Page 25 - Linkline Spring 2017

Logistics and Supply Chain Sector Confidence Down Year-On-Year
CBRE’s annual Ireland Logistics and Supply Chain Confidence Index showed a deterioration in overall confidence as a result of Brexit and the election of Trump.
At the launch of CBRE's Con dence Index 2017, left to right: Garrett McClean, Executive Director, CBRE Industrial & Logistics; Pamela Quinn, MD of Kuehne & Nagle; and Fionn Uibh Eachach, Director of KPMG Ireland.
CBRE, in association with KPMG, have released their latest survey of confidence and expectations in the Irish logistics sector. The results reveal a year-on-year drop in confidence
and a heightened sense of uncertainty across the sector, due, in part, to the precarious position of Irish exporters in the post-Brexit environment.
The second Ireland Logistics & Supply Chain Confidence Index was undertaken by specialist research agency Analytiqa who carry out similar surveys across a number of jurisdictions. More than 50 senior decision makers from across the logistics and shipping sectors in Ireland participated in the survey. Respondents included chief executives, managing directors and senior management of some of the largest logistics providers, firms and buyers in the State. The survey findings were launched at an event in the CBRE headquarters in Dublin on 28 March.
A key finding of the survey showed that confidence amongst both logistics operators and shippers in the Irish market is down year-on-year as a result of economic uncertainty with an index coming in at 60.4 compared to 72.7 in 2016. Regarding confidence in business conditions in the logistics and supply chain sector, only 50% of respondents to the Irish survey this year perceived them as favourable; falling 16% from last year. The number of respondents who felt conditions were “somewhat more difficult” compared to 12 months ago was up 10% year-on-year.
Responses also differ somewhat between the logistics sector and shippers, with logistics operators in general being more pessimistic this year. 44% believe conditions over the next 12 months are likely to be “somewhat more difficult” compared to the same period last year compared to 36% of shippers. Meanwhile, 36% of shippers think conditions are likely to be “much more favourable” over the next 12 months versus 26% of logistics operators.
When asked about anticipated changes in turnover over the next 12 months, it was encouraging to note that 80% of respondents expected turnover in their organisation to increase over the next year although this still was an 8% deterioration on 2016. 44% of respondents expect a modest increase of between 2% and 5% in turnover over the next 12 month period, with 19% anticipating an increase of between 5% and 8% in the same period. Overall, almost 58% of respondents expect increased profitability over the next 12 months.
When asked about the likelihood of their company making significant logistics and supply chain related capital expenditure over the next 12 months, responses varied. 33% of respondents said it was “likely” that they would make significant capital expenditure in these areas over the next 12 months while almost 22% said they were “very likely” to do so. Despite these encouraging results though, respondents were, in general, less positive about making significant capital expenditure than 12 months previous.
Other notable results showed that 55% of respondents in the logistics sector expect to increase headcount; almost 20% said they were more positively disposed towards the Eircode postcode; more than 87% felt Ireland is either “average” or “better than average” in terms of investment attractiveness compared to other EU countries; 56% expect an increase in demand for logistics property in 2017; and over 81% of respondents plan to introduce some form of new innovation to their business over the next 12 months.
Commenting at the release of the report, Garrett McClean, Executive Director and head of Industrial & Logistics at CBRE said,“Since last year’s inaugural survey for Ireland was conducted, it is fair to say that the landscape has changed immeasurably, with seismic events affecting Ireland’s two largest trading partners. Concerns such as last June’s unexpected Brexit referendum result and the election of a new president in the United States have exercised the minds of respondents to this year’s survey and it is no surprise that there has been a deterioration in overall confidence in the sector year-on-year considering the more uncertain backdrop”.
Also speaking at the event, Fionn Uibh Eachach from KPMG said: “This year’s survey is again another detailed insight into the mindset of the key players of the logistics and shipping industries, which has shown a decline in overall confidence in the sector. It is not surprising to see this decline given that potential increases in customs duties and administrative costs could affect international trade into and out of Ireland. Hence it is particularly important for companies in the logistics and shipping industry to be undertaking planning now for a post-Brexit world.”
The Chartered Institute of Logistics & Transport 25
CONFIDENCE INDEX