Optimism in the UK’s logistics industry has fallen to its lowest level on record, according to the latest Logistics Confidence Index from Barclays and accountancy and business advisory firm BDO.
Challenging business conditions and Brexit fears are contributing to the sector’s slump in confidence, with an overall reading of 49.7, down from 52.6 in the second half of 2018. This is the first time confidence has dipped below the 50 mark since the index’s inception in 2012. According to Barclays and BDO, it indicates that overall the sector is more pessimistic than optimistic about the state of the market.
Respondents indicated that plans for the future are being delayed as a result of Brexit uncertainty, with almost half (47 percent) making lower levels of investment or placing decisions on hold due to Brexit-related issues.
According to the report, despite an increase in demand for some operators as a result of their customers’ Brexit planning, the industry is clear in its opposition to a no-deal departure from the EU.
Meanwhile, 43 percent of businesses indicated that driver and skills shortages are the most important issues facing them this year.
Some respondents cited automation as a potential solution to skills shortages but, while there is an appetite for greater automation, responses suggest that widespread adoption is still some way off.
There are some elements of the Logistics Confidence Index that give more cause for optimism. The majority of businesses still expect to post an increase in turnover and profit over the next year. This should feed through to increased investment, with more than a third of firms ‘very likely’ to make significant capital expenditure over the next 12 months.
Philip Bird, transport and logistics partner at BDO, said: “Businesses in the sector are battling with challenges both at home and abroad. In addition to Brexit, a slowdown in key global economies as well as ongoing USA-China trade wars are causing increased uncertainty and pushing the confidence index into negative territory.”
Richard Smith, head of transport and logistics at Barclays Corporate Banking, added: “We do not need to panic – the industry is extremely resilient and the index’s dip into negative territory is marginal and comes after a long run of optimistic results. Logistics providers are doing their bit by investing in new technology and sustainability projects, but are dependent on the external environment being trade friendly to help them achieve growth and make a positive contribution to the UK economy.”