The failure of haulage companies due to their reliance on high-risk business models "can only be good news" for the long-term survival of the industry, according to analysts.
Comparing the road haulage market to the evolutionary model proposed by scientist Charles Darwin, Plimsoll Publishing claims the extinction of those businesses that are unable to respond to the needs of the modern world will benefit those that remain.
It says there are almost 200 haulage companies in real financial danger. Of these, 117 increased their debts in the last year, 125 saw profits plummet and 69 are losing money.
Answering his own question, "Should we just let them fail?", senior analyst David Pattison says: "It is clear that many of these 194 'danger' businesses are fundamentally poor, aggressive or disruptive, and are unhelpful to the market. With newly prudent banking systems in place, raising quick finance will not paper over the cracks as it once did."
Pattison adds: "Their problems go back years, certainly long before the current UK slowdown, yet they have failed to fix their problems." The comments come just days after the Government announced a multi-billion pound lending package for banks to help out businesses.
Plimsoll's statistics also show that eight of its 'top 50' haulage firms are in serious financial danger and three of them are in the top 20. It defines risky business models as those with high and rising debts and low profit margins. Companies that are failing to slash costs to reduce their outgoings are also seriously compromised.
However, Pattison says winners will emerge out of the crisis: "There are 443 terrific companies who can compete fiercely on price, and are largely debt-free while holding their margins. Most are operating at the height of productivity. These will be the ones to watch in the next period."