Bombshell new Government figures show transport & storage sector companies (including logistics, parcels and warehousing) have seen their staffing costs spiral by 35.7% in the last three months - the highest increase of any industry. Increased NI and minimum wage costs, set to kick in this April, will add to the burden, warns the home delivery expert Parcelhero.

Shock new figures from the Government's Office for National Statistics (ONS) reveal that transport & storage sector firms' staffing costs ballooned by 35.7% in the last three months. That's considerably more than any other industry sector. In contrast, manufacturing companies' staffing costs rose by 24% and retailers by 20.4% during this period.

Rising employment costs for transport & storage companies include higher wages, bonuses, National Insurance (NI) and pension contributions - and the bad news for employers doesn't stop there, warns the home delivery expert Parcelhero.

Parcelhero's Head of Consumer Research, David Jinks, a Member of the Chartered Institute of Logistics and Transport, says: 'Not only have wages in the transport & storage sector (the category which includes logistics, parcels, haulage and warehousing firms) spiralled 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 say they 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. That was compared to 22% of manufacturers and 16.2% of retailers that had experienced an increase.

'Of course, the elephant in the room is 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.

'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? Cutting staff working time looks to be one resort. 16.3% said they will limit overtime hours, compared to just 7.7% of manufacturers and 10.2% of 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.

'With resources increasingly stretched, it's interesting and heartening to see that the sector still remains focused on staff development. Just 2% of transport & storage companies say they will reduce spending on training, compared to 9% of manufacturers and 6.6% of retailers.

'Transport & storage companies that are partnered with retailers with strong in-store and online sales are in a stronger position to face the economic challenges ahead. Parcelhero's influential report "2030: Death of the High Street" has been discussed in Parliament. It reveals that retailers must develop an omnichannel approach, embracing both online and physical store sales. Read the full report at: https://www.parcelhero.com/content/downloads/pdfs/high-street/deathofthehighstreetreport.pdf