Logistics sector ‘committed to investment and expansion’ despite challenges - survey

23 June 2022

Investment remains a key priority for UK logistics in 2022, and merger and acquisition (M&A) activity levels remain high, despite the sector facing increasing challenges driven by labour costs, pricing and supply chain disruption.

According to a survey of industry leaders, 65 per cent of logistics businesses intend to make significant capital expenditure over the next 12 months, with technology, such as transport and warehouse management systems, the main point of focus in the year ahead (48 per cent).

The survey, conducted by accountancy and business advisory firm BDO LLP and Barclays, found that investment in recruitment, sustainability and automation were also high on the agenda.

In addition, nearly half of respondents said they intend to focus on acquisitions and M&A activity in the next 12 months, mirroring levels reported in the BDO-Barclays Logistics Confidence Index published at the end of 2021.

The latest survey revealed that the biggest drivers for capital expenditure included the expansion or improvement of the service offering (39%), whilst increased capacity, cost controls and efficiency through investment were also important factors. 

Jason Whitworth (pictured), M&A partner at BDO LLP, said: “Over the last 12 months our logistics research has consistently shown that businesses remain committed to investment and expansion, despite the considerable pressures facing the market. Labour costs, staff shortages and managing disruption in the supply chain are, understandably, the greatest challenges facing the sector, with customer price pressure and changing levels of demand in the end customer market creating significant problems.

“The focus on growth demonstrates the robust and resilient nature of the logistics sector, which has shown throughout the pandemic an ability to push boundaries and innovate in response to a changing market,.”

“Looking forward it is difficult to ignore the economic challenges we are all now facing. With cost increases across the market, some are currently benefiting through cost-plus contracts, the inflated price of freight, or the ability to agree increased pricing, but we are yet to understand the ultimate impact on consumer demand. 

“The core focus remains on providing increased value added services, competitive pricing, investment in new technology and delivering operational efficiencies.”

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