Logistics Confidence Index
Reality check: driving forwards in a realigning market
Despite this year’s index taking a downward turn, there are still plenty of opportunities for logistics leaders in the industry to collaborate, both with clients and other businesses in the sector.
Industry Director, Manufacturing Transport and Logistics, Barclays Corporate Banking
Confidence and expectations in the UK logistics sector
Barclays and BDO, in conjunction with specialist sector research agency Analytiqa, have once again undertaken research to assess confidence and expectations in the UK logistics sector. In its 11th year, more than 100 senior decision-makers – including chief executive officers, managing directors and chief financial officers – provided their views and insights on the factors most affecting the logistics sector.
How are logistics leaders feeling?
This year’s index score of 47.3 – down from the 50.4 in 2022 – is the second lowest ever and only just above the result for the year of the first Covid lockdowns in 2020. This suggests a dose of realism among logistics leaders after the economic turmoil of the last year and with the normalisation of supply chain capacity.
Despite this, there are still plenty of opportunities for operators, from greater collaboration with clients and other providers in the sector and the trend towards more asset- light business models.
Positive prospects for growth
Despite the more pessimistic mood overall, there remains plenty of opportunity for logistics businesses to continue to grow. 60% of businesses are confident their revenue will increase during the next 12 months, but how are they planning on doing this?
Recruitment and retention
Our research shows businesses are focusing on the need to attract younger people into the industry – and that hiring for junior and middle management roles is getting much tougher in the sector.
Unsurprisingly, improved pay and conditions tops the list of actions that logistics leaders say they are taking to address the talent and skills shortage, but almost half of businesses say they are trying to attract younger people and introducing apprenticeship schemes.
Opportunities for collaboration
Levels of collaboration with customers and/or other service providers increased in the past 12 months, say three quarters of logistics leaders.
The greatest opportunities for collaboration are in road transport and shared transport space, but there’s also scope in collaborative digital platforms and technology development, as well as electric vehicle charging or alternative fuel infrastructure, distribution centres and shared warehousing.
Strong M&A appetite
Appetite for mergers and acquisitions (M&A) remains strong because of the need for many operators to boost volumes through new service offerings or breaking into new sectors, our research finds.
Asked if they are likely to make any acquisitions over the next 12 months, 40% of logistics leaders say they are – down on our previous two reports but still the third highest ever result since the Logistics Confidence Index began in 2012.
Evolving business models
Just over a third of our research respondents describe themselves as asset-light and our findings show that confidence among these businesses is greater (at 52.7) than those running asset-heavy models (44.2).
Higher margins may be making an asset light model attractive to some logistics leaders, but historically, preference for an asset-light or asset heavy model has tended to ebb and flow depending on prevailing market conditions, fleet capacity and availability.
62% of logistics leaders say they are pursuing ESG projects to make a positive environmental impact, but they also see the commercial benefits in meeting the expectations and contractual requirements of customers, suppliers and service providers.
Adopting alternative fuel solutions is among the key areas where logistics providers are working to find both environmental and commercial benefits. However, our research shows there is still a strong emphasis on diesel – suggesting that current alternatives are too costly for the time being.
Our sustainable financing options offer routes to fund a variety of environmental projects, from renewable energy to green transport.
Our Logistics Confidence Index has slipped to 47.3 this year, the second lowest figure of the 11 years.
Costs and staffing
Staff shortages, increasing labour costs and rising fuel prices continue to be companies’ biggest challenges.
71% of logistics operators say that changing volumes tops the list of greatest challenges for the next 12 months.
Winning business from existing customers will be the key focus for driving profit growth in the next 12 months for three quarters of companies.