Key findings from the transportation & logistics industry

20th CEO Survey

Optimism tempered by challenges on the road ahead

Transportation & logistics CEOs’ confidence is declining. Over-regulation and geopolitical uncertainty continue to be among their key concerns. But this year, uncertain economic growth and protectionism, too, are chief among the threats that they see. Digitisation and technology capabilities are high on their strategic agenda. So, attracting the right talent will be a key challenge to sector companies.

Globalisation disrupted?

T&L CEOs’ confidence in global economic growth has further decreased, a trend we’ve been observing since 2014. Only 22% are very confident (2016: 36%).

Most CEOs across all industries expect the world to move towards nationalism and regional trade blocs rather than political unions and a single global marketplace. Some major trade agreements like TTP or TTIP seem to fail and world trade continues to grow more slowly than world GDP.

Transportation and logistics, a business fuelled by global trade, is naturally affected by these trends, making CEOs cautious about their own growth prospects. Only 32% are very confident about their own company’s prospects for revenue growth over the next 12 months, down from 36% in 2016 and considerably below their global peers (38%).

Backlog in digital and technology?

In order to capitalise on new opportunities, 20% of T&L CEOs want to strengthen their companies' digital and technology capabilities. They regard this as more important than innovation (12%) or human capital (13%).

Our research has shown that many industry players are lagging behind in digitisation and the application of new technologies. But it may not yet be too late: According to T&L CEOs, technology seems to have influenced competition in T&L less than in other industries over the past 5 years. But when it comes to the role of technology in the next 5 years, most T&L CEOs (75%) share the views of their peers in other sectors that technology will significantly impact or completely reshape competition.

The right talent on board?

Only 17% plan to cut their company’s headcount over the next 12 months – and only 21% say it’s primarily because of technology. Conversely, more than half of all T&L CEOs plan to hire more employees.

Given the importance of digital and technology capabilities, it appears somewhat surprising that digital skills don’t make it to the top 5 skills that T&L CEOs regard as important for their organisation. Instead, problem solving, adaptability, leadership and creativity and innovation are paramount – skills that can’t be replicated by machines.

Nevertheless, 74% regard digital skills as somewhat or very important, and every second T&L CEO says it’s somewhat or very difficult to recruit people with digital skills. So, attracting the right talent will be crucial.

What is on the minds of China and Hong Kong CEOs for the year ahead?

The Chinese economy continues to undergo complex structural reforms to ensure balanced and steady development and growth. Business outlook for executives in China appears quite positive. To achieve this growth, numerous challenges combined with global economic uncertainty have to be overcome. Intense industry competition, the pace of technological development, changes in consumer spending and behaviour, difficulty with recruiting employees with advanced skills and lack of trust in business were cited as main threats to growth prospects.

Business leaders today have a great opportunity and responsibility to lead through the disruptions by demonstrating purpose and increasing trust. Find out more from our China report: Leading through disruption.

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Alan Ng
China and Hong Kong Transportation and Logistics Leader
Tel: + (852) 2289 2828
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