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KPMG Transport Tracker – March/April 2015

This fourth edition focuses on M&A activities in 2014 and Q1 of 2015, impact of falling oil prices and challenges faced by logistics companies due to record e-commerce peak season

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Transport and logistics companies should explore innovative finance solutions to ride out General Election jitters -CILT, Industry News, Supply Chain

With businesses facing an unprecedented level of political uncertainty surrounding the General Election in recent weeks, many firms reduced their investment activity as a result of falling order books.

However, the usual dip in sales around the time of the General Election should be no cause for concern. It is those businesses that act now to take advantage of the inevitable upturn post-election that will be rewarded in the long-term.

Unsettled by the uncertainty of potential legislation changes, some firms have opted to delay investment decisions until after the election is concluded meaning that an inevitable upturn will occur in the months after the election. Businesses have two options available to take advantage of the more favourable post-election conditions; either invest, or maintain their position.

John Atkinson, head of commercial business at Hitachi Capital Invoice Finance, said

‘Most businesses have little need to exercise caution. Any legislative changes that do occur as a result of the election will not come into force until next year at the earliest, which means by investing now they can take advantage of any potential change ahead.

‘After weeks of speculation surrounding the outcome of the election and numerous promises being made by each party, many firms seem to have adopted a ‘wait and see’ mentality. This suspension of financial investment is usually motivated by the fear of making important decisions. Businesses should consider using simple cash flow solutions to free up vital cash owed to them by current late or unpaid invoices.’

Reluctance to make financial commitments is likely to deplete contract opportunities and as a result, many SMEs are have experienced a slow-down in orders in recent weeks. In some cases, customers are delaying payments of invoices, adding pressure to the already stretched cash flow of small businesses.

John Atkinson added: ‘Many smaller businesses rely on invoices being paid on time to cover their operating costs. They do not have large cash reserves and therefore it is crucial for the business to fill the order pipeline. The uncertainty in the general election has caused some businesses to pay late or hold off on projects altogether until the new government has been appointed.

‘A lack of investment in skills, as well as a potential fall in stock levels and failure to invest in new capital, such as machinery, vehicles and property could reduce the ability of a firm to capitalise on the inevitable increase in business activity after the election.

‘Businesses affected by the recent political uncertainty could benefit from options such as invoice finance to cover overheads and maintain the company’s financial position during the slow-down. Invoice finance is often underestimated as an option to provide a boost to cash flow – allowing businesses to turn their unpaid invoices into available cash. Firms experiencing a dip in orders should take steps to gain the necessary funding required to ride out the storm.’

Cautious investment activity could prove short-sighted and may reduce the future competitiveness of a business. During the period of protracted debate post-election, transport and logistics companies must work to protect cash flow and preserve trading activity in the face of depleted order-books.

Transport in the Digital Age by Deloitte

Change is coming to transportation, whether we’re ready for it or not. You can see it in public sector investment in intelligent streets and digital railways, automakers’ focus on next-generation vehicles and smart mobility services, and in the widening recognition that the “information everywhere” world will utterly disrupt the transportation status quo.

The proportion of the global population living in urban areas continues to rise faster than capacity on roads, rail and other types of transport. This pressure on transport infrastructure is driving capital investment estimated at over a trillion dollars a year. However, you can’t always create capacity by pouring more concrete, and technology will play a crucial role in changing the way we travel.

The Digital Age has begun, and technology has brought us smart phones, real-time planning, open traffic data, and social customer service. For the first time, the passenger now has more information than the operator. This fundamental shift offers consumers real choice based on a picture of alternative routes, comparative pricing and current network status. As transport operators adapt and new entrants arrive, new business models will transform the use of user information, payments, integration and automation.

These changes will form five disruptive trends for transport and smart mobility services

 

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Innovation takes centre stage at record breaking Multimodal show – CILT, Industry News, Supply Chain

A 100% recyclable pallet, which slashed one customer’s C02e by 9,000 tonnes, bringing commercial savings of around £5 million over a year, was just one of the innovations showcased at last week’s Multimodal show.

The Alternative Pallet Company demonstrated its lightweight pallet, known as the Pallite and made from paper and glue, by lifting a one tonne load as part of the Multimodal Seminars, which included insight from 64 industry thought leaders over three days of workshops.

Multimodal 2015 was a record breaker for the eight-year-old show, with over 8500 supply chain decision makers visiting over 290 exhibitors, including the likes of DSV, DHL, IAG Cargo and DB Schenker at the Birmingham NEC from 28th to the 30th April

‘We are proud to have expanded and developed the show and to continue to provide a platform for our industry to grow business, meet, learn and network,’ said Robert Jervis, Director, Multimodal.

‘We are very pleased that so many people have already signed up to exhibit next year and we are already looking forward to welcoming even more logistics buyers in 2016.’

Hundreds of shippers, including Marks and Spencer, Jaguar Land Rover, and Boots, visited the show, and many took advantage of the Shipper’s Village, a private space for freight buyers to meet suppliers.

This year’s Multimodal Awards featured two new categories, Young Logistics Professional, won by Joanne Dolan, and Woman of the Year, won by Bethany Forvargue.

The Co-operative Food was recognized for its carbon-busting switch to rail with the Award for Environmental Contribution given in conjunction with the Freight Transport Association (FTA).

Malcolm Logistics won Exhibitor of the Year, whilst John Williams, CEO, Maritime Transport, was honoured as Personality of the Year.

‘We have been delighted with the positive feedback from the awards,’ said Jervis.

‘We will continue to innovate and grow the event for 2016.’

Britain’s Lesser Known “Export Epicentres” Revealed in Exclusive Research of 2,500 UK SMEs Highlighting UK Trade in Global Markets

LONDON, 20 April 2015 – Regional cities across the UK are bucking the trend when it comes to international trade as revealed in research released today by FedEx Express, a subsidiary of FedEx Corp. (NYSE: FDX) and the world’s largest express transportation company. According to the new UK Export Epicentres Report by FedEx Express, the majority of small and medium sized businesses (SMEs) across the country are doing business overseas, with Bradford leading the way with an 86% export rate. In cities including Leicester, Oxford and Leeds, over three quarters of SMEs are exceeding expectations by trading at higher levels than Britain’s larger cities of Manchester and London.

Exporting confidence within the capital has spread throughout the UK’s cities, with lesser known export epicentres now emerging to lead the race for international clients and custom. Bolstered by the powerful influence of “Brand Britain”, a large majority (79%) of SMEs view their regional locality as a positive factor in stimulating overseas growth and profitability. However, more than a third of those surveyed highlighted they require more support on a local level to achieve international expansion.

“Now is the time to encourage UK SMEs to embrace their regional identities when building global relationships,” says Trevor Hoyle, Vice President, Northern Europe Operations, FedEx Express.  “With over 30 years’ experience capitalising on market trends in the UK, we’ve seen first-hand the wealth of benefits available to a business even at the very start of their export journey. Our main aim is to give all Britain’s regions the support and guidance they need in order to help our customers compete on a global scale.”

The report showed there is no shortage in positive thinking about the UK’s exporting future. 94% of SMEs feel optimistic about the year ahead; with 8 in 10 believing their export sales will increase again over the same time period. With average annual export sales topping £1.9m in Portsmouth alone, strong growth is set to continue throughout the rest of 2015 and beyond.

“This research has unveiled some fascinating insights into how regional self-perception and business optimism can be linked,” Hoyle added. “Our Great British history is rich and full of industrial heritage, the promotion of which can go a long way in driving UK exports forward. Although challenges still remain for some companies in doing business abroad, they can be overcome by having access to the right support, expertise and network.”

Export Rates in 26 Key British cities : The highest exporting rates amongst UK SMEs who produce goods or services are;

Bradford    86%

Leeds, London, Manchester, Southampton    81%

Belfast    79%

Oxford    78%

Leicester, Birmingham    77%

Cambridge    76%

Bristol, Derby, Portsmouth, Plymouth    75%

Liverpool    73%

Edinburgh, Aberdeen, Norwich, Nottingham    72%

Milton Keynes    71%

Cardiff, Hull    70%

Glasgow, Sheffield    68%

Coventry    67%

Newcastle    66%

To download a copy of the FedEx Express UK Export Epicentres Report containing analysis and the full findings, please visit http://www.fedex.com/gb/small-business/epicentres-report.html

Annual Manufacturing Report 2015

This year’s survey of manufacturers attracted responses from all areas and activities, from automotive, aerospace and agribusiness to plastics, renewables and steel.

Confidence is higher than they have seen for a number of years. Levels of investment are up, as are vacancies. Companies are looking to the future with commitment to more plant, machinery and equipment, and are actively seeking the skills they need to take them forward.

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Manufacturing and Industrial M & A Predictions – Deloitte UK

In spring 2014, M&A experts in the manufacturing and industrials sector gave Deloitte their views on the economic environment. They shared their views on deal drivers, valuations and keys to successful deals. The companies they surveyed have a combined market cap of nearly £300bn.

 

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Markit/CIPS Report

UK manufacturing growth slows as intermediate goods sector falls back into contraction.

 

Markit CIPS Report

The older worker: ready, willing and able…

There is a huge well of untapped potential that employers are missing out on when it comes to recruitment. Although older workers are increasingly staying on at work rather than retiring, and employers are supporting this, unemployed older people still struggle to find jobs. In 2014 the DWP identified that there were 2.9 million unemployed older workers compared to 954,000 young people not in education, employment or training.

Legislation making age discrimination unlawful was introduced in 2006. Those regulations have now been incorporated into the Equality Act 2010 and demographic trends clearly indicate that there is an ageing and older workforce that is continuing to grow following the removal of the default retirement age in 2011. And there are many compelling reasons for older workers to want to remain in work. These range from more economically-driven motivations, including maintaining an existing lifestyle, supporting dependent children or topping up a pension, to the broader benefits of being employed such as a need for the personal fulfilment work can provide or a desire to continue to engage in the social aspects of the work environment.

A recent CIPD research report observed that, ‘As the economy grows and the average age of the population increases, employers will also need to develop proactive approaches to recruitment to make sure they are age-diverse and develop a balanced employee age profile. For the first time there will be more than five generations working together in organisations, enriching the diversity of experiences, perspectives, personal values and ideas and creating challenges and opportunities which employers will need to be smart to manage.’ (‘Managing an age-diverse workforce: What employers need to know’, Worman & McCartney, CIPD, February 2015).

It’s an interesting comment that merits detailed consideration by employers as they encounter this new dimension of the workplace. Currently, older workers are often overlooked when recruitment decisions are made yet hiring an experienced worker could prove to be a wise investment. Older workers bring a wealth of knowledge and expertise, attributes that are critical to any company seeking business growth. Talented individuals are waiting in the wings for employers to recognise and value the contribution they can make and at GKI Resourcing we have the expertise to help you find them.

Pauline has an extensive background in strategic HRM. If you would like to discuss any aspect of this article or for a discussion on how we can help with High Impact HR for your business, call Pauline at GKI Resourcing on 07920 162200 or paulinej@gkiresourcing.com

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