Logistics Leaders Report Cautious Optimism Despite Increased Labour Costs

There is cautious optimism for the year ahead in the UK logistics sector, and consolidation through merger and acquisition (M&A) activity is deemed likely or very likely, according to the "UK Logistics Sector Mergers and Acquisition Index 2025", one of a suite of "Insight Reports" published by Logistics UK as part of its Executive Membership programme for leaders in the industry.

The report, co-authored by RPG Crouch Chapman and Logistics UK, in conjunction with independent logistics research firm Analytiqa, analyses the opinions of more than 100 senior-level logistics professionals on M&A activity and general sentiment surrounding consolidation in the sector. The analysis shows 2025 marks a return to positive sentiment for the industry concerning consolidation and reveals an M&A Index score of 50.2 (a score above 50 indicates positive sentiment1), compared with the 41.9 score recorded in 2024. However, the overall improvement in positive sentiment is tempered by the revelation in the report that 72% of respondents cite increased labour costs as having a significant, negative impact on company performance.

Logistics UK President Phil Roe says, "In the 12 months since we commissioned the last UK Logistics Sector M&A Index report, we have seen the UK's first change of governing party in 14 years and elections in several other major economies. In this politically volatile environment, one would expect some impact on M&A and this is reflected in our findings, with more than one in six respondents (17%) reporting they are awaiting clarity on government policy as a reason for not undertaking M&A activity in 2025. However, despite the need for further clarity on government policies and the threat of rising labour costs, it is encouraging that business sentiment is overall positive and significantly more positive than last year."

The report shows M&A activity in logistics has increased over the last 12 months with more than one in five respondents (23%) undertaking M&A compared with 19% reporting M&A activity in the 2024 report. In addition, 21% of respondents reported they had undertaken M&A activity which had either been aborted or not completed but despite this, most (94%) consider consolidation is likely or very likely to continue over the next 12 months.

The report also examines company valuations, revealing almost half of respondents felt those in the logistics sector had either decreased slightly (32%) or significantly (12%) over the last 12 months. Mr Roe suggests this reflects the sector settling into a "new normal" post-COVID: "There is a perception that businesses were overvalued during the pandemic, as the unique circumstances faced by our industry skewed profitability. The sense now is that we have entered a period of more realistic pricing and our research indicates that the trend for consolidation seems likely to increase."

"UK Logistics Sector Mergers and Acquisition Index 2025" is available exclusively to Logistics UK Executive Members as part of their membership, but a summary of the report can be downloaded here: "UK Logistics Sector Mergers and Acquisition Index 2025 - Summary". The report's findings were also presented at a members webinar, discussed on Leading on Logistics, a podcast series for senior leaders, and provided the theme for a recent Executive Membership dinner, one of several dinners for executive members held across the country providing the opportunity to meet with their industry peers and discuss the key challenges facing the sector.

Logistics UK is one of the UK's biggest business groups, representing logistics businesses which are vital to keeping the UK trading, and more than seven million people directly employed in the making, selling and moving of goods. With a history stretching back more than 130 years, and unrivalled understanding of the pressures and strategic challenges faced by the industry, Logistics UK established the Executive Membership for the leaders of this vital business sector to keep abreast of strategic issues and network with their industry peers. 

For more information about the organisation and the Executive Membership programme, please visit https://logistics.org.uk/executivemembership/