At a glance

Official figures from the Office for National Statistics reveal that in August, 33.7% of UK transport and storage firms reported a decrease in turnover, a significant rise from 13.8% in July. Only 6.1% of these firms expect growth in October, highlighting concerns about weak domestic demand and competition as key challenges. This contrasts with the manufacturing sector, where 23.5% of businesses anticipate growth, indicating a more optimistic outlook.

Official ONS figures show the number of transport & storage sector businesses reporting lower turnover more than doubled in a month, while almost none saw growth. The home delivery expert Parcelhero says the sector’s expectations for October are weak, with only 6.1% of firms forecasting growth, compared with 23.5% of manufacturers.  

The UK’s transport & storage sector is sliding into the peak trading season on the back foot, according to the latest Office for National Statistics (ONS) Business Insights and Conditions Survey.

Analysis of the survey by the home delivery expert Parcelhero reveals 33.7% of transport & storage sector businesses (the sector which includes couriers, hauliers and warehousing firms) reported that their turnover decreased in August compared with July. That is up from just 13.8% the previous month. Only 2.7% reported an increase, down from 15.2% in July.

Parcelhero’s Head of Consumer Research, David Jinks M.I.L.T., says: ‘The transport & storage sector’s performance now sits below the all-business picture, where 28.3% reported a fall and 11.9% a rise. The contrast with manufacturing in particular is stark. Although 27.5% of manufacturers also saw turnover fall, a healthier 25.8% reported growth, up from 15.4% in July. The wholesale & retail sector was closer to transport, with 31.4% reporting a fall and 11.7% an increase.

‘Transport & storage has gone from holding up well in July to being the weakest of these three sectors. Barely one in 36 firms saw turnover grow in August, while one in three saw it fall. Manufacturers, by contrast, are showing real signs of life, with more than a quarter reporting growth.

‘The survey, covering 7-20 September, also asked what particular challenges were currently impacting turnover. The most commonly cited challenge for transport & storage businesses was competition, at 18.8%, followed by economic uncertainty (17.3%), cost of materials (13.5%) and insufficient domestic demand (11.7%). The last of these has surged from 2.1% in the previous survey.

‘Other sectors are facing their own challenges. 42.7% of manufacturers cited the cost of materials and 33.9% cited economic uncertainty. In wholesale & retail, 33.9% cited economic uncertainty, 27.6% the cost of materials and 27.3% competition.

‘Manufacturers and retailers can point to input costs and a nervous economy. Transport & storage firms largely can’t. A third say nothing is holding them back, and nearly a quarter simply replied they were unsure what the challenges facing them are. The jump in firms citing weak domestic demand suggests the problem is fewer parcels and pallets moving, rather than costs spiralling. That is arguably harder to fix.  

Limited expectations for October

‘Expectations for October offer limited comfort. Only 6.1% of transport & storage firms expect turnover to rise, although that is up slightly from 4.6% last time. 16.4% expect a fall, up from 11.3%, and 28.6% are unsure. The share expecting no change has dropped from 62.8% to 48.9%.

‘Manufacturers are markedly more optimistic for October, with 23.5% expecting growth against 19.3% expecting a decline. Wholesale & retail is more guarded, with 14% expecting growth and 16.6% a fall, though 56.1% expect stability.

‘Measured by net balance (the share of firms reporting growth minus the share reporting a fall), transport & storage swung from a marginal positive of 1.4 percentage points in July to minus 31 in August, a 32.4-point deterioration. Manufacturing moved the other way, improving from minus 10.3 to minus 1.7, while retail slipped from minus 7.5 to minus 19.7. For all businesses, the August net balance was minus 16.4, so transport & storage fell well below the average.

‘The forward-looking data points the same way. Transport & storage’s October net balance is minus 10.3, worse than September’s minus 6.7. Manufacturing remains positive at plus 4.2, although down from plus 7.3, and wholesale & retail has improved from minus 6.7 to minus 2.6.

‘October should be the start of the run-in to peak, yet fewer than one in 16 transport & storage businesses expect growth and more than a quarter can’t call it. With Black Friday and the Christmas rush approaching, the sector needs demand to arrive quickly. Manufacturers are starting to look ahead with confidence but logistics firms are still waiting for a reason to.

‘While the short term outlook for the transport & storage sector shows some cause for concern, its rapid adoption of new technologies and strategies to adapt to the continuing growth of e-commerce means any dips are likely to be temporary. The longer term outlook for the sector is exciting. Parcelhero’s latest industry report, “Delivering the Future”, reveals how the way we order and receive goods will change between now and 2030, and what e-commerce might look like by 2060 and beyond. The full report is available at https://www.parcelhero.com/en-gb/resources/ebooks/delivering-the-future

Editorial insight

Official figures highlight a sharp decline in turnover for UK transport and storage firms during August, with few anticipating a turnaround as the sector heads into its busiest trading period. The figures suggest that, unlike manufacturers who are showing signs of renewed optimism, logistics businesses are entering the crucial pre-Christmas season with subdued expectations and ongoing uncertainty over demand.

For businesses reliant on parcel delivery, haulage, and warehousing, this lacklustre outlook is notable given the sector’s usual seasonal upswing in the run-up to Black Friday and Christmas. The data points to a broader hesitancy among logistics operators, with competition and weak domestic demand now cited as key challenges. While some sectors are primarily concerned with rising costs, transport and storage firms appear to be grappling more with sluggish volumes, raising questions about the pace of recovery in consumer and business activity as the year-end approaches.

This downturn comes as the sector has been adapting rapidly to shifts in e-commerce and supply chain pressures post-pandemic. While long-term prospects remain tied to ongoing digital transformation and evolving consumer habits, current trading conditions underscore the uncertainty facing many operators as they prepare for the traditional peak period.

Story ideas and journalist angles

Economic impact

Transport & Storage Sector Faces Tough Times Amid Peak Season

The transport & storage sector is experiencing a significant downturn as it heads into its busiest season, with more firms reporting decreased turnover and limited optimism for October growth.

Target audience business-finance Story potential 8/10 Industry trend

Challenges Facing the UK’s Transport & Storage Sector

The transport & storage sector is grappling with economic uncertainty, competition, and weak domestic demand, contrasting with more optimistic manufacturing and retail sectors.

Target audience trade-industry Story potential 7/10