Last year was a turbulent one globally, with political and economic repercussions impacting retailers and their supply chains. We saw many companies being acquired or going into administration, and unfortunately, 2025 doesn’t look set to bring the glimmer of light at the end of the tunnel.
For starters, consumer confidence remains low – December footfall was even lower than that of the same period in 2023. Through 2024, many people felt the impact of high interest rates, and some will now be anticipating how changes announced in the autumn budget will continue to impinge on their finances.
Meanwhile, with increases to employer National Insurance set to come into force from April 2025, retail job losses and further store closures could well be imminent. Over in the US, we already saw mass layoffs in the freight and supply chain industry in December.
These global uncertainties, along with the impact of Trump’s proposed trade tariffs, may see some businesses choose to cultivate resilience by nearshoring their operations. For central and eastern Europe, this could actually lead to growth in warehousing and manufacturing.
One thing is for certain; nothing is promised. Retailers will be strapping in for a tricky year, creating a perfect storm for the logistics businesses that service them. As well as navigating their own operational cost increases due to the tax changes ahead, some logistics operators will face pressures to reduce prices to mitigate customer costs further down the line.
With fewer retail stores to sell from and lower demand from customers looking to protect their pennies, logistics firms may also have less stock to move. Plus, traffic and roadworks have limited speeds in recent years, meaning HGV drivers are doing less mileage than 20 years ago - which typically equates to earning less money. As such, logistics providers face the conundrum of how to get by.
Meanwhile, the pressure has been on for the sector to move towards greener technologies and electric vehicle fleets. Against an already challenging market backdrop, finding the resources - and courage – to invest in this area will be increasingly difficult for those simply looking to stay afloat.
Being strategic and seeking a third-party viewpoint on where to invest in or streamline operations before making any significant changes can be wise and may be a key factor in determining which businesses swim or sink in the year ahead.
Chris Clowes, executive director at global supply chain and logistics consultancy, SCALA
