‘Transport, postal and warehousing’ fifth-most likely sector to experience financial difficulty
The Australian Securities and Investments Commission (ASIC) has released its insolvency statistics for the 2017-18 financial year, with the ‘transport, postal and warehousing’ category recording 379 insolvencies for the period – equating to 5 per cent of the 7,613 cases across 24 industries.
Insolvency statistics: External administrators’ reports (July 2017 to June 2018) shows the transport, postal and warehousing sector was the fifth-most ‘insolvent’ sector, behind only: retail trade (7.8 per cent), accommodation and food services (14 per cent), construction (21.6 per cent) and other – business and personal services (28.2 per cent).
The main causes of business collapse included: inadequate cash flow or high cash use (191), poor strategic management of business (174), Poor financial control, including lack of records (165).
Transport companies were also strongly represented in either criminal misconduct (53 cases) or alleged breaches of civil obligations, in the top three industries for the latter for: insolvent trading (71.2 per cent of reports), care and diligence—directors’ and officers’ duties (56.6 per cent), obligation to keep financial records (50.7 per cent).
Highlighting the struggles at the smaller-to-medium business end of the scale, most liabilities for transport, postal and warehousing were under the $250,000 mark, but most companies also held under $10,000 in assets – or none at all.
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“Of the top 12 industries, those with the greatest percentage of reports estimating assets of $10,000 or less were other (business and personal) services (64.1 per cent), accommodation and food services (61.9 per cent) and transport, postal and warehousing (60.4 per cent),” ASIC says.
“In 36.8 per cent of reports, the external administrator reported the administration as assetless.
“Of the top 12 industries, those that most exceeded this percentage for assetless administrations (36.8 per cent) were other (business and personal) services (41.9 per cent) and rental, hiring and real estate (39.7 per cent) and transport, postal and warehousing (38.8 per cent).”
The figures actually compare slightly better to last year, when ASIC changed the ‘transport and storage’ category to transport, postal and warehousing. There were 469 insolvencies that year, or 6 per cent of a 7,765 total across 24 industries – also ranked fifth.
The full report can be found here.