Economic uncertainty and geopolitical instability have dented optimism in the UK logistics sector, with confidence falling to its lowest level in 14 years – new research finds.

According to the Barclays-BDO UK Logistics Confidence Index 2025, which assesses confidence and expectations in the UK logistics sector, this year’s score is 40.4, down from 57.6 in 2024. This is the lowest score recorded since the research began – significantly below the previous Covid-related low of 47.1 in 2020.

The decline in sentiment has been attributed to the significant challenges facing logistics operators as a result of higher costs, sluggish GDP growth, cautious consumers, as well as geopolitical tensions. The report shows that nearly seven in 10 logistics operators think current trading conditions are more difficult than last year, with half of respondents (52%) expecting business conditions to remain tough in the next 12 months. While more than half (56%) still expect to increase turnover, this is the second lowest percentage on record and could be largely driven by price increases. As part of a longer-term downward trend on profitability since 2021, 62% of respondents expect lower profits.

The latest research from Barclays Corporate Banking and accountancy and business advisory firm BDO LLP, highlights a polarisation in the market between those operators able to invest in future-proofing themselves and a long tail of smaller operators who are focused on just getting by. Nearly nine out of 10 business leaders plan to reduce costs over the next 12 months, with 48% of respondents saying it’s ‘unlikely’ they will make significant capital expenditure in the year ahead.

Jason Whitworth, partner at BDO, said: “There are many logistics businesses that are fulfilling their potential and performing well, with positive steps being taken to drive change across the sector. However, our analysis reveals an unprecedented level of uncertainty. This has naturally generated real frustration, with a series of roadblocks to growth leaving many feeling under pressure.

“Despite a drop in sentiment, what our research repeatedly shows is deep-rooted resilience in the sector and an ability to bounce back from adversity, as we have seen time and again over the many years of tracking industry sentiment. Those that continue to embrace change through the likes of AI and automation will be ready to take advantage of an economic upturn and will come through the current economic challenges.”

Interestingly, given the focus on cost control measures, working with younger people and improving pay and conditions are cited as the most important ways of addressing the sector’s skills shortage. Cutting costs and improving margins will also lead to greater collaboration in the industry, with logistics leaders highlighting opportunities through shared transport and warehousing, especially for domestic inbound logistics, which can be particularly beneficial for smaller operators.

The research also shows that only a quarter of respondents say they have engaged in M&A in the past year. However, there is slightly more appetite for M&A over the next 12 months, with nearly a third (30%) likely to make an acquisition.

In relation to driving sustainable change, according to the Barclays-BDO UK Logistics Confidence Index 2025, this has slipped down the agenda, with only a quarter (25%) viewing it as a priority, with the ability to finance any desired changes being a significant barrier.

James Lean, Industry Director, Barclays UK Corporate Bank, said: "Leadership teams across the transport and logistics sector have demonstrated impressive resilience in the face of recent challenges, from fluctuating demand and global supply chain pressures to rising costs. Many operators are still forecasting revenue growth - a good sign of the sector’s strength and adaptability.

"Innovation is accelerating across the industry, with digital transformation, automation, and strategic investment opening up opportunities for growth. Larger firms are leading the way, while collaboration with SME and regional operators remains vital to the sector’s continued success. At Barclays UK Corporate Bank, we’re proud to partner with businesses of all sizes, providing the tools and funding they need to invest, innovate, and build stronger foundations for the future. Together, we can help the industry stay agile and seize the opportunities ahead."

Barclays and BDO's data shows that many logistics providers remain confident in their ability to adapt to trading challenges and emerge stronger - particularly those investing in innovation and positioning themselves for future growth. The research indicates a widening gap between operators focused on long-term resilience and those managing short-term pressures, which may accelerate industry consolidation. The relative stability of the UK economy compared to other G7 nations offers a degree of reassurance. With a strategic focus on service quality and targeted market engagement, logistics businesses continue to find opportunities for success.