Staffing costs for the transport and storage sector have ballooned in the past three months, with more companies claiming their costs have increased than in any other sector, according to new government figures.
The Office for National Statistics’ latest Business Insights & Conditions Survey showed employment costs rose at a higher rate for transport and storage companies, which include logistics, parcels, haulage and warehousing, than they did for other sectors.
Around 35% of the sector’s companies said their costs – which include higher wages, bonuses, National Insurance and pension contributions – had increased in the three months to end of January.
In contrast, 24.3% of manufacturing companies and 20.4% of those in retail and wholesale saw their staffing costs rise during the same period.
Meanwhile, around 46% of transport and storage businesses said that employment costs had remained the same in the past three months.
Home delivery giant Parcelhero warned that the “bad news for employers doesn’t stop there”, with the upcoming increases in National Insurance taxes and minimum wage costs set to begin in April.
David Jinks, Parcelhero head of consumer research and member of the Chartered Institute of Logistics & Transport, said: “Not only have wages in the transport & storage sector climbed in recent months, but there is no sign of any let-up in the near future.”
The ONS’ latest Business Insights survey, held in late February, also revealed that 37.2% of transport & storage companies are expecting further increases in staffing costs over the next three months. Just 1.7% believe their costs may actually decrease.
“These figures are a sharp contrast to the previous survey, released last November, when just 12.2% of transport & storage firms reported their staffing costs had increased over the previous three months,” Jinks added. “That was compared to 22% of manufacturers and 16.2% of retailers that had experienced an increase.”
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He said the “elephant in the room” was last year’s autumn budget, when Chancellor Rachel Reeves announced that on 6 April 2025 the rate of employer NICs will increase from 13.8% to 15%.
“There’s little wonder that 37.2% of transport & storage sector companies are bracing themselves for further staffing cost rises,” said Jinks.
“The big problem for all logistics and supply chain companies is that profit margins are already extremely narrow and there’s precious little wiggle room for passing on costs.
“Such is the precarious state of the market that only 19% of transport & storage companies say they will adapt to increased employment costs by increasing their prices, compared to a whopping 39.9% of manufacturers and 34.6% of retailers who plan to pass on these rises to customers.
“That, of course, begs the question: how will the transport & storage sector cover these increased costs?”
Jinks claimed cutting staff working time “looked to be one resort” as more companies said they would limit overtime hours compared with the manufacturers and retailers.
“Even though many delivery and haulage firms are operating on wafer-thin margins, 24.7% say they will absorb the costs within their profit margins – again, that’s a higher percentage than manufacturing and retailers.
“It does leave analysts wondering how sustainable this situation is in the longer term.”
Despite having increasingly stretched resources, the logistics sector largely said it would continue to focus on staff development by not reducing spending on training.
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