CBRE Ireland’s Logistics Confidence Index 2021 reports drop in Supply Chain confidence

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‘This year’s report provides a great insight into how the logistics sector has performed over the last 12 months, as well as an indication of the biggest challenges facing this sector of the economy over the year ahead’

Commercial property specialists CBRE Ireland and the Freight Transport Association of Ireland (FTAI), in conjunction with specialist sector research agency Analytiqa, have published the sixth in a series of annual surveys to assess confidence and expectations in the Irish logistics and supply chain sector. This survey mirrors similar analysis undertaken by Analytiqa in other countries on this specialist sector of the economy.

This year’s survey reports a decrease in confidence amongst supply chain professionals across the island of Ireland, an entirely expected outcome according to CBRE, as last year’s results were calculated just prior to the onset of the global Covid-19 pandemic. One year on, and the ramifications on supply chains – and especially international trade – remain.

Over 50 senior decisionmakers expressed their views and insights to facilitate this important industry research. Respondents included CEO’s, Managing Directors and senior management of some of the largest logistics providers and buyers of supply chain services across the island of Ireland. Respondents were asked about current business conditions and forecasts for the future. They expressed their views on growth plans of their companies in terms of anticipated changes in turnover, profitability, logistics and supply chain related capital expenditures and expected changes to employment. Respondents shared their opinions on key issues such as Covid-19, Brexit, logistics property requirements, Ecommerce business, innovation and technology, skills shortages and sustainability and environmental issues.

According to Garrett McClean, Executive Director, Head of Industrial & Logistics at CBRE Ireland, “Despite the global pandemic, national lockdowns and concerns about the potential effects of Brexit, which negatively impacted some sectors of the Irish commercial property market last year, the industrial & logistics sector continued to flourish throughout 2020 and the early part of 2021, with structural trends supporting both occupier and investor demand for industrial & logistics real estate. In fact, a combination of lockdown and Brexit-related uncertainty stimulated an increase in Ecommerce and data centre activity and necessitated the reconfiguration of supply chains, which in turn fuelled demand for facilities in this sector of the market. From a property perspective, the biggest challenge continues to be the ability to source modern logistics product for occupiers and investors alike. Despite this, the prospects for this particular sector of the property market in 2021 are very encouraging. This optimism marries with the overall sentiment of this year’s Confidence Index, which points to huge opportunity in the year ahead”.

Reflecting the ongoing disruption to international trade and global supply chains, 60% of logistics operators stated that they are reacting to changes in their customers’ international supply chains (such as the near-shoring of production or sourcing of materials), while 17% of manufacturers and retailer respondents suggested they are making structural changes to their international supply chains in response to the pandemic. The pandemic also appears to be accelerating shifts towards more digitally enabled, technology-driven supply chains. Just under one-half (48%) of logistics operators suggest that Covid-19 has prompted greater use of and/or more investment in technology to drive efficiencies in their business, whilst 39% of manufacturers and retailers have taken the same approach.

Overall, 87% of respondents stated that they have had to manage operational delays in their supply chains as a result of Brexit, a challenge encountered by 84% of logistics operators and 91% of manufacturers and retailers. Almost two-thirds of respondents (62%) suggested that they have been challenged by the lack of preparation or readiness of their supply chain partners. The ‘blame’ for such issues appears to be equally distributed, with 60% of logistics operators and 64% of manufacturers and retailers identifying such challenges. Just under one-half (47%) of companies (36% of logistics operators and 59% of manufacturers and retailers) have been challenged to identify new optimal supply chain solutions for international trade lanes and export markets as a result of the post-Brexit trading arrangements, whilst from an administrative perspective, 43% of companies (48% of logistics operators and 36% of manufacturers and retailers) have encountered difficulties in getting access to customs agent expertise.

According to Aidan Flynn, General Manager of the Freight Transport Association of Ireland “The resilience of the Irish supply chain, faced with so much disruption because of the decision by the UK to leave the EU (five years ago) and the coronavirus pandemic that swept the world in 2020, must be recognised and applauded. The key to Ireland’s future competitiveness will be quality and volume of services to continental Europe that can preserve the benefits of the customs union and single market by limiting the administrative burden and delivering frictionless access to the European market. In tandem, the Covid-19 recovery will see passenger movements recommence on the Irish Sea and this will have the bonus of supporting the logistics sector reconnect with the Landbridge.”