Ireland Logistics and Supply Chain Confidence

April 2018

CBRE, in association with FTAI, have released the latest survey of confidence and expectations in the Irish logistics sector of the economy, which was launched at an event at CBRE headquarters in Dublin. The third CBRE Ireland Logistics & Supply Chain Confidence Index was undertaken by specialist research agency Analytiqa.

The CBRE Ireland Logistics and Supply Chain Index for 2018 shows an overall confidence score of 63.3, up from 60.4 in 2017, but still below the 72.7 figure reported in 2016, demonstrating the extent to which issues such as Brexit are exercising minds in this sector of the economy.

Interestingly, this year’s survey shows that there has been a significant divergence of confidence between the two sets of respondents, logistics operators and shippers. Last year, shippers were marginally more confident (61.2) than logistics operators (59.7). This year, we see confidence amongst logistics operators increase to 75.4 and shippers reduce to a 50.0 measure.

Despite a positive economic outlook, the deterioration in shippers’ confidence year-on-year is perhaps not surprising, considering that the prices of raw materials and inputs are increasing at a faster rate than it is possible to pass on to customers in the current environment.

60.0% of respondents expect increased profitability over the next 12 months, up from 57.0% in 2017. It is encouraging to note that despite the significant challenges across supply chains, 52.0% of respondents intend to increase their logistics-related headcount to some extent over the next 12-month period (up from 46.0% last year).

2017 was characterised by shortages of modern industrial and logistics stock to satisfy demand across the island of Ireland, which in turn fuelled rental growth and impacted negatively on take-up volumes. 71.0% of respondents to this survey expect an increase in demand for logistics property in 2018 (up from 56.0% last year), with logistics operators once again considerably more bullish than shipper’s in this respect, mirroring trends in surveys in 2016 and 2017. 

Overall, 23.0% of respondents nominated ‘Brexit uncertainty’ as one of the biggest challenges facing their business in 2018. Other concerns that ranked highly in this year’s survey included ‘a shortage of drivers and other key skilled employees’ as well as ‘economic conditions’ and ‘increasing employee wage pressures’.

When asked to identify key opportunities for their business over the next 12 months, ‘achieving market growth internationally’ has increased in importance relative to the 2017 survey, with 22.0% of respondents now identifying this as a key area for the year ahead. ‘Offering value added services to customers’ and ‘capitalising on domestic market growth’ are also among the leading opportunities identified by respondents.

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