Logistics industry invests despite blow to confidence

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The logistics industry is investing in technology and value added services to cope with customer pressure for lower prices while competition and costs rise.

But confidence in the industry has dropped to a four year low – declining from 61.9 in H2 2015 to 51.8 in H1 of this year, according to the UK Logistics Confidence Index by Barclays and Moore Stephens.

Despite the drop in confidence, around 70 per cent of those surveyed expect their turnover to increase over the next year.

Companies are using both technology and value added services to retain existing clients and attract new business.

“Confidence in the UK logistics industry has taken a knock from price pressure and increasing competition,” said Rob Riddleston, head of transport and logistics at Barclays. “Under such pressure, the high level of planned capital expenditure is welcome news and reflects the sector’s pressing need for investment in technology.

“It is also encouraging that the role of technology is recognise as a route to both control costs and improve service levels and investment in this area is a key trend for the sector.”

The growth of value-added services was ‘most commonly cited as an opportunity for the sector and a key driver of contract wins – 24 per cent of those surveys highlighted the trend, a threefold increase on H1 2015.

The index also found that over a third of companies surveyed are planning to acquire rivals to ‘unlock new services and achieve economies of scale’.

The major short-term concerns for those working in the industry are customer price pressure and cost control. Customer price pressure was flagged up as the most prominent issue faced by the businesses surveyed (49 per cent – an increase of 6.5 per cent on last year’s H2).

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