Logistics confidence hits eight-year low

27 November 2020

Logistics confidence has hit an eight-year low due to the fallout from the pandemic, skills shortages and concerns over Brexit.

The Logistics Confidence Index, by Barclays Corporate Bank and accountancy firm BDO, has dropped to 47.1 in 2020, down on 49.7 in 2019 and the lowest level since the survey began in 2012.

The index, based on the views of 100 senior business decision makers, is calculated on the proportion of respondents reporting an improvement, no change or deterioration within the sector, scored from 0 to 100. A number over 50 indicates an improvement, while below 50 shows a decline.

Global uncertainty created by the pandemic, ongoing concerns over the UK’s future relationship with the EU and continuing skills shortages all impacted confidence.

The drop comes as industry figures warn of the strain “broken” Black Friday sales will put on already-stretched delivery firms in the midst of lockdowns.

And ports around the world have been impacted by heavy congestion, with the UK experiencing a “perfect storm” due to coronavirus and Brexit that has seen container rates soar by up to 300%.

However, the index showed there was a high degree of polarisation in the views of operators depending on the sectors they were most exposed to, with a third reporting current business conditions as either the same or more favourable than 12 months ago.

“Those focused on e-commerce and last-mile deliveries have fared relatively well, while others operating in manufacturing sectors, such as automotive, aerospace, oil and gas, saw unprecedented levels of disruption,” it said. 

More than a half of the operators surveyed (55%) said the online retail industry would provide the greatest business opportunities in 2021, while just under a third (32%) cited manufacturing and 6% highlighted the automotive sector. 

The survey found the pandemic had drastically impacted the industry as the vast majority of respondents (94%) stated they had utilised the government’s Job Retention Scheme and staff furloughs to help them through.

To help overcome talent shortages, more than two-fifths (42%) stated they were using technology to replace human talent. More than seven in 10 (72%) said they were funding green-related projects over the next 12 months.

Firms also displayed cautious optimism for the year ahead with nearly half (49%) saying they expected to see profits increase over the next year, despite economic uncertainty. 

Ian Cranidge, head of transport and logistics at Barclays Corporate Banking, said: “2020 has been an unprecedented year – never has the industry faced such a plethora of multi-faceted challenges. 

“However, longer term this is an extremely resilient sector which is ready to bounce back once the pandemic passes. Businesses are using this challenging period to build back better, by investing in technology and sustainability. The present is undoubtedly tough, but we can look to the future with optimism.”

Jason Whitworth, partner, M&A advisory and logistics and supply chain management at BDO LLP, said: “As we stand today, it feels like we are still in the eye of the storm in terms of uncertainty. Given this, it is no surprise confidence is low. The pandemic highlighted the vital nature of an effective supply chain, and this survey demonstrates the sector’s resilience and adaptability. 

“Encouragingly, the responses reveal a continued appetite to invest for the future – searching out new markets and added value services, developing technology, automation and sustainability projects, and attracting, training and retaining good people.”

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