Winning contracts from rivals is now the main source of new business for over half of logistics operators, according to the latest UK Logistics Confidence Index from Barclays and Moore Stephens.
Some 57 per cent of respondents said that their main source of new business over the past six months has come from ‘switchers’ from other logistics service providers. Barely one in ten said that their main source of new business came from customers renewing existing contracts.
For the first time in the twice yearly survey, operators say that maintaining their existing customer base is now their top focus.
The study also found that 3PL margins are under pressure as major retailers and manufacturers look to maximise efficiencies before signing up to a new contract. Value-added services are considered the most critical factor (29.6 per cent) for contract wins by logistics businesses.
Personal relationships to deliver beyond the terms of a contract and traditional haulage, is a key driver behind contract wins, according to over a fifth (21.8 per cent) of operators, up almost 5 per cent on the last survey.
Some 26 per cent said current conditions in the industry are somewhat more difficult than in the previous six months, up ten per cent on the first half of the year. But 73 per cent of respondents expect prospects to improve or stay the same.
Eight in ten operators expect their turnover to increase in the next 12 months and 53 per cent expect profits to increase – down 13.7 per cent on six months ago.
There has been a 7.2 per cent rise in the number forecasting lower turnover. And there has also been a 7.2 per cent rise in those forecasting that profitability will fall.
Despite this, three-quarters of operators feel confident enough to be planning to invest in capital expenditure over the next six months. This likely reflects the realisation of the pressing need for investment in fleet, warehousing and technology to drive greater efficiencies, improve client service and so win more business.
Rob Riddleston, head of transport & logistics at Barclays, said: “Following the feel-good factor we have witnessed in recent surveys, it appears that logistic operators are more cautious this time as the sector returns to a more normal footing. Their focus now is very much about finding solutions to longer-term problems such as driver and skills shortages, relentless pressure on margins and the ever-increasing competition to win and retain customers.
“Yet, there is still a lot of confidence among operators with high levels of investment, turnover and profitability still being reported.”
* The UK Logistics Confidence Index is based on a survey of 100 senior decision makers by Analytiqa for Barclays and Moore Stephens.