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Deal activity and CFO confidence improves in logistics

31/03/14

The findings of the latest UK Logistics Confidence Index from Grant Thornton highlight the fact that the sector is feeling positive as the overall economic mood of the country begins to improve.

It recorded a confidence reading of 74.9, marking a leap of almost 25 per cent over the last six months and 43 per cent on a year-on-year basis.

Despite this, the sector is still struggling with a number of issues, with margin pressure, customer demand, fuel costs and market volatility cited as the greatest causes for concern over the next six months.

Some 84 per cent of respondents expect their turnover to increase over the coming year, with 16 per cent expecting a rise of ten per cent or more. Size does not play much of a role in determining these predictions, with positivity spread fairly evenly between large and small operators.

Investment intentions are also strong - three-quarters of businesses are hoping for significant capital expenditure throughout 2014, with fleets, infrastructure and technology all likely to be developed as firms attempt to stay ahead of their rivals.

A quarter of businesses say they are examining acquisition opportunities which is broadly the same figure as has been recorded in the previous six months.

Darren Bear, corporate finance partner at Grant Thornton, said operators are feeling confident that the economic situation is likely to get better in the future, offering benefits to their business and making investment a good move.

"This momentum is encouraging for the sector, however the relatively high level of competition in the sector is putting continued pressure on margins. Operators would be wise to keep an eye on value-add opportunities which ingrain them deeper into supply chains and strengthen their roles as critical partners in clients' successes," he concluded.

With opportunities likely to increase for logistics firms over the course of the year, it is vital they have the right talent in place to take advantage of this.

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