Insolvencies in the logistics industry have seen a significant increase of 14% over the past year, according to a report by Forvis Mazars, an international tax and advisory firm. The rise in bankruptcies can be attributed to the surge in demand for home delivery services during the pandemic, which has now started to decline.
During the peak of the pandemic in May 2020, online sales accounted for 34% of all retail sales. However, by July 2024, this number had dropped to 28%, indicating a shift back to in-store shopping. As a result, there is less demand for logistics services that are closely tied to online sales.
Furthermore, some online retailers have begun charging customers for returns, leading to a decrease in the habit of ordering multiple items and returning them. This change in consumer behavior has had a direct impact on the demand for logistics services, affecting smaller companies in the industry.
Overall consumer spending has also decreased since the pandemic, with retail sales volume dropping from 105 in July 2020 to 99 in July 2024. High interest rates and wage inflation have left people with less disposable income, contributing to the challenging economic circumstances faced by logistics companies.
Rebecca Dacre, a Partner at Forvis Mazars, highlighted the tough environment for smaller logistics businesses, as larger players dominate the market. The combination of reduced demand and economic challenges has made it difficult for smaller companies to compete and adapt to the changing landscape.
With the growing need for capital investment in electric vehicles and the rising costs of leasing vehicles and employing drivers, many smaller players in the logistics sector may struggle to survive. It remains to be seen how these companies will be able to adjust to the changing market dynamics and evolving consumer behaviors to stay afloat in the industry.
