Insolvencies among logistics companies have risen by 14% in the past year, increasing from 464 in 2022/23 to 530 in 2023/24, according to research by Forvis Mazars. Many of these businesses were established during the pandemic to meet the surge in demand for home deliveries. However, as demand has fallen back to pre-pandemic levels, many smaller operators are now struggling to remain viable.

During the pandemic, online sales accounted for 34% of all retail sales in May 2020 but have since dropped to 28% by July 2024. This decline, coupled with the resurgence of high street shopping, has reduced the need for logistics services, which are closely linked to e-commerce growth. Some online retailers have also introduced fees for returning goods, prompting consumers to cut back on bulk ordering and returns, further dampening delivery volumes.

Consumer spending has declined since the pandemic, partly due to high interest rates reducing disposable income. Retail sales volume indices have dropped from 105 in July 2020 to 99 in July 2024. Rising costs, including wage inflation and vehicle leasing expenses, are adding to the challenges faced by logistics companies, particularly smaller operators.

Rebecca Dacre, Partner at Forvis Mazars, noted that smaller logistics firms are finding it increasingly hard to compete with larger players. She highlighted that falling demand, economic pressures, and the need for significant investment in electric vehicles are creating a challenging environment for many in the sector. With these factors at play, the future remains uncertain for smaller logistics businesses.