ENVIRONMENT
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.
PEOPLE
Following the government’s response to the driver shortage, the measures put into place have reduced the driver shortage somewhat. However, the sector is still facing 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.
DIGITAL DISRUPTION
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.
COST VOLATILITY
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. This then helps to inform decisions, whether it be to streamline systems, focus on customer retention, introduce value added services, diversify to win new business and/or divest to accumulate reserves.
PRICE COMPETITION
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.
DESTINATION PLANNING
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.