Freight sector comes off lightly in liquidation stakes

The latest liquidation figures made for an interesting read in the SA freight industry, with everyone keenly eyeing who around them had gone, or were likely to go, bung. But the logistics sector (transport, storage and communication) fared reasonably lightly in the latest stats on company liquidations in the first four months of the year – with only a 16% rise from 25 to 29 closures compared to the same period last year. And the lightness of this rise can be seen in a comparison with the other overall figures, and those for other industry sectors. The month of April, for example, saw overall liquidations rocket up by 41.3% compared to the level a year ago (247 to 349). That brings the year-to-date total to 1 357, which is a whopping 45.3% higher than in the first four months of 2008. These figures came as a bit of a surprise – even possibly an element of shock – to Luke Doig, senior investment and economic services manager for Credit Guarantee Insurance Corporation (CGIC) “I honestly had expected that, with the surfeit of public holidays and the concomitant administrative delays, the rise would have been in the 20% region,” he told FTW. “There again, with the spate of company closures in the past months and the pick-up in the unemployment rate in the first quarter of 2009, I would have expected insolvencies to surge.” But that they hadn’t done in the first three months, with the drop of 6.6% recorded in March (240 from 257 a year earlier) actually taking sequestrations to a level only 10.5% above that of the first quarter of 2008. The same wasn’t true by the end of April, with some alarming trends emerging in various sectors for the first four months of the year. The top three in total numbers – but obviously with no pride in being there – were: Financing, insurance, real estate and business services (a combination which forms the largest services industry) and which saw 51.6% more failures at 561 from 370; wholesale, retail trade, catering and accommodation, which saw 26.7% more firms fold in a rise from 344 to 436; and community, social and personal services which saw failures rise 85.8% to 145 from 78. In fourth and fifth places were: Manufacturing, where casualties rose 17.9% to 79 from 67; and, despite the apparent boom, the winding-up of construction firms, which leapt 105.7% from 35 to 71. Tailing off the list, agricultural failures jumped 125% to 18 from 8; electricity, gas and water liquidations spiked from 4 to 11; and mining closures doubled to 6 from 3. The logistics sector fits in just above the agricultural industry, and is well down the list in sheer numbers. And how relatively lightly the sector is being hit by the current bad times is also apparent in the latest gross domestic product (GDP) figures. According to Doig’s analysis, the logistics sector makes up 10% of SA’s GDP. “But the figures for that specific sector only fell -1.8% in the first quarter, compared to an overall drop of 6.4%,” he told FTW.