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A report by Barclays Bank and advisory firm BDO has found that logistics operators in the UK believe that Brexit and driver shortages will be their biggest challenges in the next year.

The findings were published along with numerous other takeaways in the The UK Logistics Confidence Index 2020, produced by Barclays and BDO, in conjunction with specialist sector research agency Analytiqa.

The main source of the data in the Confidence Index is a survey of 100 senior decision-makers, including chief executive officers, managing directors and chief financial officers, all of whom were questioned during September and October 2020.

Overall, the Confidence Index fell from 49.7 in 2019 to 47.1 this year. The authors of the report highlight that this continues the downward trend seen in recent years, and takes the Index to its lowest level since the survey began eight years ago.

The Confidence Index also includes some fascinating data regarding the single most important issue facing logistics operators in the next 12 months.

Over 26% of the logistics operators surveyed stated the impact of Brexit was the biggest issue, while just shy of 24% said it was driver and skills shortages. Meanwhile, the economic impact on their end customer market was considered the single most important issue by almost a fifth of respondents.

However, when asked what the main focus for their company would be over the next 12 months, most operators ranked cost control and winning new customers as their priorities.

Worryingly for environmentalists, investing in the sustainability agenda was considered to be of the lowest priority. On the other hand, despite that statistic, more than 7 out of 10 businesses say they will be investing in sustainable, environmental or ‘green’ projects in the next 12 months.

When it comes to Brexit, the authors of the Confidence Index say they discovered polarising views among the survey participants:

Comments from our survey respondents reflect the tendency of Brexit to polarise views: ranging from predictions of chaos, excessive paperwork and higher prices for vehicles and parts, to potential new opportunities as UK businesses adjust their supply chains and inventory levels and require new logistics operations to serve their customers.

As regards recruitment and talent shortages, the logistics operators said a lack of lorry drivers and warehouse staff were having the greatest effect on their business.

To try and alleviate this problem, some operators have turned to wellness programs, which seem to have alleviated issues with staff turnover, absenteeism and productivity:

Of those who offer wellness programmes 79.3% say they have experienced reduced staff absenteeism, 56.9% report higher productivity and performance from employees, and well over half (55.2%) say it has led to people staying in their jobs for longer.

Technology is of course another huge factor influencing the logistics sector. When asked what technology applications would have the biggest impact on their business in the next 3 years, almost two-thirds of respondents said upgrades to/the replacement of their existing TMS/WMS/ERP/fleet solutions.

Leveraging the collaborative/sharing economy and/or customer platforms was the next most popular answer, chosen by roughly 45%. By contrast, less than 5% listed the use of drones as having the biggest impact.

Other key takeaways from the report are as follows:

  • Two-thirds (67.1%) of respondents say current business conditions have become tougher in the past 12 months.
  • While half of respondents (50.6%) think business conditions will get more difficult in the year ahead, and fewer than half (48.9%) think profits will be up, many still see opportunities to grow revenues by focusing on the changing supply chain, the growth of e-commerce and delivering value-added services.
  • Three-fifths (60.2%) of those surveyed say Covid-19 had a negative effect on their business in 2020
  • There is a high degree of polarisation in the views of operators, with 35.5% saying the pandemic has had a positive impact on their company’s performance, despite the economic disruption.
  • System upgrades remain the main technology focus, but the sector has a growing appetite for investing in automation and other enabling technologies.
  • Predicted M&A activity over the next 12 months is at a level only just below the all-time high for the index in 2017.

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