or eat out for months. That proved not to be the case, however. During the latter half of May, only 1.6% of eateries and hotels reported they had closed their doors permanently; 15.1% remained closed temporarily and 83.3% had resumed trading.

“Likewise, even the ‘Arts, entertainment and recreation’ sector fared better, despite long periods of lockdown. No entertainment companies contributing to the report said they had closed permanently, although 14.3% were still temporarily shut. An impressive 85.4% of arts and entertainment organisations are now open again.

“Both the arts and the accommodation and food sectors actually reported worse financial performances than transport and storage firms, but significantly fewer organisations actually failed.

“The report is obviously grim news for transport and storage companies,” added Jinks. “It also strikes a warning note for anyone hoping to see evidence of an economic recovery. The logistics sector is an indicator of the economy. When manufacturers and retailers are doing well, their transport providers are busy; similarly, when UK companies begin to struggle, transport and warehousing is the first sector to show an immediate decline.

“The root of the problem is that freight transport companies are particularly exposed to the impact of Brexit. This is on top of issues caused by the pandemic,” Jinks suggested. “It’s extremely concerning that Customs problems have not got any better since Brexit regulations first hit in January.”

“The proportions of businesses experiencing challenges in importing and exporting are broadly unchanged since January 2021,” the report stated.

That is a damning indictment of current Government policy.

“During the period 3-16 May, 38.2% of exporters reported increased challenges around additional paperwork; 26.8% reported challenges with new Customs duties; 15.2% indicated reduced demand for products and 8.6% complained of disruption at UK borders. Brexit issues remain a hurdle for exporters and their transport providers,” Jinks concluded.

ParcelHero’s own in-depth analysis of the ongoing EU-UK trade problems and, in particular, the powder keg Northern Ireland Protocol agreement can be seen by clicking here

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