Industry Watch Haulage Logistics Company Watch Centurion House

Industry Watch Haulage & Logistics Company Watch, Centurion House, 37 Jewry Street, London, EC 3 N 2 ER - +44 (0)20 7043 3300 info@companywatch. net – www. companywatch. net Registered in England Wales No. 3597613

Industry Watch – Haulage and Logistics Organisations around the world rely on Company Watch’s industryleading financial analytics, such as the H-Score® and Text. Score®, to drive their credit and procurement risk processes. Our scores are trusted by banks, corporates, investment houses and public sector bodies to manage their exposures: by providing a transparent drill-down to the factors driving our analysis, and the tools to stress-test our scores, we enable our clients to take evidenced-based decisions and justify these to key stakeholders within their organisations. With the H-Score® and Text. Score® predicting over 92% of global quoted company insolvencies in advance, it is the risk management tool of choice, providing actionable intelligence in an uncertain world. As part of our ongoing analysis of the market place, we monitor the performance of industry sectors within the economy and model the impact of internal and external events on various sectors. These results are included within our Industry Watch updates. If you would like to find out how the Company Watch platform and analytics can support your credit and procurement processes then please contact us. Regards Jo Kettner CEO, Company Watch May 2019 Our latest Industry Watch looks at the haulage and logistics industry and how it is struggling with the many issues it faces today. © Company Watch Limited 2019 Company Watch, Centurion House, 37 Jewry Street, London, EC 3 N 2 ER - +44 (0)20 7043 3300 - info@companywatch. net – www. companywatch. net

Analysis of the haulage and logistics sector The productivity and competitiveness of the UK economy is dependent upon having an efficient road haulage sector and road infrastructure that works for all users. 98% of all food, agricultural, machinery and consumer products are moved by road in the UK. The haulage and logistics sector is the UK’s 5 th largest employer, with 2. 54 m people currently employed in the sector. The industry is worth £ 124 bn Gross Value Added (GVA) to the UK economy, making it a critical part of the economy. There are currently 23, 700 companies registered in the sector. Of these, 66. 5% have a financial H-score of 50 or less and 41. 6% of the industry actually fall into the H-score warning area. Excessive competition and chronic congestion of UK roads and ports is becoming a real issue for many within the sector. It is commonplace to find motorways roadblocked and deliveries backlogged. Brexit uncertainty is deterring many drivers from accepting UK trips. Over 60% of drivers in the industry are non-UK Europeans. This means that if and when Brexit finally goes through, it will have a negative impact on employers. There is currently a shortage of 45, 000 driver in the UK, exacerbated by the lack of European availability. Long, anti-social hours makes it a potentially unattractive proposition for potential employees - deterring them from the sector. The overall average H-Score® of this sector is 39/100. This is down from an average of 42 two years ago, which indicates that the industry is under stress. This is compounded by the number of company insolvencies; 2, 600 companies have been declared insolvent over the last 5 years. This is a shocking 10 companies per week. © Company Watch Limited 2019 Company Watch, Centurion House, 37 Jewry Street, London, EC 3 N 2 ER - +44 (0)20 7043 3300 - info@companywatch. net – www. companywatch. net

“ 2, 600 company insolvencies occurred in the last 5 years, working out at a shocking 10 per week. ” “ ” © Company Watch Limited 2019 Company Watch, Centurion House, 37 Jewry Street, London, EC 3 N 2 ER - +44 (0)20 7043 3300 - info@companywatch. net – www. companywatch. net

Analysis of the logistics sector UK diesel duty remains a heavy tax burden on the UK supply chain, putting upward pressure on costs for companies and consumers, undermining competitiveness and soaking up the working capital of haulage businesses. The impact in the more remote areas of the UK, which are furthest from suppliers and major markets, is especially damaging. The industry does not borrow heavily (£ 2. 2 bn), and its gross assets of £ 13 bn mean gearing is low. However, stakeholders in the industry need to remain careful and understand individual issues to see how logistics and haulages organisations will react to the changing industry. The Road Haulage Association estimates that the highest profit margins in the industry are only around the 3% mark. Therefore it comes as no surprise there is a lack of investment in much needed vehicle fleet renewal, especially with the newly passed ultra low emission zone meaning trucks not meeting the current Euro VI standards will now be fined £ 100 per day to deliver goods in central London. The condition of some of the UK’s roads continue to deteriorate, resulting in increased costs to vehicle repair and maintenance. Truck drivers and their employers have an additional requirement – the provision of secure parking for trucks with appropriate facilities for drivers, starting with motorway services areas. The need for drivers to take rest breaks by law (as well as by common sense) means there need to be sufficient space for drivers to park their lorries securely. © Company Watch Limited 2019 Company Watch, Centurion House, 37 Jewry Street, London, EC 3 N 2 ER - +44 (0)20 7043 3300 - info@companywatch. net – www. companywatch. net

The H-Score® measures a company’s financial health. It is derived from a company’s published financial results and quantifies how closely the accounts resemble those of companies which subsequently failed. Displayed graphically over five years, on a scale of 0 (weakest) to 100 (strongest). Companies with an H-Score® of 25 or less are placed in the Warning Area. Not all companies in the Warning Area will fail, however, of the companies that do fail, the vast majority were in the Company Watch Warning Area prior to collapse. The H-Score analytics look at a company's financial position from a number of aspects including profit management, working capital management, liquidity, and how the assets are funded. To find out about subscribing to Company Watch please contact us on +44 (0)20 7043 3300 © Company Watch Limited 2019 Company Watch, Centurion House, 37 Jewry Street, London, EC 3 N 2 ER - +44 (0)20 7043 3300 - info@companywatch. net – www. companywatch. net

Company Watch Centurion House 37 Jewry Street London EC 3 N 2 ER +44 (0)20 7043 3300 info@companywatch. net www. companywatch. net © Company Watch Limited 2019