L&D sector sees shift to upward trajectory

Logistics and Distribution sector services include organisations providing transportation, distribution, and wholesale services as well as supply chain and freight arrangement solutions. The sector’s index score stands at 126 (normalised to the base year of FY19 = 100), up from 125 last year. The most significant improvements have occurred in growth and productivity dimensions, primarily driven by the restructuring of global supply chains to address tariff barriers and increased technology adoption.

Logistics and Distribution sector performance, by dimension, is as follows:

• Growth: Revenues in the Logistics and Distribution sector normalised in FY24, with moderate growth driven by ocean and air freight demand in Asia. However, cost inflation tempered year-over-year EBIT growth, although this was partially offset by price increases and disciplined cost management.
• Profitability: Price increases bolstered gross profits, partially offsetting service cost inflation and resulting in only slight margin compression. In addition, efficiency gains and strict cost-control measures further helped maintain bottom-line profitability despite high overhead expenses.
• Productivity: Previous investments in productivity-enhancing technology boosted revenue per employee metrics despite stable headcounts. Additionally, firms are making a shift towards asset-light models, concentrating on value-added services to enhance efficiency and scalability.
• Cash flow: Significant capital investments in digitalisation and integration initiatives slightly reduced operating cash flow ratios, while quick ratios fell due to growth in vendor payables and short-term debtors surpassing temporary cash conversion.