There is cautious optimism for the year ahead in the UK logistics sector, and consolidation through merger and acquisition (M&A) activity is deemed likely or very likely, according to Logistics UK.
The report analyses the opinions of more than 100 senior-level logistics professionals on M&A activity and general sentiment surrounding consolidation in the sector.
The analysis shows 2025 marks a return to positive sentiment for the industry concerning consolidation and reveals an M&A Index score of 50.2 (a score above 50 indicates positive sentiment), compared with the 41.9 score recorded in 2024.
However, the overall improvement in positive sentiment is tempered by the revelation in the report that 72% of respondents cite increased labour costs as having a significant, negative impact on company performance.
Logistics UK President Phil Roe says, “In the 12 months since we commissioned the last UK Logistics Sector M&A Index report, we have seen the UK's first change of governing party in 14 years and elections in several other major economies.
"In this politically volatile environment, one would expect some impact on M&A and this is reflected in our findings, with more than one in six respondents (17%) reporting they are awaiting clarity on government policy as a reason for not undertaking M&A activity in 2025.
"However, despite the need for further clarity on government policies and the threat of rising labour costs, it is encouraging that business sentiment is overall positive and significantly more positive than last year.”
The report shows M&A activity in logistics has increased over the last 12 months with more than one in five respondents (23%) undertaking M&A compared with 19% reporting M&A activity in the 2024 report.
In addition, 21% of respondents reported they had undertaken M&A activity which had either been aborted or not completed but despite this, most (94%) consider consolidation is likely or very likely to continue over the next 12 months.
The report also examines company valuations, revealing almost half of respondents felt those in the logistics sector had either decreased slightly (32%) or significantly (12%) over the last 12 months.
Mr Roe suggests this reflects the sector settling into a “new normal” post-COVID: “There is a perception that businesses were overvalued during the pandemic, as the unique circumstances faced by our industry skewed profitability.
"The sense now is that we have entered a period of more realistic pricing and our research indicates that the trend for consolidation seems likely to increase.”