Feel good can still be a factor, insists UKWA

While predicting what 2012 has in store for the UK 3PL sector is far from straightforward, it is important that the industry does not allow itself to be overwhelmed by the almost daily utterances of despondency emanating from our politicians and economists, says UKWA’s Roger Williams

Iremember vividly the announcement that London had won the bid to hold the 2012 Olympic Games. It took place at 12.30pm on the 6th July 2005. It was the day UKWA held its annual luncheon and awards, and we were just about to take our seats for lunch.

The news was received with a sense of excitement and achievement by most of us, and despite the economic backdrop, our preparations seem to have progressed as planned, and on time. I have never held a negative thought about the UK hosting the games. I remain convinced that the short term shot in the arm that the Games will bring to the domestic economy will be timely and significant. I am also sure that the Games will provide a lasting and productive legacy. Let’s hope it also brings a bag full of medals for Great Britian’s athletes.

Predicting what is going to happen in the third party logistics sector in the months ahead is rather more problematic than forecasting the numbers of medals that Team GB is going to win in the summer, and very much more important.

During the last three years we have seen a small net growth in UKWA membership numbers, but a slightly higher churn rate. That means we have recruited more, and we have lost a little less. Our losses are largely out of our control, with the majority caused by companies ceasing business or merging with others. That recruitment and retention record might indicate that the 3PL sector is swimming blithely through the rough waters of the economy and more empirical evidence gathered from UKWA member companies would support that view.

One manufacturing company that supplies products to the warehousing industry reports that 2011 was its best year ever. Another has recently taken on more staff enabling them to manufacture seven days a week, and is in the process of putting on a night shift to cope with the demand for its storage products. Anecdotal evidence gathered from 3PLs suggests that, for the overwhelming majority of companies, 2011 was a year which either reached or exceeded their expectations.

There is a also a school of thought that contends a sustained period of economic hardship could have positive implications for the third party logistics and storage industry â€" particularly those companies who stay positive and entrepreneurial in their outlook. When companies come under pressure to cut costs, the argument goes, the services offered by the 3PL sector become even more attractive.

If the economy declines as forecast, companies that have operated their own storage facilities or distribution operations will come to see warehousing and transport as a very high fixed cost. By offering flexibility and the chance to reduce assets those 3PLs that have optimised their own businesses, will be able to put forward an even more compelling business argument for outsourcing.

As a result, companies that have historically been reluctant to outsource may well be tempted to do so, as the real bottom line benefits of switching to a 3PL become ever more obvious.

That said, I think it is true to say that collectively, the membership of UKWA is cautious, and I have no desire to offer a ‘hostage to fortune.’ The fragility of the global economy in general, and the specific political and economic threats to Europe provide a daily reminder of the seriousness of the current situation. But, I just wonder whether we are being too cautious when there is clear evidence of success.

Good news stories provide a ‘feel good’ factor, and confidence can be a very powerful tool. Let those of us that operate in the ‘real economy’ not allow ourselves to be overwhelmed by the almost daily utternaces of despondency emanating from our political leaders and the various economic soothsayers that advise them. After all, history shows, that their forecasts have been hopelessly inaccurate in the past.