UK transport sector sees 38% drop in payment claims

Atradius, one of the UK’s leading trade credit insurers, has revealed a 38% drop in claims for late or failed payments in the transport sector since September 2023. This marks a significant improvement for the industry, which had faced a tough year with a 30% spike in automotive claims as of September 2024, driven by global trade slowdowns.

Despite geopolitical challenges like the Red Sea Attacks and falling water levels in the Panama Canal, the transport sector has shown resilience throughout 2024. Declining interest rates since August have also eased fuel costs, boosting performance across the board.

The push for sustainability has been a key factor in the sector's adaptability. As the industry is responsible for 10% of the UK’s carbon dioxide emissions, companies invested £500 million in 1,200 electric buses this year. While these sustainable practices come with higher costs, they signal the sector's commitment to meeting green targets as it transitions into 2025.

Decarbonisation and electrification will remain priorities, with the new Labour Government’s legislative changes expected to accelerate the shift to electric vehicles over the next five years. This overhaul will challenge firms but also create long-term value, driving the sector toward net zero.

However, Atradius warns that the transport sector is not out of the woods yet. Insolvencies remain a major concern, with a 6% rise in transport sub-sector insolvencies over the past year and an overall UK insolvency forecast of 7% for the next six months.

While demand remains strong—evidenced by 16.7 million international trips in the first quarter of 2024 and a 3.6% growth in motor vehicle manufacturing—the sector must remain vigilant.

Nicola Harris, Senior Underwriter at Atradius UK, says: “Our data shows a 41% drop in monthly claims and a 38% annual decline, proving the sector’s resilience. But for this progress to continue, transport firms need to stay proactive, protecting themselves against insolvency risks.

“This year we’ve seen a 32% rise in new charging stations across the UK, a clear step forward in the push toward sustainability. But as we approach COP28, there’s still a long road ahead.

“Trade credit insurance is crucial in this process, offering financial protection against potential losses. In a competitive and trust-driven industry, it enhances resilience and ensures businesses can thrive, even as they transition to more sustainable operations heading into the new year.”