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East Anglia: Logistics sector sees dip in confidence

12:59 02 March 2013

Ian Carr, haulage and logistics specialist at Grant Thornton East Anglia

Ian Carr, haulage and logistics specialist at Grant Thornton East Anglia

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CONFIDENCE among East Anglian logistics companies has fallen, with consumer demand, margin pressure and fuel costs continue to be major areas of concern, according to new research from Barclays and financial and business advisers Grant Thornton.

The latest UK Logistics Confidence Index, which includes a survey of key decision makers from the East Anglian logistics industry, has fallen 10% from the first half of 2012 to 52.5.

The survey found that 42% of those surveyed do not foresee business conditions improving over the next six months, with a further 41% expecting conditions to be somewhat or much more difficult – a 58% increase from the first half of the year.

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.”

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

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

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 Barclays says many logistics providers are starting to put high on their agendas.

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.”

Ian Carr addedd: “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.”

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