Results also point to a decline in expected trends for Q4, with road congestion and delivery times, and cost of living expected to worsen over the next three months.
The LPT monitors the performance of the industry each quarter. Covering the third quarter of the year, the LPT measures the sentiments of over 200 businesses across the wider logistics sector. When asked about other expected trends, responses referred to EU Exit-related border controls, customs requirements, recruitment challenges, fuel price volatility, shortages of diesel vehicles and vehicle technicians, and a lack of government strategic planning, contributing to significant delays.
The survey results come after the Autumn Budget was published, which outlined that employer’s National Insurance Contributions (NIC), and National Living Wage (NLW) will change from April 2025. Changes will increase operational costs significantly for logistics companies from April 2025.
While removing the employment NIC allowance threshold and increasing the allowance to £10,500 has been welcomed by industry, increasing the rate paid to 15% and tightening the per-employee threshold to £5,000 will increase costs.
Logistics UK estimates that if the increase in employer National Insurance contributions was to be absorbed completely by logistics employers, it would lead to a £1.7 billion cost burden, which would be the equivalent of over 42,000 employees.
The increase in the National Living Wage to £12.21 per hour will also increase costs, particularly for those with a higher proportion of lower paid workers. To mitigate against rising costs, in Q4 2024 certain strategic actions are more likely to be implemented by logistics companies.
Survey findings also highlight how businesses are planning to diversify and take work back in-house, indicating strong interest in strengthening internal capabilities and reducing dependency on external partners. Looking at supply chain issues, over the past three months increases in transport costs were reported, likely driven by persistent inflation and fluctuating fuel prices, along with challenges around delays in receiving parts.
In line with previous LPT surveys, the majority of respondents do not expect to invest in warehouse expansion in the next quarter.
With regards to staffing levels, logistics staff turnover over the past six months shows different patterns across roles. HGV drivers had a relatively low turnover rate of 2.7%, possibly due to specialised training and licensing requirements, which create stability but also limit quick replacements.
In contrast, van drivers had a slightly higher turnover of 3.8%, reflecting the often strenuous and low-entry barrier nature of the role. Fitters, mechanics and technicians experienced the highest churn rate at 8%, likely due to competitive demand for skilled technical roles in other industries.
The data also shows that only 2.3% of HGV driver hires were newly qualified, with a 0.3% redundancy rate, indicating limited influx of new talent and low redundancy, likely due to steady demand for logistics professionals despite economic fluctuations.
Whilst staff churn rates are varied, there are also mixed responses around filling vacancies, with particular concerns over recruiting for fitters, mechanics and technicians, where 51.8% of respondents report severe to very severe problems.
HGV drivers also face notable recruitment difficulties, with one-fifth experiencing severe issues. In contrast, roles such as forklift drivers and van drivers are easier to fill, with 47.3% and 38.9% reporting no problems, respectively.
The findings indicate that specialised technical roles and jobs requiring specific qualifications, such as mechanics, are more challenging to fill due to a shortage of skilled workers.
In contrast, more general roles like forklift drivers and warehouse staff are comparatively easier to recruit, as they typically require less specialised training and have a larger pool of potential applicants.
Logistics UK will be launching the annual Logistics Industry Survey in January, which alongside national statistics, will shape the highly anticipated Logistics Report.
If members are interested in completing the Logistics Industry Survey once live, or have any questions, contact the Policy Information team.
