The logistics sector is finally seeing signs of recovery from three years of unprecedented pressure on the supply chain, a new report showed.
Logistics businesses are confident they will continue to regain economic strength throughout the rest of 2023 after navigating numerous challenges over the past couple of years – including the pandemic, the supply chain crisis, Brexit and the war in Ukraine.
A recent survey by Logistics UK showed overall business performance was perceived to have improved by January 2023, with 34.2% of survey respondents having better economic expectations for 2023 compared to 2022, and 42.6% predicting no change.
The group’s business performance index showed overall business confidence was 54.9 in January 2023, an increase from 43.5 in the same period in 2021, at the height of the pandemic.
The figure also marks a decrease from 67.0 in January 2022 – although the Ukraine-Russia conflict and subsequent energy costs hikes had not kicked in at the time.
Logistics UK CEO David Wells said: “While the initial months of 2022 witnessed a resurgence in consumer spending and increased business activity, in the second half of the year the logistics sector navigated a difficult economic climate due to a global energy price shock – triggered by the Russian invasion of Ukraine – in addition to changing trade processes driven by Britain’s exit from the EU and the increasing need to decarbonise.
“Nevertheless, our industry continued to demonstrate its adaptability with the UK trading £414bn exports and £644bn imports in 2022.”
The sector added £163bn to the UK economy and generated just over £1 trillion in revenues in 2021, according to the latest government data – a 19.2% increase on the previous year and the same as in 2019, which marked “a welcome sign of recovery from Covid-19”.
Despite government interventions, such as the reduction of fuel duty by 5p per litre in March 2022, the Logistics UK Industry Survey 2022-23 found the greatest deterioration in business performance was due to high fuel prices.
The report also highlighted that further challenges remained for the sector, specifically around decarbonisation, incoming Brexit checks and skilled labour shortages, as well as the impact of inflation and the cost of living crisis.
“There is still an urgent need for investment and innovation to reduce GHG emissions at the pace and scale necessary to meet net zero targets,” Wells added. “And with inflationary pressures continuing to affect prices across the economy, the current turbulent business conditions look set to continue in the next 12 months.”
Post-Brexit woes including increasing costs, customs frictions and labour shortages have also contributed to a slump in the UK’s competitiveness in the global logistics space.
According to the World Bank’s 2023 Logistics Performance Index (LPI) report, the UK was ranked 19th on the performance indicator – a significant drop compared to the average placement of 6th between 2012 and 2018.
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