UK logistics sector is braced for growth

Posted on 5 Nov 2013

More than half of UK third party logistics companies expect to invest more in equipment, people and premises in 2014 than they did in 2013.

The findings come from of 3PL 2013, a survey of warehouse operators by the United Kingdom Warehousing Association.

The majority (53%) of surveyed logistics providers, or 3PLs, expect to see their investment in information technology increase next year, while 49% are preparing to spend more on their vehicle fleets.

Extra staff (47%), bigger premises (47%) and materials handling equipment (39%) are other areas where firms predicted that they will be investing. Only 10% foresaw a decline in their year-on-year spending, the UKWA survey showed.

The expected rise in investment among 3PLs reflects a renewed sense of optimism across the logistics sector following a period of flat growth.

The bullish investment plans are matched by a confident attitude towards company turnover in 2014 with 55% of respondents anticipating an increase. 33% thought their turnover was likely to remain unchanged while 12% are expecting a fall.

The survey also showed that in 2013 most workers (61%) employed in the 3PL sector received a modest pay rise. The majority (67%) were awarded an increase of 3% or less while 33% enjoyed an above-inflation salary boost of between 3% and 5%.

In good news for staff, nearly half of the companies surveyed (47%) expect to be able to give a general pay rise to all staff in 2014.

The survey also indicates strong levels of satisfaction among users of 3PL services with the performance of their suppliers. Across the sector an average of 83.78% of all contracts that were up for renewal were extended with 14% of respondents reporting that they had enjoyed a 100% contract renewal rate over the past year.

The average duration of new contracts won by surveyed companies was 2.41 years. For the overwhelming majority of those questioned (80%) new contracts tend to be for between one and 3 years, while 20% stated that, on average, clients were prepared to commit to 3-5 year deals.

But it was not all good news. The greatest threats to 3PL businesses were increased price competition, cost inflation (particularly fuel) and regulations and legal issues.

In the past year, the majority of respondents (82%) had increased the cost of their services by up to 5% to cover rising fuel charges. A small number (5%) had been compelled to raise their prices by more than 10% to offset the rising price of fuel.