Logistics industry set for success despite uncertain year ahead

The FTA Logistics Report 2018, in association with Santander, polled the opinions of around 500 freight and logistics businesses operating in the UK and internationally, and found cause for optimism among respondents for the coming year of trading, after consistent performances from businesses moving goods by all modes of transport. The firms surveyed span across 15 sectors, though the largest number of respondents are firms transporting by road.

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Overall market activity and investment intentions are up across the board, Elizabeth De Jong, FTA’s Director of UK Policy, explains:

Respondents to this year’s FTA Logistics Report were generally positive about their 2017 trading performance, and the prospects for their respective sectors. With positive growth in domestic and international road freight, as well as the majority of air freight import/export business, sea freight movements and a rebound in rail intermodal services, there is much to be encouraged by for the logistics industry.

However, with inflationary pressures at home and abroad and the uncertainty of trading relationships post-Brexit, it is clear that many operators are far from confident about their future business prospects. And with logistics underpinning the British economy at all levels, both domestically and overseas, it is crucial that the sector is boosted by concrete trading conditions which will keep Britain trading effectively as the country moves towards the challenges which Brexit will undoubtedly bring.

According to the 2017 FTA Logistics Report, domestic and international road freight performed positively during the year, while air freight operators and intermodal rail service users reported generally encouraging business growth during 2017. International sea freight customers reported the strongest growth in 2017 to and from the Far East, and predicted that 2018 should be a good year for international shipping, with growth expected on almost all routes.

However, respondents surveyed for the report cautioned that the current positivity surrounding logistics could be lost without concrete plans for the UK’s future trading relationships with Europe, which will have an impact internationally and domestically. Continued inflationary pressure could also have a significant effect on investment – 14% of those questioned have already curtailed investment decisions since the vote to leave the EU – as well as on consumer spending, which will have a knock-on impact on the logistics sector which supplies all the nation’s needs. There are also concerns surrounding future employees for a sector which relies heavily on EU workers, with 35% of respondents highlighting that a restriction on worker movement would have a detrimental effect on their businesses.

John Simkins, Head of Transport & Logistics, Santander Corporate & Commercial Banking, commented:

Santander is committed to supporting the freight transportation industry and we are pleased to see an overall positive outlook for the industry in 2018. The survey shows that overall fleet investment intentions remained positive and road freight market activity such as HGV, van and trailer fleets saw investment increase.

The industry is constantly transforming and the evolving environmental concerns and frequent changes to legislation has forced many companies to regularly review their fleet operations.

It is also great to see that the business confidence is rated high for international opportunities, which supports our research from the Santander Trade Barometer on UK exporters and the increasing demand for British goods. With over 17% of respondents looking to expand internationally, we at Santander are ideally placed to support those international trading ambitions.

For 2018, FTA, which represents more than 17,000 logistics businesses, is calling for a positive agenda from government, focusing on making the most of global opportunities while optimising the opportunities which Brexit brings for business both at home and overseas. Retaining maximum access to EU markets, in as frictionless a state as possible, is also high on the agenda of “asks” to ensure trade can continue to flow freely to and from the UK.

Elizabeth De Jong, FTA’s Director of UK Policy, commented:

It is clear that logistics is a resilient sector, filled with operators determined to get the job done whatever the economic challenges, and the overall picture for 2017 has been encouraging.

The mood for 2018 in the freight industry is one of cautious optimism but trading conditions can change on a knife edge, and it is vital that the businesses which support the nation’s economy are given as much opportunity as possible to maintain and build on their trading relationships. Without logistics, British business simply will not keep moving in line with the rest of the world.

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