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As UK citizens go to the polls today in a general election viewed by analysts as “too close to call”, a new logistics confidence index continues to register at a high level.

However an underlying trend suggests that intense price competition is leading to “unsustainably low rates” in the industry.

Barclays and shipping accountant Moore Stephens compile the index from a twice-yearly survey by a specialist sector research agency, and it is regarded as a barometer of the general health of the UK’s logistics sector.

Many respondents to the latest survey pointed to overcapacity in the market, which, combined with “price challenges from larger multinational providers”, was the catalyst for an increase in competition.

The agency said: “Our survey results suggest that major retailers and manufacturers are increasingly likely to shop around to meet their price and service expectations, rather than renewing contracts automatically.”

It added that respondents reported “customers’ pricing expectations are becoming increasingly demanding” and noted that the survey revealed that over half of new business won over the previous six months had come from customers switching from other service providers.

Nevertheless, despite this ‘price war’, 37% of respondents said business was “somewhat more favourable” than in the previous period; an increase of 25% since the beginning of 2012.

Moreover, 79% of those businesses completing the survey said that they expected the outlook to improve or stay the same in the next six months, with over 50% looking to increase their staff headcount during the period.

There was also a hike in logistics businesses planning to make an acquisition over the coming months – up from 32% to 24% – reflecting the trend of recent takeovers in the sector such as the FedEx/TNT Express deal announced recently.

However, as reported several times by The Loadstar in the past year, the UK logistics industry is facing an acute skills shortage and this was a common theme from respondents to the survey.

The agency concluded: “Attracting and retaining highly-skilled employees, particularly drivers, continues to be a major concern for the industry and is increasingly becoming a major hindrance to growth.”

Indeed, referring to the driver shortage the report said that this was the “single most important issue” for almost half of the companies surveyed.

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