Transport & Storage Sector Shrugs Off the Turmoil of ‘Awful April’
For months, UK businesses had been fearing the impact of April's staffing cost rises. However, the latest ONS survey reveals transport & storage sector companies kept their calm in the face of employer National Insurance and National Living Wage increases. Nor do they appear to have been ruffled by Trump's new tariffs, says the international delivery expert Parcelhero.
Transportation & storage sector firms were left largely unscathed by 'Awful April', according to the latest Business Insights survey from the Office for National Statistics (ONS). Last month was dubbed 'Awful April' by analysts due to the arrival of a perfect storm of financial challenges. Perhaps the most feared were the rises in employers' National Insurance (NI) contributions and the 6.7% increase to the National Living Wage.
Both of these measures were originally announced in Chancellor Reeve's 2024 Autumn Budget but only took effect this April. Piled on top of these changes, some companies also faced a rise in their business rates and tariffs on their exports to the USA announced by President Trump in April. It was expected that the impact of this tsunami of challenges would be compounded by a fall in consumer confidence, owing to increases in household energy costs, water bills and council tax rates that also hit during April.
However, the home delivery expert Parcelhero says that although the transport & storage sector (the category which includes logistics, parcels, haulage and warehousing firms) was braced for impact it seems to have had a relatively calm month. Parcelhero's Head of Consumer Research, David Jinks M.I.L.T., says: 'Following the long-heralded increases in employer NI contributions and the National Living Wage, all eyes were on labour costs this April. British businesses were asked: "Which of the following challenges, if any, are currently impacting your business's turnover?" Only 16.1% of transportation & storage firms who responded between 19 April and 18 May said labour costs had impacted their turnover.
That's significantly fewer than the 26.3% of manufacturers and 22.1% of retailers who said labour costs were impacting their businesses. '11.6% of transport & storage companies reported their turnover actually increased last month, which was a good result, though fewer than the 14.7% of manufacturers and 19.7% of retailers who reported a rise. Dig a little deeper and the picture was even more positive, with only 19.8% of transport & storage firms reporting a decrease in turnover.
That's significantly healthier than their manufacturing and retail partners: a hefty 31.2% of manufacturers and 25.4% of retailers reported falling turnover. By that measure, transport & storage firms escaped Awful April relatively unscathed. 'Overall, the new employer costs and Trump's April tariffs seem to have left transport & storage companies largely unfazed.
Just 18.5% of firms in this sector said economic uncertainty was affecting their turnover, compared with a whopping 33.6% of manufacturers and an even larger 39.8% of retailers who expressed concern. 'Of course, the crunch question is what ongoing impact will April's changes have? When asked about their predictions for next month, 61.7% of transport & storage companies said they expect their turnover to remain the same in June and just 9% expect it to fall.
Again, these responses are more optimistic than their manufacturing and retail partners.
51.1% of manufacturers and 55% of retailers expect their turnover to remain the same, while 20.4% of manufacturers and 14.7% of retailers believe their turnover will actually fall in June. 'For a final assessment of the impact of Awful April, the business rates rise that hit a number of companies during the month was also shrugged off by the sector. Only 1.8% of transport & storage sector listed business rates as a major concern heading into June, which is less than manufacturing's 2.5% and retail's 8.6%.
'Ultimately, it's those stores with a combined High Street and online offering that are most protected against staffing cost increases and unexpected events.
Parcelhero's influential report "2030: Death of the High Street" has been discussed in Parliament.
It reveals that retailers must develop an omnichannel approach, embracing both online and physical store sales.
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