New research suggests operators’ expectations of growth this year could be hamstrung by a lack of innovation within the road transport sector.The latest UK Logistics Confidence Index, conducted by Analytiqa, for Barclays and Grant Thornton reveals that more than half of respondents (53%) expect profits to increase in the next six months.
Rob Riddleston, head of transport and logistics at Barclays Commercial Bank, said this optimism about profitability could have more to do with firms deciding to turn down unprofitable work this year.
“Larger logistics companies are letting competitors take contracts they can’t make money on,” he said.
However, when it comes to achieving their growth plans, and by extension improving margins, keeping existing customers (top priority for 30%), winning new contracts (29%) and cost control (18%) are at the top of operators’ lists. Offering new services is a top priority for just 4% of those surveyed.
This focus on cutting costs rather than innovating to keep and win contracts does not bode well.
“Our view is that costs have generally been cut as far as they can be without putting the business at risk,” said Phil Bird, a director at Grant Thornton.
“Offering more services always comes out pretty low in the rankings and this is the way to become stronger and more profitable in the long term.”
The boss of Gregory Distribution recently warned that times had never been tougher with the road transport sector.
