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Retaining customers key say logistics providers

LONDON: The latest bi-annual UK logistics index from Barclays Bank and international auditors Moore Stephens says maintaining existing customers is now the prime focus for logistics companies.

The index reports that for 57 percent of operators, their main source of new business over the past six months has come from "switchers" from other logistics service providers with less than 10 percent coming from customers renewing existing contracts.

barclays corporateOther indicators suggest 73 percent of respondents expect the outlook for the sector to improve or stay the same, but almost a quarter believe that conditions are more difficult; however 75 percent feel sufficiently confident to make capital investments in the next six months; and the industry image remains a key barrier to women choosing to work in the sector.

Barclays said the "intensely competitive nature of the sector continues to put prices under severe pressure suggesting that margins continue to be squeezed as major retailers and manufacturers look to maximize efficiencies before signing up to a new contract".

Index respondents noted contracts can be won by moving away from traditional service offerings to working in partnership with customers. Many highlighted their customers' requirements for a one-stop-shop route to market covering many aspects of the supply chain such as storage, picking, packing, labeling, co-packing and point-of-sale services.

Eight in 10 operators said they expect their turnover to increase in the next 12 months with 11 percent forecasting a rise of 10 percent or more. More than half of respondents (53 percent) expect an increase in profits, down 13.7 percent from six months ago, while 31 percent expect profit levels to stay the same.

Rob Riddleston, head of Transport & Logistics at Barclays, commented: "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 amongst operators with high levels of investment, turnover and profitability still being reported," he added.

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