HAULAGE firms across the North-East are fearing a harsh winter as the squeeze on profit margins is making it barely worth operating, it was claimed.

David Glover, director at specialist transport and commercial law firm Marshall Glover in Durham, said many transport firms were now facing a crippling financial burden.

His view was backed by Linda Farish, chair of the North-East arm of insolvency trade body R3.

As well as the well documented impact of rising fuel costs and the duty imposed on it by the Government there are financial resources that transport firms must legally have in place in order to operate and which are becoming ever harder to access.

Under European regulations, hauliers have to be able to demonstrate their ongoing financial viability, which in practice means they need to have significant amounts of capital in the bank and available to them.

Banks were generally happy to make arrangements to cover these responsibilities in previous years, but with options for these resources now limited, hauliers have found greater financial pressure on their operations.

Mr Glover said: "The last few years have almost produced the perfect storm for the regional haulage industry - not only has the cost of fuel risen dramatically, but the decline in the retail sector has meant that there have been fewer cargo loads that need transportation and hence more competition for less business.

"The cherry on the top has been the availability of finance from the banks becoming far less flexible.

"Hauliers need access to £4,500 for each vehicle they run, as well as a further £8,100 for overall expenses.

"Whilst there will always be haulage contracts out there to be won, the economies of scale that larger businesses can look to mean their smaller independent rivals often can't match their charges."

Ms Farish, who is also director of Recovery & Insolvency at Newcastle-based accountants RMT, adds: "Even with fuel escalators built into their contracts, haulage firms have found that already-tight profit margins have been made even tighter, almost to the point where it's not viable for them to operate."