Logistics Performance Tracker

The Logistics Performance Tracker (LPT), based on responses from approximately 200 logistics companies, offers an overview of the sector’s performance and outlook from the first quarter of the year. It also includes expectations for the sector’s performance in the near term.

The UK economy showed modest growth in Q1, with GDP rising by 0.7%. However, this strong start to the year appears to be short-lived. Early estimates for April suggest a 0.3% contraction, largely driven by the introduction of significant US tariffs on global imports. These tariffs, coupled with escalating tensions between the US and China, have disrupted international trade flows, particularly affecting UK exports. As a result, logistics companies are more pessimistic about the economic outlook for the six months ahead, with the average falling to 3.7 out of 10, which is the lowest since Q3 2023. Despite this, business confidence remains relatively resilient at 5.7 despite falling from the previous quarter, and financial health is stable at 7.1, suggesting that many firms are weathering the storm for now.

The global geopolitical landscape has reversed earlier expectations of easing supply chain pressures. Renewed conflict in the Middle East and the ongoing US-China trade war have delayed the recovery of shipping volumes through the Suez Canal. These developments have driven up transport costs for 65.5% of respondents and caused delays in spare parts delivery for 52.6%. However, there are some reasons for optimism in the sector, with reports of extended EU delivery times and UK border disruptions declining significantly, indicating improvements in logistics flows with our closest neighbours and improved efficiency at our borders.

Looking ahead, companies expect further deterioration in Q2, particularly in the cost of living, availability of goods from China, and vehicle parts supply. Freight volumes and kilometres travelled are also expected to decline, reflecting growing caution in the face of trade uncertainty. Domestic freight rates are expected to rise by 2.6% in Q2, with international rates close behind at 2.4%. Warehousing costs are also expected to increase by 2.4%, driven by heightened demand and hesitancy to move goods amid tariff uncertainty. In part due to these rising warehousing costs, only 16.7% of companies plan to expand warehouse space this year. This suggests a cautious investment climate, with many firms opting to wait for greater clarity on trade conditions.

Innovation remains a critical focus for the sector, particularly as the industry moves towards net zero. Respondents rated innovation’s importance at 7.4 out of 10, though confidence in the sector’s innovation performance has dipped to 5.6, down from 5.8 last year. The top innovation priorities for logistics businesses include fuels, decarbonisation and sustainability (23.6%), route planning and traffic flow (21.8%), and infrastructure (12.7%). Barriers to innovation include high costs, integration complexity, regulatory uncertainty and skills shortages.

Staffing is still a critical issue, particularly for technical roles. Over 57% of companies reported severe difficulties filling fitter, mechanic and technician vacancies. In contrast, van and HGV driver shortages have eased, with only 14.5% of companies reporting severe HGV driver shortages, which is down from 20.3% at the end of 2024.

The April 2025 Budget introduced changes to Employer National Insurance Contributions, adding further strain to already tight margins. Nearly a quarter of companies (24.3%) are passing these costs onto customers, while others are freezing pay or delaying recruitment.

The first quarter of this year has highlighted the resilience of the UK logistics sector amid mounting global and domestic pressures. While financial health of businesses remains stable and demand persists, the outlook for Q2 is cautious. For logistics leaders, the path forward will require strategic investment in innovation, proactive workforce planning and agile responses to evolving trade dynamics.

Logistics UK has now launched the next Logistics Performance Tracker survey, which will form the basis of the Q2 2025 version of this report. If you are interested in completing the Logistics Performance Tracker survey, or have any questions, please contact the Policy Information team. 

Published On: 17/07/2025 15:00:00

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