28 logistics
Confidence prevails in UK logistics industry but short termism is stunting innovation
UK logistics businesses are promisingly optimistic in light of current economic challenges, but a focus on cost-cutting and sticking to core business is restricting innovation according to research from Grant Thornton
The recently-launched UK Logistics Confidence Index, which includes a survey of key decision makers from the UK logistics industry, shows that although the majority of businesses are investing over the next six months, they continue to tackle the same ongoing issues leaving innovation to take a back seat.
When asked what the biggest concern is facing logistics businesses over the next six months, one third of respondents cite margin pressure as the greatest challenge on their business, followed by fuel costs (20%). Surprisingly only 15% of respondents are concerned by eurozone uncertainty.
Although faced with cost pressures, there is optimism in the industry. Over three quarters of businesses surveyed view current business conditions as somewhat difficult (65%) or very difficult (13%), with 48% foreseeing conditions to be the same over the next six months. However, a quarter of respondents see things improving this year, with 53% expecting an increase in profit over the next six months.
Positivity is also seen in the number of businesses intending to make significant capital expenditure (CAPEX) over the next
six months, with 42% of businesses surveyed ’likely’ and 21% ’very likely’ to invest in CAPEX. Headcount is also set to increase, with 47% of businesses indicating they’ll be taking on more employees over the next six months.
In terms of how logistics businesses intend to achieve their growth plans over the next six months, 51% are focused on winning new contracts, with margin improvement (18%) and maintaining existing customers (17%) also a key focus.
Merger and acquisition activity is also being considered. Three out 10 businesses (29%) are likely to make acquisitions over the next six months with 9% stating they are currently looking at an acquisition target, while 20% are actively reviewing opportunities. These are encouraging signs given the current market, indicating that businesses are seeing opportunities particularly due to margin pressure.
Amanda James, senior manager at Grant Thornton, said: “The logistics industry has always been an early indicator of the state of the wider economy. This sensitivity makes it wiser to the ways that it can thrive in the lean years. There is, however, only so far that
costs can be taken out of a business, margins can be cut and only so many contracts that can be won.
“The next 12 months will likely be a period of consolidation in the sector, creating more companies of scale who are able to invest in innovation and diversification, as continuing to do more of the same is simply not an option. We also believe that the really successful companies will be operating on an ’asset light’ basis and co-ordinating the provision of services across the supply chain.“
Frank Dixie, managing director of Fareham- based worldwide logistics company, PSP, added: “The research reflects what we have seen throughout the industry, and not just in the UK. Innovation and diversification has been at the top of our agenda at PSP and has played a major part in our success throughout the recession. Just this year we were able to report a 20% increase in turnover from non-leisure boat shipments, following our decision to provide a bespoke service for ferry and hovercraft transportation.“
Grant Thornton and Barclays recently held a breakfast with key business leaders from logistics business across the region to discuss the research and challenges ahead in the sector.
Details: Amanda James 023-8038-1168
amanda.j.james@uk.gt.com
Top companies need top advisers.
At Grant Thornton, we go about our business in a different way. We concentrate on building relationships with our clients based on their individual needs. Engaging with entrepreneurial businesses and working with their owners and management teams to help them realise their full potential. Contact us to help unlock your potential for growth.
For further information please contact: Norman Armstrong Partner T 023 8038 1114 E
norman.armstrong@
uk.gt.com
grant-thornton.co.uk ©2012 Grant Thornton UK LLP. All rights reserved. Grant Thornton UK LLP is a member firm within Grant Thornton International Ltd. Grant Thornton International Ltd and the member firms are not a worldwide partnership. Services are delivered independently by member firms. Full disclaimer available at
grant-thornton.co.uk www.businessmag.co.uk THE BUSINESS MAGAZINE – SOLENT & SOUTH CENTRAL – DECEMBER 12/JANUARY 13
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40