Today’s business owners in the transport and logistics sector face many challenges, which need to be managed successfully to build a strong and profitable business.
Lower operating margins, tough competition, driver shortages and rising costs, including those linked to the introduction of Clean Air Zones across the UK, are making it harder for all businesses to make a profit.
We advise transport and logistics companies, from air and sea freight forwarders and hauliers, to domestic and international couriers. We work closely to find solutions to industry issues, utilising our experience in everything from business strategy and corporate finance, to audit and tax advice.
A guide to maximising the value of your business on exit.
Sophie Said – Transport & Logistics Specialist
Leading a company to a successful exit requires business owners to build a solid foundation. In our experience, those businesses that perform best are those that have a clear vision and a supporting strategy which enables them to implement a well-planned route, with clear directions to keep them on track and avoid any delays.
All too often we see SMEs selling for less than what they are worth. All it takes is a little forward thinking to maximise potential opportunities.
More Transport & Logistics Brighter Thinking
Key challenges for the Transport and Logistics sector
The Freight Transport Association has estimated that the UK has a current shortage of some 52,000 drivers. Warehouse operators in the logistics sector could also face significant staff shortages.
To avoid a skills crisis, business owners must invest in driver training and aim to create a multi-skilled, flexible workforce, which can be deployed to meet shifts in market demand.
Air quality legislation has led to the introduction of Clean Air Zones and Ultra Clean Air Zones in towns and cities across the UK. For road hauliers and freight forwarders, the restrictions imposed are increasing costs and putting further pressure on operating margins and cash flow. Business owners in the sector should harness data and manage cash flow carefully. Strategic divestments could help to raise the funds needed to invest, which may in turn help to minimise corporate tax liabilities by creating an opportunity to claim R&D tax relief.
Volatile fuel prices continue to wreak havoc with margins, particularly as they account for a significant proportion of direct costs for many transport and logistics businesses. To counter this, operators are focusing on improving profitability via greater efficiencies by harnessing data to inform decisions, streamlining systems, focusing on customer retention, introducing value added services, diversifying to win new business and/or divesting to accumulate reserves.
Intense contract price competition continues to put pressure on operators, in some cases driving them to undercut competitors just to secure the busiest routes. Operators should avoid agreeing to unsustainably low rates just to remain operational. In this climate of price competition, it is vital that all business owners focus on margins and forecast to make sure they are operating within their means.
Digital technology and data science are driving disruptive changes in our towns and cities and encouraging investment in smart city innovation. As transport infrastructure continues to evolve, passengers increasingly have access to multi-modal transport information and comparative pricing. This disruption has created an opportunity for new entrants, therefore existing businesses may need to transform their business model to survive. Strategic vision and a clear understanding of the business is vital to enable business leaders to make the right decisions at the right time.
A combination of challenging trading conditions and increasing market consolidation is leading some business owners in the transport and logistics sector to consider selling up in the not-too-distant future. To do so successfully, a clear and considered exit strategy is needed and business owners should plan ahead. For some, a sale or divestment may be the destination of choice, but changes may be needed to ensure they achieve the best value. Business owners should seek professional advice so that they can prepare the business to achieve the best possible outcome.