There can be no more resilient sector in the UK economy that our own transport industry which is often used as a barometer for the economic climate. As a supplier of trucks and trailers, we can see first-hand, how challenging the operators are finding it and yet how well large parts of the industry are rising to these financial challenges right now.
We have been closely tracking market data and our own impact and performance over the last 16 weeks across all aspects of heavy commercial vehicles from the first signs of the pandemic, through lockdown and now through easing the restrictions. Clearly there has been a critical period over March and April where very little was happening and the industry confidence was at its lowest ebb. Key sector operations around food and medical supplies may have continued but for almost all other sectors the government support was the difference between still being in business today or out of business and we should be thankful for that.
Like every other business, we have worked hard to maintain a full operation and support service to all our customers and we are pleased that despite most of our staff home-working, that service was maintained and staff are gradually returning to our depots in line with full health and safety precautions being in place. A key indicator for us is that sales and business has turned a small corner in the last 4 weeks. From mid-May we have certainly started to see a small but significant change. Transport continues and indeed every week of lockdown easing sees that confidence grow. Apprehension exists, but owner-drivers and fleet operators are looking to take advantage of what has been a quiet market and making choices again about investing in their vehicles and fleets.
Shorter term leasing options, low interest finance and a larger supply of new and quality used vehicles suggest this is a good time to upgrade, or at least talk and evaluate options going forward.
One factor in this evaluation is preparing plans for upgrades before the year end. Brexit negotiations are very much in the slow lane. Our UK government is insistent on adhering to the January deadline and so WTO rules may be a likely outcome. Trade tariffs are inevitably going to increase imported new vehicle prices by at least 10% and for those planning for new, we may see an early demand and / or an increasing demand for quality low mileage used vehicles. With full Brexit now just 6 months away, we need to be braced for change, albeit we do expect the softer import rules around documentation and UK border checks are likely to be applied for the first 6 months which is welcome.
So with Covid-19, Recession and Brexit in play, clearly predicting the future is very difficult. We can realistically expect a bounce-back as the economy will kick-start again and soon, but the pace is still unknown and hard to predict. From the perspective of Asset Alliance Group, we mentioned “green shoots” in this blog title. In our business we have indeed started to see a range of business needs coming through, which is encouraging. Trailers have been particularly strong given the welcome resumption of the construction sector. Temperature-controlled vehicles and trailers have also see good indicators in the last few weeks as well as the early months as part of essential deliveries. We are now seeing tractors and rigids starting to move as well with some large deals from customers giving us reason to be confident about our industry returning. In our bus sector, major operators continue to see the need to invest in the latest fleets of alternative powered buses while of course coach operators are understandably still holding off. Clearly the resumption of our manufacturing sectors and retailing will bring the biggest lift to our industry and we can only hope that key sectors such as automotive and hospitality can resume and get through the terrible period these sectors in particular have seen over recent months.
We do accept we are entering the UK’s deepest recession on record, and yet we also believe that as a country we can rebound. There is a political will and need to accelerate this and we are learning new behaviours to avoid a second wave and this will be key for the scientific advisers to get behind supporting a return to a more normal lifestyle and business arrangements. We hope that all our sectors can now recover, that we can all remain sensible to accepting change and we can all play our part in getting our transport and haulage sectors back into full gear, supported by a public that are confident in spending again and returning our key sectors back to full employment.
We believe this has started. We also believe that our likely 15-16 week shutdown is almost behind us and we can have reason to be cautious but also optimistic and show the necessary good sense around health and safety. We will prevail and in our own business we will continue to support our current and new customers by working with them to structure leasing, contract hire, rental and finance arrangements, balanced with the right assets for their business. We have always depended on one another, and now more than ever.