ISSUE 1 | 2022
62
increase in the next 12 months. The outlook for profitability was similarly optimistic, with 62% of companies expecting to increase profits, up 13% on 2020. As the effects of the pandemic begin to settle, many operators felt the acceleration in e-commerce is creating new opportunities, while those serving hospitality and leisure firms were seeing their markets revive. Reflecting this renewed optimism and high demand in the sector, 85% of companies said they were likely to make significant capital expenditure over the next 12 months. Exports have been a recent headache, particularly for UK-based businesses, due to post-Brexit trading changes. The UKOffice for Budget Responsibility calculates that UK trade with the EU has so far declined by around 15% since Brexit, and January 2022 saw the introduction of full customs controls between the UK and the EU for the first time (though full veterinary and sanitary checks on agri-food products do not come into effect until July 2022). Further disruption is anticipated from this latest change, with particular concerns that some EU exporters to the UK, particularly SMEs, may not be ready for the paperwork. However, looking at this optimistically, this can be seen as the final step to be negotiated in moving towards greater clarity and understanding of what is now required for effective EU/UK trading. With businesses also becoming familiar with solutions such as multi-territory location of stock and the incorporation of EU-based entities, renewed confidence from both sides is to be anticipated when the dust settles.
UK LOGISTICS ANNUAL DEAL ACTIVITY
80
60
40
66
64
48
20
43
35
29
26
0
2015
2016
2017
2018
2019
2020
2021
INDUSTRY CONSOLIDATION In October 2021, we published our latest edition of the BDO & Barclays Logistics Confidence Index, summarising the views and insights of over 100 senior decision makers in the UK Logistics sector. This confirmed the view that the industry was set for further consolidation, with 42% of respondents (an all-time high for the Index) saying they were likely to make acquisitions over the next 12 months, with creating scale, finding efficiencies through technology or providing value-added services being the main drivers for this. Demonstrating significant levels of renewed optimism, the Index had risen to its highest level since H1 2015. The dramatic rise in sector positivity might seem counterintuitive in the light of media headlines about a supply chain crisis. Indeed, 60% of respondents said that
business conditions were more difficult than 12 months ago, with obstacles that include global trade imbalances, as well as the perennial issue of staff shortages, particularly drivers, as their main concern. However, logistics operators in 2021 were much more confident about the future than they were 12 months previously, when the Confidence Index had fallen to its lowest level since 2012. That was a period before a Brexit deal had been reached and when so much was unknown in the earlier stages of the pandemic. Fast forward a year and operators feel that they had a better sense of certainty and visibility over the issues they are facing, and that they were able to take control and make strategic decisions about their future investments. Although coming from a very low base in the previous year, more than three quarters of operators expected their turnover to
Made with FlippingBook HTML5