CBRE has released the first in a series of annual surveys of confidence and expectations in the Irish logistics sector of the economy, which makes for interesting reading. The CBRE Ireland Logistics & Supply Chain Confidence Index, which was co-sponsored by KPMG, was undertaken by specialist research agency Analytiqa who undertake a series of similar surveys across a number of jurisdictions including the UK. More than 50 senior decision makers from across the logistics and shipping sectors in Ireland participated in the survey. Respondents included CEOs, managing directors and senior management of some of the largest logistics providers, firms and buyers in the island of Ireland.
Some of the key findings of the research are as follows:
- Almost three quarters of respondents say they are more confident about business conditions in the logistics sector than they were only 12 months ago. Logistics operators are considerably more positive than those involved in shipping.
- 57% of respondents say that conditions are ‘somewhat more favourable’ than 12 months ago while a further 9% describe conditions as ‘much more favourable’ than last year.
- In relation to the next 12 month period, 53% of respondents say they expect conditions to be somewhat more favourable than now which is encouraging. Only 21% of respondents were negative about prospects over the next 12 months.
- 89% of respondents expect turnover in their organisation to increase over the next year while 62% expect an improvement in profitability over the next 12 months.
- Only 8% of respondents are predicting a decline in profitability in their organisations over the next 12 months.
- 74% of logistics operators say they were likely to incur significant capital expenditure over the next 12 months.
- 55% of respondents said they expect to increase headcount in their organisations in the next year with the largest proportion (38%) expecting to increase headcount by between 2% and 5% year-on-year.
- More than 70% of respondents believe that e-commerce has the potential to grow by up to 10% in the next 12 months. Almost half of respondents say that they would accommodate growth in e-commerce by improving technologies in their organisations.
- 56% of respondents say that Ireland is no different to other EU countries in terms of its logistics performance and the ease of managing supply chain operations. However, one third of respondents disagree and say that Ireland is ‘better than average’ in this respect.
- When asked about investment is needed to facilitate improvements in supply chain operations, the items that ranked highest included investment in road infrastructure, investment in training and continuous professional development, investment in broadband and investment in sea/port infrastructure.
- 56% of respondents expect an increase in demand for logistics property over the next 12 months. 24% of respondents commented on the cost of facilities and the size of facilities available in the market.
- Over 85% of respondents plan to introduce some form of innovation to their business over the next 12 months with a fifth of respondents mentioning implementing more automation.
- Only 1% of respondents expressed a plan to implement 3D printing over the next 12 months with only 2% of respondents plan to introduce drone technology this year.
- When asked what their business priorities for the next 12 months are, winning new contracts ranked highest with 23% of respondents in the logistics sector. A further 21% of logistics respondents said that maintaining their existing customer base was their key priority while other factors that ranked highly included cost control, improving contract margins and expanding into new geographical markets. For respondents in the shipping industry, cost control was the issue that was of primary concern to respondents.
- 23% of respondents said that customer price pressures and reducing costs were the biggest challenge facing the supply chain of their business in 2016. 12% respectively identified economic conditions and market volatility as being of concern. Other concerns included employee wage pressures and foreign exchange rates.
- Only 5% of respondents expressed a concern at the potential impact of BREXIT.
- When asked to identify key opportunities for their business over the next 12 months, a variety of responses identified consolidation of service providers, market growth international and increasing employee skills and training as the most important opportunities for their businesses.
Commenting on the release of the report, Garrett McClean, executive director, head of industrial & logistics at CBRE commented “We’re delighted to be publishing the inaugural annual confidence index for such an important sector as logistics and supply chain, which forms the backbone of the Irish economy, both north and south of the border. The report provides a comprehensive insight into current and emerging trends given the high calibre of the respondents. I’m also encouraged by the high confidence levels and the positive outlook for the next 12 months, although BREXIT remains the big uncertainty on the immediate horizon”.
