Confidence in the logistics industry has seen its first upturn for two years, according to a survey.
The Barclays UK Logistics Confidence Index found there was a more positive climate in the sector than might have been expected after the UK voted for Brexit, but the upturn was still marginal compared to a steady fall in confidence since 2014.
The index, a twice yearly survey of senior decision makers across the sector, increased to 53.0 in the second half of 2016, up from 51.8 in the first half. Readings above 50 indicate growth while those below 50 signal contraction.
Confidence was “down on the 2014 and 2015 levels, but it is still showing a small degree of confidence as a sector as a whole,” said Rob Riddleston, head of transport and logistics at Barclays.
Riddleston said when he commissioned the survey he was expecting confidence to have dipped and was “perhaps a little bit surprised that it hadn’t”, but the increase reflected other economic statistics published after the Brexit vote.
“The UK’s economy’s still growing quite well. Reduced a little bit but certainly at a higher level than the initial forecasts estimated,” he said.
The report said while Brexit was a cause for concern for the industry, a number of other operational concerns were also weighing on confidence.
When asked what issues would be the most important for their business in the next six months, 40.8% said resisting pressure from customers to depress prices. Although this was down 8.1% on the first half of the year, Barclays said it showed the industry thought there was still too much capacity.
Other key concerns included a shortage of skilled staff and drivers (35%) and a shortage of warehouse space (8.7%).
Firms reported seeing value-added services as being important in standing out from the competition, with high quality service and total value propositions being seen as more important than overall price in winning business.
“One side of the coin, that means probably people wanting something a little bit extra for nothing. But it might also be providing the logistics solution, perhaps in a more efficient way, through information technology,” said Riddleston.
After value-added services, overall price was the second most important factor in winning new business, listed as a key driver of contract wins for 29.5% of respondents. The proportion of firms citing the importance of personal relationships fell to 17.1%.
More than half of respondents (57.7%) said their main source of new business came from customers switching their logistics providers, while just over a quarter (26%) said most new business came from existing customers expanding their operations.
The survey found the main concern around Brexit was uncertainty over future volumes being shipped into the UK if free movement of goods is restricted.
The report said domestic operators were concerned a fall in inward investment would impact the economy and many operators expected demand to fall.
Overall, 64.1% of operators said they expect a marginally or significantly negative impact of Brexit on their business, while only 9.7% said they expected a marginally or significantly positive impact. Just over a quarter (26.2%) expect no impact.
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