Half of UK logistics firms to make acquisitions despite volatile market

Almost half of UK logistics firms is set to make an acquisition in the next year despite challenging market conditions.

Data published today by Barclays Corporate Banking reported that 45 per cent of UK businesses were considering the move as a way to achieve economies of scale and expand services. 

This is the highest figure ever recorded in the survey’s 10-year history.

Around 60 per cent of respondents are in fact expecting their turnover for the year to increase, while 25 per cent forecast a decrease. 

“It’s encouraging to see that businesses are looking ahead at capex and finding ways to grow,” said Lee Collinson, Barclays Corporate Banking’s head of manufacturing, transport and logistics.

“This spirit of determination and innovation has come to define the UK logistics industry and looks set to continue.”

An example of this is logistics provider GXO receiving on Tuesday regulatory approval from the Competition and Markets Authority (CMA) for its £965m acquisition of Leeds-based Clipper Logistics.

Nevertheless, the industry is facing significant challenges such as supply chain issues and soaring prices, which in turn are impacting industry confidence. 

According to the research, the number of businesses expecting a drop in profitability has increased to 30 per cent this year, while companies forecasting positive margins have gone down from 62 to 45 per cent.

“It’s little wonder that, as the market contends with the toughest business conditions experienced for many years, confidence is at its third lowest level since the report began,” added Jason Whitworth, partner at BDO LLP, said.

“Concerns over profitability, skills, labour shortages, top line growth, and the rising cost of doing business, are integral to that fall.”