The British logistics industry has suffered its biggest fall in confidence since 2015, with over half (60.8 per cent) of respondents in a recent survey saying business conditions have become more difficult in last 12 months due to Brexit and the ongoing driver shortage.

Moore Stephens’ annual Logistics Confidence Index, produced in partnership with Barclays, found over half of respondents (51 per cent) felt driver and skills shortages was the biggest issue facing their business.

However, the Index remains positive and above 50, suggesting there is still a degree of optimism among operators. More than half of companies still say they expect to increase profits in the year ahead, despite concerns of rising costs and greater pressures on margins.

The study was carried out among 102 of the top companies in the sector with a combined company revenue of over £18bn.

“The overall sentiment of this year’s survey is that of uncertainty,” said Philip Bird, Moore Stephens partner. “In the 2017 index, companies were optimistic for improving overall business conditions. But with the potentially serious impact of poor Brexit negotiations and poor performance across the retail sector in the last year, many companies seem much less optimistic about the prospect of a positive 2019.”

Of primary concern to logistics companies is the potential shortages of skilled drivers. Whether enforced or the result of voluntary cost cutting, around one in five (18.8 per cent) of operators surveyed said they expect to decrease headcount in the next 12 months.

This potential vacuum of EU and ageing drivers leaving the workforce resulted in over half of respondents (51 per cent) judging driver and skills shortages was the biggest issue facing their business.

According to CBI figures, 14 per cent of LGV drivers in the UK – around 43,000 people – are EU nationals. Coupled with an ageing workforce of HGV drivers – the CBI estimates that 60 per cent are 45 or older – this long-standing challenge for the sector is being exacerbated by the current political uncertainty, the report said.

“It’s disheartening to see that lack of drivers remains the industry’s top concern, as it has done for some years,” said Richard Smith, head of transport & logistics at Barclays. “The reality is there is simply not enough new talent coming into the sector early enough to counter an ageing workforce. One of the main challenges in attracting recruits has been the perception the industry lacks significant career opportunities, particularly for the younger worker. The shortage of drivers needs immediate attention.”

Often regarded as a bellwether for activity in the wider economy, the logistics sector is perhaps unsurprisingly concerned about Brexit. However, the study showed two thirds of respondent companies said they have taken no formal measures in post-Brexit planning, limiting their response to internal or informal discussions or action to address potential challenges as the UK edges closer to its departure, despite almost half (48.9 per cent) of respondents more pessimistic about the outlook for the industry than they were in 2016.

While companies seem to point to a tough year ahead, there is a spirit of adaptability and tenacity to make the most of the business climate in the coming year. Brexit is likely to bring reduced competition from EU companies and the potential benefits of technology could suggest there are still possibilities to win new business and improve revenue.