Confidence in the UK logistics sector has fallen as a result of the Covid-19 pandemic and Brexit concerns, according to the latest report from Barclays and BDO Global. Nevertheless, there are reasons to be cautiously optimistic about the future.
The Barclays-BDO Logistics Confidence Index is measured via a survey assessing the expectations of more than 100 senior decision-makers across the logistics sector. The index has fallen from 49.7 in 2019 to 47.1 for 2020, which is the lowest level recorded since the survey began in 2012.
Ian Cranidge, head of transport and logistics at Barclays Corporate Banking, said: “2020 has been an unprecedented year – never has the industry faced such a plethora of multi-faceted challenges.”
According to the survey, this fall in confidence is a result of domestic and global uncertainty created by the Covid-19 pandemic, in addition to ongoing concerns over the UK’s future trading relationship with EU.
94 percent of respondents said that they used the government’s Job Retention Scheme and staff furloughs, and 42 percent said that they are using technology to overcome talent shortages.
However, Barclays-BDO acknowledged that the index number does not take into account the vast differences in the ways various sectors have been affected. A third of operators reported current business conditions are either the same or more favourable than twelve months ago despite the disruption, for example.
Sectors focused on e-commerce and last-mile deliveries have fared relatively well, whilst others in sectors such as automotive, aerospace, and oil and gas faced greater levels of disruption.
Barclays-BDO also outlined that there are bright spots in the midst of this disruption, including greater adoption of technology to address business challenges, and greater levels of investment into sustainability projects. More than seven in ten businesses in the survey are putting funds into green projects over the next twelve months.
Moreover, the number of companies expecting to make acquisitions is close to the all-time high of 2017; 38.9 percent of respondents said they are likely to make an acquisition in the next twelve months.
“Longer term this is an extremely resilient sector, which is ready to bounce back once the pandemic passes. Businesses are using this challenging period to build back better, by investing in technology and sustainability,” Cranidge said.
Jaon Whitworh, partner, M&A advisory and logistics and supply chain management at BDO, added: “Encouragingly, the responses reveal a continued appetite to invest in the future – searching out new markets and added value services, developing technology, automation and sustainability projects, and attracting, training and retaining good people.”