The latest UK Logistics Confidence Index reports of intensifying competition in the sector with 53 per cent of businesses reporting that all new business won in the past six months has come from new customers switching from others service providers.

The bi-annual index, commissioned by Barclays and Moore Stephens, also shows that nine per cent of operators say their main source of new business has come from customers renewing existing contracts, a drop of 10 per cent since the last survey in H2 2014.

More encouragingly, a third of firms say that current customers expanding has been their primary source of new contracts.

Many respondents point to over-capacity in the market, combined with price challenges from larger multi-national providers for the increase in competition.

Operators also point to a continuing squeeze on prices by customers as well as competitors.

The survey results suggest that major retailers and manufacturers are increasingly likely to shop around to meet their price and service expectations, rather than renewing contracts automatically with the result, that for many respondents, customers’ pricing expectations are becoming increasingly demanding.

However, despite these pressures, confidence in the sector remains steady with 37 per cent saying that business conditions are somewhat more favourable compared to the previous six months; an increase of 25 per cent since the beginning of 2012.

The outlook for the next six months is similarly confident with 79 per cent expecting the outlook to improve or stay the same and 55 per cent looking to increase headcount.

John Union, Head of Corporate Banking, Barclays Wales region, which covers the Gwent area, said: “The high level of planned capital expenditure is welcome news for the industry and reflects the sector’s pressing need for investment in technology, particularly IT, in order to drive greater efficiencies, productivity and to improve service.

“Such investment is critical to winning new business and with margins increasingly being squeezed, the survey would suggest that operators are looking to invest now in order to realise the rewards to be had in this vitally important business sector.”