More focus on operational challenges due to Covid-19

The UK logistics industry has seen a 50% fall in activity in Q2 of 2020, despite notable transactions.

Transaction volumes across the logistics industry have fallen by 50% according to national accountancy and business advisory firm BDO LLP.

The ‘UK Logistics: Building Resistance’ report revealed that eight deals were completed from April to the end of June 2020 (16 in Q1 2020), with the overall half-year figure also down by a third compared to H1 2019. Disclosed values for deals in Q2 sat at £131 million, £79 million lower than the value recorded between January and March 2020.

However, despite a fall in transaction volume, there were notable deals, including the £98 million acquisition of Fowler Welch by Culina, the acquisition of Return Loads by Mandata, and Connexus by Addesecure, which all underpin the core drivers for M&A activity.

The report also highlighted that the BDO Logistics FTSE Index and the FTSE All Share Index have both rallied at the end of July 2020, recovering to 17% and 19%, respectively, against levels 12 months ago.

Jason Whitworth, M&A partner at BDO LLP, said: “The BDO Logistics FTSE Index fell by over 40% in March this year, reflecting the global level of disruption to trade routes and the direct impact of this on the sector.

He added: “The impact of lockdown was significant for many, whilst some, specifically those servicing the accelerated shift to e-commerce and the online move in food retail, have benefitted.”

Whitworth explained that as the pandemic unfolded, businesses focussed on their own operational challenges, which led to a fall off in M&A activity in Q2.

He continues: “Businesses will need to understand and adapt to the longer-term economic and operational impacts.”