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End-of-year review: Transport & Logistics

Gov Kandola, Head Consultant for our Transport & Logistics team, offers his take on the year in his sector

 

In transport and logistics, things move fast – and I’m not talking about vehicles or cargo...

 

Dad jokes aside, a lot has happened this year, and I’m keen to share my take on the key trends in my sector, what these mean for talent, and what the future holds. Read on to find out more!

 

What happened in the logistics industry?

Global instability continues to affect the logistics space. With their supply chains already under strain post-COVID, logistics companies have been further hit by the effects of dramatic spikes in interest rates and inflation, as well as conflict in Ukraine and the Middle East. Of course, inventory levels that were boosted during the pandemic will go down at some point, and inflation is also dropping from the highs we saw last year. When the global picture settles down, I’m confident that the logistics industry will thrive again.

 

It’s worth mentioning that while ocean and air freight have suffered, trucking is doing comparatively well; companies using integrated systems for shared truckloads are showing new ways for the industry to innovate sustainably. Having said that, there hasn’t been much spending in the industry lately; instead, key investments are being prepared for the latter half of next year. Logistics companies are increasingly looking at areas to improve on, such as automation, real-time tracking for supply chains, and digital transformation, that will help to increase efficiency. At the same time, there’s also more demand for niche sectors like cold chain solutions, which boomed during the pandemic given the need to transport pharmaceuticals in bulk. Many businesses that invested in this area have done well, but it’s still quite new and there’s a shortage of talent to really drive innovation there at present. Clients have been approaching us to understand this side of the market, as well as to get a sense of where its key talent is located.

 

Succession planning a central concern

 A big topic I’ve seen across the board in transport and logistics this year is the need for succession planning. This is a real focus for many businesses, particularly at executive level but also in positions just below, such as vice presidents. There simply isn’t enough senior talent in the industry at the moment; many firms are struggling to find future leaders. If senior figures leave, or approach retirement age, it is more important than ever for companies to have capable candidates able to step up from the lower ranks.

 

Transport updates

As for transport, booms in both infrastructure and sustainable development have meant that many businesses in this space have thrived. The explanation partly comes down to an increase in passenger numbers boosting revenue, and – in some cases – more government investment. Many firms are pushing to ensure they’re in as good a position as possible to make the most of the public money on offer. Mobility industries like rail used to struggle for talent compared to, say, aviation – but there’s probably never been a better time than now to join the transport industry given the exciting plans that are being approved all over the world, particularly stateside.

 

Businesses that are doing well are anxious to find strong talent to maintain their position. Where rail businesses used to struggle to match the salaries offered in the aviation industry, now train companies are competing against each other to attract talent. They often have a hard time gauging the going rates for salaries and bonuses in this sector, though we have recently undertaken several benchmarks for businesses to understand how they compare to direct competitors and adjacent industries.

 

How did private equity in transport and logistics fare?

In private equity (PE), meanwhile, the first half of the year was very slow. Everything was dictated by interest rates and inflation, making it very difficult to borrow money. As a result, many businesses couldn’t make their deals happen and, with M&A activity also down on previous years, PE funds held onto cash rather than risk seeing it become over-inflated. The picture has brightened over the past few months, however, with firms looking to make strategic acquisitions. Falling interest rates have been positive for businesses within this space, but with many organisations still struggling to keep pace with the hikes in rates, we’ve seen cash-poor companies actively looking to be bought out by private equity funds. Acquiring within the wider transport space has been more difficult than in logistics, where trucking and trailer leasing have increased; I’ll be curious to see how this one plays out over the next twelve months.

 

So, just what else might happen in 2024?


 

Predictions for next year

I imagine we’ll see a big increase in sustainability roles in 2024. Activity in this space picked up in the second half of this year; a lot of businesses that hadn’t done so already began to think about this. In many cases, organisations that have been influential in setting net zero targets received hefty investments on the back of their sustainability commitments – without having specialised teams in place. Often, individuals who were interested in sustainable practices moved internally within their companies; now, businesses want experts, people with dedicated experience in sustainability and/or regulatory affairs to engage with directors on critical environmental, social, and governance (ESG) matters.

 

Having a central team to monitor net zero targets is extremely important; it allows the organisation to track progress and keep up with timelines in place to meet sustainability goals and genuinely bring about change. This will only go so far, however. The Chief Sustainability Officer needs a direct line to the CEO and the board of directors to ensure that they have a voice within the company. This year, I’ve had plenty of conversations with businesses to help them in this area, as it’s a topic of increasing concern; with carbon emissions from transport and logistics companies traditionally being high, regulatory bodies are looking into Scope 1, 2, and 3 emissions in earnest. They have the data to back up their research, and companies that do not comply risk hefty fines. Some businesses have tried to get out in front in their attempts to tackle the problem: DB Schenker and their use of sustainable aviation fuel springs to mind. AI, which is already such a huge talking point in transport and logistics, will likely come to the fore here as well; I’ve already noticed an uptick in the number of businesses vocally supporting its use for tracking emissions. I think this will take off in earnest in the second half of next year, when the importance of sustainability will be well and truly on the strategic agenda for businesses in the transport and logistics space.

 

As for mobility investment, a huge increase in commercial talent is necessary, along with an evaluation of the operations vertical. The pool for operations candidates is ageing across the industry, and we’ve not really seen new individuals coming through in numbers. Transport businesses would be well advised to get more people involved in this space – particularly younger individuals, rather than those at the end of their careers.

 

Finally, I think we’ll see automation in logistics pick up yet more given what a huge topic it is and how much scope there is for expansion. Separately, we will likely see more attention on commercial efforts from transport and logistics companies alike. Talent for sales, revenue, and pricing will be needed – in rail, for example, ancillary revenues and partnerships for long-term profitability strategies are very much part of the conversation. The US will be interesting to watch: Amtrak’s new CCO and EVP, Elliott Hamlisch, has a background in hospitality and may well use his expertise to push the company’s commercial offerings. Elsewhere, Metrolink have been taking steps to improve their customer experience – and with the L.A. Olympics little over four years away, more and more people are thinking about CX and marketing to engage with residents and passengers alike.

 

It’s been a fascinating year, and I look forward to more of the same in 2024!

 


If you need help with executive talent solutions in the transport and logistics sectors, please don’t hesitate to get in touch.

 

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