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Home » Logistics providers in the United Kingdom express pessimism about sector's outlook
Forward Thinking

Logistics providers in the United Kingdom express pessimism about sector's outlook

June 9, 2016
Supply Chain Quarterly Staff
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Logistics providers in the United Kingdom were more pessimistic about the U.K. logistics sector's outlook during the first half of 2016 than at any time in the past four years, according to a survey released Tuesday by Barclays Bank PLC and U.K. consultancy Moore Stephens International Ltd.

The biennial survey, the eighth conducted since the survey began in 2012, found that the logistics "confidence index" dropped in the first half of the year to 51.8, a 10.1-point decline from the second half of 2015 and the largest sequential decline in the survey's history. Nearly half of all respondents reported that the operating climate was more difficult than just six months prior, a significant increase from similar readings of the year before. About 47 percent expect conditions to worsen over the near term, according to the survey.

Several factors conspired to produce the gloomy outlook. The most notable was intensified pricing pressure, both from more demanding shipper customers and from an increase in provider competition, according to the survey. About 49 percent of respondents said an inability to gain pricing power was the biggest short-term challenge facing their businesses. For the survey's first few years, problems finding qualified labor had been the biggest challenge cited by respondents.

Respondents also cited higher costs, saying that declining fuel prices have been more than offset by the rising costs of insurance, vehicles, technology, and driver wages. Finally, uncertainty over the outcome of the June 23 referendum on whether Britain should remain in the European Union is weighing on the sector's prospects, the survey said.

About 35 percent of respondents said they are looking at acquisitions to increase their service portfolios and achieve better economies of scale. About 16 percent are investing in new IT applications, while 24 percent are rolling out "value-added" services such as last-mile deliveries, returns management, and light assembly to win and keep business, the survey said.

In what has become a common narrative in such surveys, most of the respondents expect their own companies to perform better than the overall market. About 70 percent expect their companies to report higher revenues over the next 12 months. About 52 percent expect to report higher profits, reflecting the host of concerns confronting them.

About 100 top U.K. logistics executives participated in the survey.

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