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Logistics companies confident of growth despite lack of Brexit planning

The vast majority of logistics companies expect their business to grow over the next three years despite uncertainty over the UK’s exit from the European Union, according to a new survey of executives in the sector.

The report by the trade body Freight Transport Association (FTA) found that 34 percent of respondents were “very” or “completely” confident that their business would grow in the next three years. 50 percent described themselves as moderately confident.

Only 17 percent said they were not very confident or not at all confident.

The survey found that 27 percent of respondents planned to increase their investment in HGV, 12 percent planned to increase their investment in vans and 24 percent planned to increase investment in trailers.

The market uncertainty created by Brexit was the most cited external challenge to international growth, with around 55 percent of respondents citing it.

However, 17 percent said they had not started to plan for Brexit while 45 percent did not know of a company plan in place.

Fifteen percent said they were planning for all Brexit scenarios. Eight percent and seven percent said they were planning for a transitional period followed by a hard Brexit and a soft Brexit respectively. Only six percent were preparing for a no deal exit in March 2019.

Around two thirds cited building the right team as the biggest internal challenge while 60 percent cited maintaining profitability.

Elizabeth de Jong, FTA’s Director of UK Policy, commented: “The logistics industry is facing a challenging road ahead.  With Brexit negotiations stalling, businesses are in a difficult position as they try to plan for an uncertain future.

“In the event of a no-deal exit, logistics businesses are most concerned about the potential impact on infrastructure plans, labour shortages and border delays. While the government has provided companies with some information, in the form of no-deal contingency papers, there are still several key processes to be agreed if the UK logistics sector and just-in-time economy is to be protected.”

The organisation urged the government to seek an agreement as an “urgent priority” with no deal only as the last resort.

“As we leave the EU, it is vital the UK’s economy remains efficient and competitive internationally.  There is much the government can do to help make this happen: investing in road and rail infrastructure; creating a favourable fiscal environment; improving initiatives to address skills shortages; and facilitating cleaner fuels through use of duty differentials while protecting modal choice.”

She added: “Logistics businesses are facing rising operating costs.  The ongoing increase in fuel prices – up 18 percent since December 2017 – presents a key challenge.  While FTA is pleased the government decided not to increase fuel duty in its autumn Budget, we’re disappointed it didn’t take the opportunity to reduce it, given this rise.  The report also discovered that operators are struggling with increased warehouse rates and are finding it difficult to pass these increased input costs on to customers.”

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