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The UK Logistics Confidence Index 2021

07 October 2021

The 2021 edition of the BDO & Barclays Logistics Confidence Index presents the results of our survey of the views and insights of 100 senior decision makers, to assess confidence and expectations, as well as the latest hot topics and longer term trends, in the UK logistics sector. 

Demonstrating significant levels of renewed optimism, our Logistics Confidence Index has risen this year to 62.5, its highest level since H1 2015. The dramatic rise in sector positivity might seem counterintuitive in the light of recent media headlines about a supply chain crisis. Indeed, 60% of respondents in our research say business conditions are more difficult now than 12 months ago. However, despite recognising obstacles that include global trade imbalances and an exacerbated shortage of drivers, logistics operators are much more confident about the future.

More than three quarters of operators predict turnover will rise in the next 12 months, and they’re optimistic about profitability, too, with 62% expecting increased profits, up 13% on 2020.  85% of companies are likely to make significant capital expenditure over the next 12 months and almost two thirds (63%) expect an increase in headcount within a year.

Operators still face significant business challenges in the short term, with 96% pointing to staff shortages as their main concern and many are worried about the increased labour costs this will cause.  There is an expectation of increased prices across the global supply chain.

Post-Brexit, 39% of companies believe they will do less business with EU customers in the next 12 months. At the same time, half of companies predict they will do more business in the UK, implying an increasingly competitive domestic marketplace.

The industry is experiencing high levels of deal activity and is set for further consolidation with 42% likely to make acquisitions over the next 12 months, with economies of scale and expansion of service offer the main drivers..

Jason Whitworth, Partner, M&A Advisory and Logistics & Supply Chain Management at BDO LLP, said: “The logistics industry is still operating against an extremely challenging and well-documented backdrop but the big difference this year is that operators feel they have a better sense of certainty and visibility over the issues they’re facing. In the earlier stages of Covid, and before a Brexit deal had been reached, so much was unknown. Fast forward a year, businesses feel they are able to take control and make strategic decisions about their future investments.

“With renewed optimism and high demand, there is significant opportunity for deal-making in the industry. Whether businesses are looking to create scale, achieve efficiencies through technology or make acquisitions to provide value-added services, we expect to continue to see strong levels of M&A activity across the sector.”

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