Retail and manufacturing slowdown hits the logistics industry

Jake Cordell
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Logistics firms face higher costs at the same time as pressure to cut prices from customers (Source: Getty)

Logistics firms are being squeezed by a higher cost of doing business and increasing pressure from struggling retailers and manufacturers, according to a new report.

Barclays found 49 per cent of businesses said trading conditions had become more difficult over the last six months, as its measure of confidence hit its lowest level since the index started in 2012.

While cheaper fuel prices have helped, firms say they are being cancelled out - or not even covering - other rising costs in terms of higher wages and the need to invest in technology.

The national living wage in particular was cited as an extra burden for logistics companies who also reported a continued shortage in the number of drivers.

Read more: Supermarkets need a radical lesson in supply chain management

At the same time that costs are going up, troubled retailers and manufacturers looking to move goods around the company are also putting increased pressure on their clients to keep their own prices down. Nearly half of the operators surveyed said cost-cutting from customers was the most pressing concern facing their business as they feared the industry was in a "race to the bottom" on prices.

Just 11 per cent of companies said trading conditions had become easier over the last year and only 47 per cent expect them to improve over the rest of the year, despite a majority believing that turnover will rise. The continued struggle for margins and profitability will only become more acute if woes facing the retail and manufacturing industries do not recede.

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