Profits up for East’s logistics operations

LOGISTICS firms are expecting their turnover to rise - in spite of the economic gloom, according to a study.

Research into the performance of the UK’s top 50 logistics firms over the past five years shows the combined operating profit for 2010 was �575million, up �8m on the previous year. Average operating margin also rose to 2.6% from 2.1% over the same period.

The joint report from business and financial advisers Grant Thornton East Anglia, and Barclays Corporate finds that despite rising fuel costs, inflation and low demand from depressed global markets, the region’s logistics sector is showing surprising resilience.

Darren Bear, partner at Grant Thornton East Anglia, said: “These figures are particularly notable considering the many financial pressures logistics companies have faced over the past five years. The sector has proved its resilience by improving cost-control, employing more flexible working practices and more focused investment and becoming ‘asset-light’ operations by reducing employee numbers and renting rather than owning vehicles and warehousing.”

The survey, which also tracked the opinions of 100 industry firms, showed that more than 80% of businesses expect to see an increase in turnover over the next 12 months.

A further 98% plan some form of investment in their business in the coming year with vehicles, technology and staff the main priorities.

Countering rising fuel costs has also been a top priority with 87% of firms questioned saying they have brought in measures to reduce fuel spend. More than two thirds improved vehicle efficiency, introduced better driver training and used fuel monitoring technology.

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Meanwhile, far fewer – between 15% and 34% of firms - mitigated the actual cost of fuel by fixing rate deals with suppliers, arranging customer fuel surcharges or hedging.

Corporate chief at Barclays Corporate East Anglia Matthew Peek said the state of the sector had always been a litmus test for the health of the economy. Mr Bear said the improved 2010 margins suggest the sector is recovering from the doldrums of the recession.