Confidence in the logistics sector has fallen to its second lowest level on record, only slightly above that seen during the first COVID-19 lockdown in 2020, a new industry report has found. According to the Barclays-BDO UK Logistics Confidence Index 2023, this year’s score is 47.3, down from 50.4 in 2022. In 2020, the confidence index stood at 47.1. Any index figure below 50 indicates overall pessimism in the logistics sector – a sector that is integral to the functioning of our society at many levels and regarded as a useful barometer of the state of the wider economy. The latest figure is in contrast to the marked optimism seen in 2021, which produced an index reading of 62.5, as the sector bounced back from the effects of the pandemic – a time of increased levels of home delivery and higher rates for global logistics services. The latest study from Barclays Corporate Banking and accountancy and business advisory firm, BDO LLP, found that three quarters of operators (75%) feel business conditions are more difficult now than a year ago, with levels of demand the number one concern for 71% of logistics businesses. Interestingly, staff shortages and increased labour costs – a perennial problem for the sector – are becoming less of a concern for businesses. Less than half of logistics leaders see it as a major challenge in the next 12 months. Challenges in recruiting warehousing staff and LCV drivers have also eased as volumes fall. Jason Whitworth, corporate finance partner at BDO LLP, said: “Given the economic environment and market dynamics, it’s not surprising that the industry is cautious about the current trading environment, with real concern over volume of activity across certain sub-markets. As always, the logistics industry is feeling the effects of a tightening economic climate more than most, as inflation and interest rate rises continue to have an impact on consumer behaviour. “Despite the lower overall confidence, there are still plenty of opportunities for operators, including greater collaboration with customers and other providers in the sector in areas such as shared-user warehousing, shared transport space, as well as electric vehicle charging or alternative fuel infrastructure.” The report also showed that nearly nine in 10 respondents are investing in environmental, social and governance (ESG) projects. While the majority are driven by playing their part to combat climate change, there is clear acknowledgement of the growing commercial importance of being able to demonstrate ESG credentials in winning new business. There is a willingness to consider alternative fuel types, with electric solutions a top priority for investment, albeit jointly with diesel, suggesting the alternatives are not yet viable in many cases. Whitworth added: “Investment in technology and ESG measures is a positive step to pursuing both cost savings and gaining competitive advantage. In addition, due to a need by many operators to boost volumes through new service offerings or breaking into new sectors, appetite for M&A activity remains strong.” Looking at growth opportunities in the next 12 months, the most popular strategy is cost control and efficiency. According to the research, this is also one of the main drivers of investment in technology. More than half of businesses see this as an opportunity and, as in previous years, most will spend on upgrades to and replacement of existing technology. With the rise in cybercrime across all industries, cyber security is the second highest priority. James Lean, Industry Director for Manufacturing, Transport & Logistics at Barclays Corporate Banking, said: “It is consistent with other global indexes to see the UK logistics sector feeling at a low level of confidence following the realigning of supply chain capacity. “However, as our report shows, despite cooler demand from manufacturers and wholesalers, this resilient sector continues to look to the future, adapting their business models through digital strategies, investing in fixed assets and importantly their people.”

Whitby Seafoods has been given five days by the Competition and Markets Authority to demonstrate that its purchase of Kilhorne Bay Seafoods won’t lead to higher prices and lower quality products. Whitby Seafoods currently holds 90% of the market to supply breaded scampi to foodservice customers such as pubs, restaurants, and fish and chip shops by some distance. It has a market share close to 90%, and Kilhorne Bay Seafoods, while significantly smaller than Whitby Seafoods, is the second-largest supplier. Whitby Seafoods agreed to buy Kilhorne Bay Seafoods in May this year, and voluntarily notified the deal to the Competition and Markets Authority, which launched a merger review into the deal in August. An initial Phase 1 investigation conducted by the CMA has found that Whitby Seafoods already holds a very strong market position in the supply of breaded scampi to foodservice customers. Following the deal, Whitby Seafoods would face even less competition from other scampi suppliers. The CMA’s investigation also found that Whitby Seafoods faces limited competition from potential market entrants and suppliers of other types of breaded seafood. The loss of competition brought about by the deal could result in foodservice customers having to pay higher prices – which could ultimately lead to higher prices for customers in venues such as pubs, restaurants, and fish and chip shops – as well as reduced product quality. The CMA will refer the deal for an in-depth Phase 2 investigation unless Whitby and Kilhorne Bay offer remedies which fully resolve these concerns. They now have five working days to submit proposals. Colin Raftery, Senior Director of Mergers at the CMA, said: “Scampi is a popular choice when eating out in the UK, with over 20 million servings sold to restaurant, café, and pub goers every year. These venues are already facing significant cost pressures, and it’s critical that we don’t allow a loss of competition to make things worse.

“Kilhorne Bay is a relatively small player, but Whitby Seafoods already faces only very limited competition when competing for foodservice customers – so the deal would leave customers facing the risk of higher prices and lower quality products.”

Rather than delivering HS2 Phase 2 new line between Birmingham and Manchester Prime Minister Rushi Sunak has promised to enhance the transport infrastructure across the whole country. Communities in towns, cities and rural areas will see improved transport infrastructure far sooner through £19.8 billion reinvested in the North, including:

• £2 billion for a new station at Bradford and a new connection to Manchester;
• £2.5 billion to deliver a new mass transit system in West Yorkshire;
• £3 billion for upgraded and electrified lines between Manchester and Sheffield, Sheffield and Leeds, Sheffield and Hull, and Hull-Leeds.
• Nearly £4 billion more funding for local transport in the North’s six city regions.
• A new £2.5 billion fund for local transport across all areas in the North outside the six city regions – smaller cities, counties, towns and countryside.
• A new £3.3 billion fund for road resurfacing.
• Landmark investments in roads, reopened train lines and new stations

Cornerstone of the new plans is Network North, which it’s claimed will drive better connectivity across the North and Midlands with faster journey times, increased capacity and more frequent, reliable services across rail, buses and roads. £36 billion will be invested in hundreds of transport projects across the country – with every region set to receive the same or more transport investment on an unprecedented scale as a result of the change.   A further £12 billion on top of this figure will be set aside for faster connectivity between Liverpool and Manchester. This represents a fundamental shift in investment towards the people’s transport priorities, consistent with the Prime Minister’s pledge to grow the economy while ensuring value for money and demonstrating responsibility with taxpayers’ money. More than four million people in cities in the North cannot currently reach their city centre by public transport within half an hour, which is detrimental to productivity and economic growth. And rail accounts for just 8 per cent of distances travelled and 2 per cent of all journeys. Yet the HS2 project currently accounts for over one-third of all Government’s transport investments, preventing the Government from spending on people’s genuine priorities and doing little to improve the journeys that people make the most.