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‘Brexit’ referendum hits logistics confidence

LONDON: June 10, 2016. With Britain’s EU Referendum just 13 days away, logistics industry confidence is at its lowest level since 2012 according to the latest UK Logistics Confidence Index from Barclays and accountants Moore Stephens.

Despite continued growth in the UK economy, logistics operators are apparently concerned about the impact of the referendum and a dampening of demand in China and the Eurozone, while struggling with price pressures, increased competition and cost increases.

Moore StephensConfidence is expected to fall further during the second half of 2016 with 47 percent of respondents expecting the outlook to deteriorate. At the same time, pricing is now seen as the most important factor in winning new business, with 62 percent saying new customer acquisition is the result of displacing an incumbent provider, a rise of nine percent year-on-year.

Philip Bird, partner at Moore Stephens (head office, right) commented: “There is no doubt that logistics companies are more pessimistic about the short-term outlook for the sector than our previous survey. This may be due to uncertainty surrounding the referendum and also the continued sluggish growth of the UK and global economies. Within this environment we expect to see further price pressure and consequently continued focus on cost control and M&A activity as a means to achieve economies of scale.”

According to the study respondents cited value-added services including last-mile delivery, co-packing, returns management services, labeling, pre-assembly or even basic manufacturing as a way to establish long-term customer relationships.

Technology is also viewed as a business opportunity for the logistics sector to realize the cost, service level and efficiency benefits of cloud services, digital tracking technology and the insights available through big data analytics.

Rob Riddleston, head of Transport and Logistics at Barclays added:  “Confidence in the UK logistics industry has taken a knock from price pressure and increasing competition. 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 recognized as a route to both control costs and improve service levels and investment in this area is a key trend for the sector.”

Barclays and Moore Stephens surveyed over 100 CEOs and CFOs for their latest H1 2016 Index.

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