The logistics and storage sector continues to face considerable upheaval. Returns generated to shareholders (TRS) are, in some cases, as much as 30% less than the cost of capital, in this asset intensive sector fixed procurement cycles don’t always marry with predictable demand, volatile demand necessitates flexibility from those assets, especially buildings, vehicles and people, customer loyalty is thin and competitors wait ‘vulture-like’ to exploit a simple error and finding new customers to fuel organic growth is expensive and time-consuming. M&A has its place but doing so is more to do with accessing embryonic markets and the capabilities to exploit them than gaining bulk purchase privileges from scale.

Ambitious owners, leaders and investors can blend these ingredients to create a potent cocktail that has a good chance of outperforming the market but it will require astute judgement to do so. An ‘in-series’ approach to the following would be a good start but, resources permitting, ‘in-parallel’ would be better;

• Use sophisticated approaches to branding and communications to differentiate from competitors, confidently attract larger customers and drive a culture devoted to uncovering operational efficiencies.
• Develop the capability to identify, execute and integrate attractive acquisition targets.
• Use alliances to access new markets and accelerate capabilities in cost-effective ways.
• Build ‘top table’ capability to manage increasing uncertainty, especially around the issues that threaten value-creation e.g. regulation & compliance, external affairs and labour trends.
• Don’t just ‘add digital’ to existing processes to keep-up with customer-expectations, competitors and shareholders, use it strategically to drive core operational efficiencies, get closer to customers and acquire unique data to inform decisions.
• Resolve the asset conundrum with innovative approaches to procurement cycles, asset-pooling, recruitment, alliances and collaborations.

Where are you going to start?

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