Optimism in the logistics sector is at its lowest level in 12 years, according to the latest Logistics Confidence Index, with companies citing uncertainty over Brexit and the ongoing driver shortage as key contributors to falling levels of confidence.

The index, produced by Barclays and BDO, is based on a survey of more than 100 logistics industry leaders. It assesses respondents' confidence in the sector using a score from nought to 100. Any number over 50 indicates an improvement, whilst those below 50 suggest a decline.

This year’s index reveals growing pessimism in the sector, with an overall reading of 49.7 - the lowest reading since the survey was launched 12 years ago. This latest reading compares to the sector’s record high of 74.9 in the second half of 2013 and a reading of 52.6 posted in 2018.

Brexit fears are a significant contributor to the fall in confidence, according to the index, with almost half of respondents (47%) making lower levels of investment or placing decisions on-hold since the 2016 referendum.

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The index also revealed a clear opposition to a no-deal Brexit. Businesses were asked whether they would see more or less business from customers in different parts of the world under a no-deal Brexit.

For EU customers, no-deal scored net -52%, with +9% under a deal; for UK customers, a no-deal outcome was also considered to be less positive than a deal at +8% and +31% respectively. For customers from the rest of the world, the result was +3% for no-deal, versus +9% with a deal.

Sector shortage

The HGV driver and general skills shortage in the sector is another key factor affecting confidence, according to respondents, with 43% rating this as the most important issue facing the industry.

On a more positive note a majority of respondents (63%) expect to post an increase in turnover and profit (55%) over the next year, whilst more than a third of firms said they were ‘very likely’ to make significant capital expenditure over the next 12 months, up 2% from 2018.

There is also an increasing focus on green issues, with 72% of respondents planning to invest in sustainable projects in the coming year.

Richard Smith, head of transport and logistics at Barclays Corporate Banking, said: "Our logistics operators are sending a clear message – a no-deal Brexit is going to hurt the industry and must be avoided.

"The business leaders we surveyed have combined revenues of £17.2bn, so the fall in confidence they are reporting should be taken seriously."

Don't panic

However, he added: “We don’t need to panic – the industry is extremely resilient and the index’s dip into negative territory is marginal and comes after a long run of optimistic results.

"Logistics providers are doing their bit by investing in new technology and sustainability projects, but are dependent on the external environment being trade friendly to help them achieve growth and make a positive contribution to the UK economy.”