Wednesday 23rd August 2017
Home Transport News Transport News Pressure mounts on transport firms

Pressure mounts on transport firms

E-mail Print PDF

Medium sized transport and logistics firms in the region could be vulnerable as confidence across the sector has fallen in the face of weakening consumer demand, pressure on margins and rising fuel costs.

A UK logistics confidence index compiled by Barclays and Grant Thornton, which includes firms in the region, has fallen by 10 per cent from the first half of 2012, to 52.5. It found that 42 per cent of those surveyed do not see business conditions improving over the next six months. A further 41 per cent expect them to be ‘somewhat or much more difficult.’

However the industry appears to be more optimistic for the longer term with 52 per cent of firms expecting to increase profits, 37 per cent predicting a rise in headcount and 57 per cent expecting to increase capital spending over the next six months.

Ian Carr, haulage and logistics specialist at Grant Thornton East Anglia, said:“The East Anglian haulage and logistics sector is a key contributor to the region’s gdp and constitutes a real mix of small, medium and large companies which are all impacted by the unrelenting economic climate.

“But it’s the medium sized firms which are most vulnerable as they are not big enough to benefit from large scale efficiencies and not small enough to have the necessary customer agility in a very competitive market. For these firms more than others, consolidation will play a key role in moving forward.

“In the longer term, the region’s sector is also expected to feel the impact of the Thames Gateway, the UK’s new major deep sea container port and Europe’s largest logistics park, when it opens at the end of the year.”

In order to achieve future growth plans, almost half (49 per cent) of respondents will focus on winning new contracts and 48 per cent on maintaining their existing client base, followed by cost control (39 per cent).

A major element in achieving these goals will need to be a focus on real value-added opportunities in the long-term, such as innovative and differentiated services – factors which many logistics providers are starting to put high on their agendas.

Over half (55 per cent) will be implementing new innovative supply chain solutions over the next six months with a further 19 per cent actively reviewing options. The two main areas of focus identified will be investment in IT (28 per cent) followed by collaborative solutions (24 per cent).

The majority of respondents believe there is still efficiency to be achieved through greater collaboration. However it is a lack of understanding by their customers which is restricting real progress in this area with 66 per cent of respondents believing manufacturers and retailers only understand to a limited extent the benefits of supply chain collaboration, while 23 per cent stated they don’t understand at all.

Gareth Farbon, transport and logistics specialist at Barclays Eastern region, said:  “Logistics businesses have often been viewed as “commodity” type providers by their customers, and therefore the development and offering of new services across the entire supply chain will help to change this perception. Greater opportunities in collaboration exist, but the challenge is getting the much needed buy-in and change amongst all customers.”

Further to collaboration and innovation, many respondents said greater consolidation in the industry is needed. Of those surveyed, 27 per cent are either likely to make or will be making acquisitions over the next six months, whilst 13 per cent are either actively reviewing or will make disposals.

Ian Carr concluded: “In the last year our local team has completed several transactions in the logistics sector. We anticipate further merger and acquisition activity across the sector in the short-term driven by several factors - the need to achieve scale, geographic expansion and further service offerings in order to be able to offer end-to-end solutions for customers."

Last Updated ( Thursday, 21 March 2013 10:02 )