UK Logistics sector registers a big leap in confidence

UK Logistics sector registers a big leap in confidence

logisticsmall.jpgThe FINANCIAL -- The bi-annual Index, commissioned by Barclays and Grant Thornton UK LLP, which surveyed over one hundred senior decision-makers within Logistics businesses, recorded an overall confidence reading of 74.9, a leap of almost 25% on the previous six months and 43% year on year, according to Barclays.

logystic.jpgThe FINANCIAL -- The bi-annual Index, commissioned by Barclays and Grant Thornton UK LLP, which surveyed over one hundred senior decision-makers within Logistics businesses, recorded an overall confidence reading of 74.9, a leap of almost 25% on the previous six months and 43% year on year, according to Barclays.

 

Following a promising start to the year, confidence in the sector continued to grow throughout 2013 and the latest figure marks the highest index rating and largest half-year increase since the survey was launched in H1 2012. However, the sector is still grappling with some big challenges as margin pressure, customer demand, fuel costs and market volatility are cited as the greatest cause for concern over the next six months.

Of those surveyed, over three-fifths (61%) said that operating conditions were more favourable, compared to 26% in the first half of 2013. Only 7% stated that the current outlook had worsened with 32% saying that conditions had stayed the same. Looking ahead to the next six months, the majority of respondents believe the outlook is likely to improve further with over half (55%) expecting more favourable conditions. 35% believe it will stay the same and just 10% believe conditions will deteriorate, according to Barclays.


In line with this more positive outlook, 84% of respondents expect their turnover to increase in the next year. Just under half (48%) are expecting an increase of 5% or more with 16% forecasting a rise of 10% plus, which is well ahead of the current UK inflation rate. Size does not appear to be a factor with regard to turnover expectations as the same percentage of larger and smaller operators (84%) are expecting an increase over the next year, up from 60% and 74% respectively on the first half of 2013.

Similarly, the rise in optimism translates into increased profit expectations with nearly three-quarters (73%) of logistics operators surveyed expecting a rise over the next twelve months. Over a third (38%) are forecasting a rise of 5% or more, with 16% anticipating an increase of 10% plus. Less than one in ten (9%) foresee a decrease in profitability, compared to 15% in the first half of 2013, according to Barclays.


Investment intentions are also high for the vast majority of logistics businesses with three-quarters planning to invest profits in significant capital expenditure. Operators are looking to invest in fleets, infrastructure and technology in order to drive growth and competitiveness. A quarter of businesses say they are assessing acquisition opportunities which is broadly the same as in the previous six months.

Logistics businesses are also looking to take on more employees with half of operators planning to increase staff levels, up 6% on the previous year. This growing figure reflects the findings of the recent Barclays Employers Survey which also reported that 50% of logistics companies were looking to fill more roles over the next year.

However, major challenges persist for the sector with respondents reporting that continuing downward pressure on margins is still by far the biggest issue for the sector as customers continue to demand more for their money and also are very prepared to change service providers in order to get it. Another continuing challenge for the sector is the lack of qualified drivers and other skilled employees. The concern lies not only in attracting suitable talent but also in retaining skilled employees with the added burden of trying to attract younger recruits to counter an ageing workforce, a particular problem for the sector, according to Barclays.

 

 

Author: The FINANCIAL