Powered by people and technology: the transport & logistics sector view

Our latest survey of OMBs across all sectors found that while 60% of all respondents are confident about the general outlook for 2018, this percentage falls to 55% for T&L OMBs. Businesses in the sector are also less confident about meeting revenue and profit targets. So why is this?

The staff challenge

Staff shortages are a big issue in the T&L sector. Not only are drivers in short supply, but so are warehouse staff – and even some senior management white collar roles are proving hard to fill. Brexit is having a real impact, with staff from the European Union returning to their home countries and being less willing to come to work in the UK in the first place. The sector’s long-term image problem also continues to have an impact, with T&L seen as offering low wages and zero hours contracts.

It’s no surprise therefore, that investing in staff training is a key strategy for T&L companies in 2018: 63% intend to invest in staff training and development this year, compared to 51% of OMBs across all sectors. Similarly, T&L OMBs are responding to their talent challenges by undertaking succession planning (42% intend to do so in 2018, compared to 24% of all OMBs) and creating apprenticeships (25% plan to do so, compared to 15% of all OMBs).
Technology investment

With staff at a premium, T&L OMBs are also investing strongly in technology: 50% of T&L respondents plan to invest in new technology or IT systems in 2018, compared to just 33% of OMBs across all sectors. The use of technology in the T&L sector is generally under-developed in comparison with some others, such as retail. This means there is scope for investment in a range of IT systems and processes to streamline activities, improve performance and reduce the impact of staff shortages.

Intriguingly, T&L OMBs are also more likely to see technology as a threat than most OMBs (42% see it as a medium to long-term threat, compared to 18% of all OMBs). This may suggest that some have let IT investment slip in the past and recognise the need to catch up. It may also reflect the fact that some significant players in the T&L sector, such as FedEx and Maersk, have suffered major cyber attacks in recent years and incurred material financial losses. In fact, a third of T&L OMBs are concerned about the threat to their business from a cyber attack or data breach in 2018.
Acquisitions ahead

Another striking finding in this year’s survey is that 17% of T&L OMBs plan to grow through acquisitions in 2018 – well ahead of the 7% result across all OMBs. This high level of sector interest in mergers and acquisitions was also revealed in our UK Logistics Confidence Index 2017, produced in partnership with Barclays. This found even higher expectations for M&A deals this year, with 40% of participants saying they were likely to make acquisitions over the next 12 months – the highest percentage in the 10 years that we have been producing the UK logistics confidence index.

M&A activity is attractive to T&L OMBs for a number of reasons. It offers the opportunity to achieve economies of scale, diversify services and address skills shortages.
Tackling GDPR

A major challenge facing T&L OMBs is the need to achieve compliance with the EU’s General Data Protection Regulation (GDPR). The May 2018 deadline is now fast approaching. Almost half (46%) of T&L OMBs surveyed expressed concern about complying with the EU GDPR (well ahead of the 24% of OMBs overall).

Such high levels of concern reflect the complex supply chains in which many T&L OMBs operate, reaching from manufacturers through to retailers at the point of sale. The amount and complexity of data and the number of different parties involved in the supply chain makes GDPR compliance that much more challenging for T&L OMBs.

Strategies for success

It’s clear that OMBs in the transport and logistics sector face many challenges in 2018. However, they are taking action by investing in staff, technology, growth and compliance. Moore Stephens can help in a variety of ways, including:
  • If investing in new technology, why not make that investment in a solution that automates and optimises the way your business operates? IT and software experts from our RSULT team can implement an end-to-end solution that streamlines your activities. They can help you create joined up systems and processes, enabling seamless operations from start to finish in the production process, from order receipt to product despatch.
  • As your business adopts and integrates new technologies, the need for management information drawn from multiple IT systems can lead to wasted management time. Stream, our complete online finance and accounting solution allows you to view and drilldown into your financial data through one easy-to-use central hub.
  • Mergers and acquisitions are major transactions in the lifecycle of any business. They are complex, require significant investment of management time and can carry significant risks, as well as rewards. We have the practical experience of advising and supporting clients in the T&L sector with the planning, negotiation and completion of M&A transactions.
  • Complying with the EU GDPR is a complex challenge. If companies do not comply they can be fined up to 4% of annual turnover or €20 million, whichever is greater. We have developed a GDPR healthcheck to help companies make sure they cover all the angles, avoid regulatory problems or even a reputational loss.
For further support and guidance with any of the issues raised in this article, please get in touch with Philip Bird, Partner and Head of the Transport & Logistics sector group.

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