Confidence returns to UK’s logistics sector, survey says
A SURVEY of more than 100 senior executives in the UK’s logistics sector has identified a significant increase in confidence throughout the first half of 2013.
The bi-annual Logistics Confidence Index, commissioned by advisory and accountancy firm Grant Thornton and Barclays, showed an overall confidence reading of 60.3 for the first half of 2013 – a 15% rise on the previous six months.
The survey also points to a largely optimistic outlook for the remainder of the year, despite continued cost pressures and increased concerns over market volatility and legislative changes.
Operators appear cautiously optimistic that business conditions will remain stable over the coming months, rather than deteriorate any further. More than a third (35%) of respondents expect business conditions to further improve throughout the latter half of this year. A majority (71%) of executives forecast revenue growth over the next 12 months and more than half (52%) anticipate an increase in profitability within the year.
This positive outlook is expected to drive capital expenditure in the sector, with nearly two-thirds (64%) of respondents looking to make a significant investment over the next six months. The optimism is also leading to stronger employment prospects in the sector, with 43% expecting to increase employee numbers within the next six months.
Operators’ growth plans are underpinned by a focus on business development and winning new contracts, along with better management of their operating costs. More than one-fifth (21%) of respondents pointed to the growth of their current customers’ business as their main source of new business won in the first half of this year, suggesting improvements in the broader UK economy are driving a tangible impact on prospects in the sector.
Birmingham-based Geoff Davies, head of corporate finance at Grant Thornton UK, said: “The UK’s logistics sector is in many ways a barometer of the overall economy. The cautious optimism we’re seeing in the sector supports much of the more recent economic data that has been published.
“Logistics companies seem to be adopting a pragmatic and proactive approach to growth, as reflected in their capital expenditure and employee plans, and are now seeing the benefits of the leaner operating models that were adopted over the last few years in response to economic conditions.”
Ray O’Donoghue, managing director for Barclays in the Midlands, added: “Given our geographical location, logistics businesses remain a key sector for the Midlands economy. The sector has been through a difficult few years as economic conditions have been challenging, therefore it is pleasing to see that the industry is looking forward to improved prospects.
“The industry is now well placed to help the economy continue to grow as we enter recovery mode, and with a number looking to explore new sectors and services lines, there is realisation of a need to adapt and continually improve.”
