< Previous20 Business Link www.blmforum.net FREIGHT, STORAGE AND MOVEMENT remain safe. The Panama Canal has also presented recent challenges. Persistent drought conditions have curtailed the number of daily vessel crossings, with only 24 vessels permitted to navigate the canal each day, a significant decrease from the usual 36. This limitation in crossings has translated into extended transit times and heightened costs for cargo voyaging from Asia and the Indian Sub-Continent to the US East and Gulf Coasts. The resulting backlog has led to potential delays exceeding 20 days as vessels await their turn to cross. With each passing day of delay and disruption to schedules, the available capacity in the market continues to dwindle, precipitating a corresponding rise in rates. Although ocean freight rates have indeed experienced noticeable increases, they pale in comparison to the height of the Covid-19 pandemic, providing hope in today’s climate. At its peak, rates for 40-foot containers bound from Asia to North Europe and the Mediterranean soared to around $15,000, while those destined for North America surpassed the staggering mark of $20,000. The ability to reduce the impact of such lengthy disruption in 2024 demonstrates the resilience and adaptability of the global freight network. Turning to air cargo, a resurgence is on the horizon following a slow 2023, with global growth expected to uplift by 4.5% year-over-year, a significant leap from the -5.0% observed during 2023. This optimistic trajectory encompasses all major regional trade lanes, spearheaded by a robust recovery in the heavily impacted transpacific and intra- APAC routes. Particularly, perishable, and raw materials are anticipated to outperform the global market average. Despite a year of rapid recovery in 2023, global air cargo capacity is www.blmforum.net Business Link 21 FREIGHT, STORAGE AND MOVEMENT projected to plateau or experience a slight contraction throughout 2024, with a notable 6.8% year-over-year increase witnessed in the previous year. Although rates have exhibited relative stability, incremental upticks were observed in the final four months of 2023. As demand continues to outpace capacity this year, rates are poised to remain relatively steady, albeit with anticipated increases, particularly in the latter half of the year. In tandem with these developments, the e-commerce sector shows no signs of slowing down, with an impressive 25% increase forecasted during 2024. This burgeoning volume is poised to command a significant share, accounting for approximately 30% of China and Hong Kong exports in the same year. The area of contract logistics (outsourcing shipping and storage to third parties) is poised for growth. Although only 30% of the market is currently outsourced, this figure is on the rise. While a revised forecast indicates a slightly tempered revenue outlook from 2023 to 2027, the industry maintains a respectable Compound Annual Growth Rate (CAGR) of 4.1%. Anticipated growth for 2024 has been adjusted marginally downward to 3.7%, reflecting the evolving market dynamics. Yet, demand for outsourced logistics services remains buoyant, with 83% of shippers anticipating an uptick in outsourcing expenditures over the next two years. Moreover, 74% of shippers foresee an expansion in outsourcing expenditures, set to reach between 5% and 10% of their current logistics costs. As companies navigate the uncertainties stemming from potential supply chain disruptions and geopolitical tensions, diversification of routes and methods will continue gaining traction to mitigate supply chain vulnerabilities. © stock.adobe.com/hallowenMATERIALS AND COMPONENTS 22 Business Link www.blmforum.net T his year is poised to shine a spotlight on a longstanding challenge – the excessive consumption of virgin materials. Despite concerted efforts by governments worldwide to curb this trend, consumption levels remain stubbornly high, leading to a cascade of waste and heightened emissions. Industry leaders are beginning to pressure manufacturers to act, appealing to their social responsibility to spearhead solutions. Embracing circular practices represents a crucial step forward, setting a precedent for others to follow suit. Whilst regulations may be tightening, manufacturers must take the initiative. Incremental changes, such as prioritizing reuse and recycling over fresh production, can yield significant strides in mitigating the environmental impact. By laying the groundwork for these practices now, the pace can quicken for broader, more transformative shifts in the future. Experts argue that it should not be merely seen as compliance but being proactive in preserving our planet’s resources for generations to come. In fact, structural engineers are increasingly tasked with futureproofing both existing infrastructure and new plans in the face of increasingly erratic weather patterns. With 2023 witnessing a surge in extreme weather events, adapting existing structures to withstand floods, droughts, and other harsh elements has become imperative. With this in mind, sustainability is taking centre stage as the construction industry grapples with its role in combating climate change. With construction accounting for a significant portion of UK emissions, attention must be paid to the four Cs: climate, carbon, compliance, and cost when choosing project materials. trends Material Faced with a difficult few years post-pandemic, the construction industry appears to be on the mend. With the long-anticipated growth in sight, attention has turned to the very foundations of the industry, and how the shifting trends will elevate the quality of outputs and ensure continued industry success. 24 Áwww.blmforum.net Business Link 23 © stock.adobe.com/juniart24 Business Link www.blmforum.net MATERIALS AND COMPONENTS The imperative to integrate these aspects is underscored by the growing demand for data and transparency. As financial institutions increasingly factor climate risk into their decisions, construction projects must demonstrate their green credentials to remain insurable and eligible for loans. Addressing energy consumption, particularly within areas like heavy machinery, will also aid these green initiatives. Implementing effective emission reduction solutions hinges on robust benchmarking practices. As the trade embraces digital transformation, access to data on emissions and operational efficiency becomes more readily available. Closer monitoring of machine metrics offers a tangible solution, enabling companies to identify and optimize fuel consumption throughout project lifecycles. The question then becomes, which materials should be adopted to support these efforts? In discussions surrounding sustainability, the focus often centres on the longevity of materials. However, the maintenance and replacement of building materials are frequently overlooked aspects that can significantly deplete resources. Take roofing tiles, for instance, which commonly suffer from cracking and fading, necessitating frequent attention and upkeep. By blending diverse materials such as asphalt, slate, laminate, tar paper, wood fibres, and fiberglass, manufacturers create synthetic shingles that boast enhanced durability compared to single- material options. These modern roofing solutions retain the essence of their natural counterparts while demanding minimal maintenance, presenting a promising avenue for sustainable construction practices. Similarly, Ferrock is a relatively new building material crafted from a blend of recycled components. During its hardening and drying process, this mixture actively absorbs carbon dioxide, setting it apart from traditional materials like concrete and giving itself those all- important environmentally friendly qualifications. With ingredients such as steel dust contributing to its composition, Ferrock not only mimics the functionality of concrete but also surpasses it in environmental sustainability. This distinctive material boasts a reduced carbon footprint and achieves carbon neutrality, representing a significant step forward in eco-conscious construction practices. By harnessing readily available resources and repurposing waste materials, Ferrock embodies industry drive for sustainability by transforming waste products into opportunities for positive innovation. Although we may not initially think of wood as a sustainable material, the key lies in the wood type. In recent years, bamboo has surged in popularity, particularly in the realm of furniture, thanks to its chic aesthetic. However, its use in construction predates this trend by many years. Unlike traditional trees like pine and cedar, which face challenges in prompt reforestation and limited geographic prevalence, bamboo boasts rapid growth rates. Furthermore, it is a natural choice for construction, with a strength-to-weight ratio that outshines wood, concrete, and brick, alongside a tensile strength rivalling that of steel. Likewise, cork has witnessed a resurgence in demand as a versatile building material with a myriad of applications. Derived from the bark of cork oak trees, cork enhances both aesthetics and functionality in construction projects. One of the unique features of cork oak trees is their longevity, with some living for over two centuries. What sets them apart is their ability to undergo bark harvesting without causing harm, allowing for repeated harvesting cycles. This sustainable practice not only makes cork an attractive building material but also underscores its eco-friendly qualifications, offering a renewable resource that aligns with the principles of responsible construction. Whether adorning walls and facades, providing flooring solutions, or serving as insulation for roofs and ceilings, cork stands as a demonstration of the potential of natural materials in creating sustainably built environments moving forward. Given this heavy focus on new materials, and re-introducing traditional ones, there becomes a pressing need to www.blmforum.net Business Link 25 MATERIALS AND COMPONENTS KIRKBY LINDSEY ELECTRICAL ENGINEERING LTD HULL T: 01482 223937 • E: info@kirkby-lindsey.co.uk ECLIPSE ELECTRICAL ENGINEERING LTD YORK T: 01904 692783 • E: admin@eclipse-electrical.co.uk Experts in the repair, rewind and supply of electric motors, geared motors, pumps & fans. Hazardous Area Motor (ATEX) Repair specialists with fully certified IEC Ex service facility. Visit www.kirkbyeclipse.com for more information. refocus attention on investing in skills, especially within specialized professions. From the craftsmanship of conservation stonemasons and master joiners to the meticulous work of lead workers, gilders, and even cleaners, the talent pool for these niche roles is rapidly dwindling. As the economy shows signs of stabilization and with an imminent election on the horizon, there’s a unique opportunity to reevaluate the priorities of the education system. The atmosphere is perfect for policymakers and industry leaders to collaborate on crafting a viable strategy to address the acute shortages in human resources currently plaguing the sector. Now more than ever, the future success of the construction industry hinges upon proactive measures to nurture and sustain the skills essential for not only continuation, but growth in the face of new climates. © stock.adobe.com/jollier_26 Business Link www.blmforum.net FINANCE Securing funding remains a formidable challenge despite the flourishing digital sector. While crowdfunding may seem enticing, its unpredictability underscores the need for alternative strategies. D espite a thriving digital sector, funding any venture remains a challenge, especially for entrepreneurs seeking to stake their claim in amongst so much variety and a sheer glut of established and new businesses. It may seem that everyone else can fund a start-up these days, as the crowdfunding market continues to flourish as an alternative for bypassing traditional lenders. The sheer unpredictability of this approach of pitching directly to end users, however, means that it’s not a reliable means of generating cash. The allure is understandable, with the number of high- profile success stories behind its perpetual rise in status. But the fact these instances become such keenly shared stories is evidence of their scarcity. For every success, there are dozens of failures, and turning to crowdfunding channels isn’t suited to every sector either. When ideas and innovation alone aren’t crowdfund-friendly or reliable sources for investment, one prevalent strategy for accessing capital is through management buyouts (MBOs), a transaction where a company’s management purchases the assets and operations from the business owners. From a manager’s point of view, an MBO is an attractive option, because it allows them to enjoy the greater The capital conundrum www.blmforum.net Business Link 27 FINANCE control of owning the business rather than serving as an employee. It’s equally advantageous from the seller’s perspective, as this kind of transaction allows corporations to shed divisions that are not part of their core business. For privately-owned businesses, an MBO offers a way out for owners wishing to retire or to take a less hands-on position in the company. A typical MBO will see a management team pooling resources to acquire all or part of the business they manage. Of course, this can’t be accomplished without capital. But solutions such as private equity or calling on angel investors can be used to finance MBOs, or to provide equity capital to support growth plans. As well as wealth, angels can also provide their experience, knowledge, and contacts. Angels are one of the most significant investors in start- ups and early-stage businesses, but that shouldn’t deter more established firms. However, it’s important to bear in mind that securing an angel can be a difficult and protracted experience. They’re harder to research and contact – certainly compared to private equity firms – and so they can seem less transparent. Private equity instead employs a variety of investment strategies, including leveraged buyouts (LBOs), venture capital investments, growth capital, distressed debt investments, and mezzanine financing. Each strategy has its own risk and return potential. In an LBO, for example, a private equity firm acquires a company using a significant amount of debt, which is often secured by the company’s assets or cash flows. It’ll then provide strategic guidance, operational expertise, and access to their network of industry contacts in a bid to improve the company’s operations, increase its profitability, and eventually sell it for a higher price, generating a return for the firm and its investors. A management buy-in (MBI), as 28 Á © stock.adobe.com/Gorodenkoff28 Business Link www.blmforum.net FINANCE opposed to an MBO, requires an external management team securing a company and replacing the existing management team. This can come with several disadvantages when compared to an MBO. In the latter, a pre-established management team takes over the business, meaning they have a much better understanding of that business so there is no learning curve involved, they also already have relationships with that company’s other employees and its customers. An outside management term will need to become acquainted with a company’s operations, as well as build up relationships with clients and staff, all of which takes time. Invoice finance is often the simplest way for businesses to unlock cash tied up in their outstanding invoices. Selling to a third party secures access to funds within a short period, covering some risks associated with late or missing payments up-front in exchange for a cut of the invoice, and providing a lifeline for maintaining healthy cash flow. However, businesses must consider the various types of invoice finance available and choose providers carefully to avoid potential drawbacks such as customer alienation. Asset-based finance is a specialised method of providing companies with working capital and term loans, using accounts receivable, inventory, machinery, equipment, and real estate as capital. This kind of financing is often used to pay for expenses when there are gaps in a company’s cash flows. But it’s also frequently used for start-up company financing, refinancing existing loans, financing growth, mergers and acquisitions, as well as MBOs and MBIs. This financing option won’t be right for every business’s needs, but can be invaluable for bridging cash flow gaps, financing growth, and facilitating mergers and acquisitions, especially for companies that have exhausted traditional lending options. Venture capital investments can be revolutionary to early-stage or high- growth companies, providing critical early funding in exchange for equity stakes. These investments are typically made in startups with the potential for rapid growth and significant returns, and therefore come with high demand for specific criteria and expectations, potentially triggering a major stress load. Peer-to-peer lending platforms take some of the pressure off by connecting borrowers directly with individual © stock.adobe.com/fizkeswww.blmforum.net Business Link 29 FINANCE Understanding the £300 trivial benefits allowance for directors Directors, are you aware of the fantastic £300 trivial benefits allowance? This incredible opportunity allows you to provide tax- free benefits to yourself, with each individual benefit capped at £50, and the total benefits for the year not exceeding £300. Here’s a detailed look at how it works: 1. The trivial benefits allowance enables directors (including those of limited companies) to provide themselves with non-cash benefits worth up to £50 each. 2. You can utilise this allowance multiple times throughout the tax year, ensuring each individual benefit remains under the £50 threshold. 3. Importantly, the total value of all benefits provided in a tax year should not surpass £300. It’s crucial to ensure that the cumulative value of all benefits remains below this threshold. 4. Eligible benefits can include a wide range of items such as gift vouchers, hampers, meals, or even team-building events for yourself and your employees. 5. Both income tax and National Insurance Contributions (NICs) are not applicable to these benefits, making it a tax-efficient way to enjoy some well-deserved perks. 6. Ensure that benefits are provided as a gesture of goodwill, occasional, and unrelated to your normal duties as a director, rather than as part of a contractual obligation. 7. Maintain thorough records of the benefits you provide, including the cost, date, and reason for each benefit, to ensure compliance with HM Revenue and Customs (HMRC) regulations. Take full advantage of the £300 trivial benefits allowance and treat yourself to tax-free perks throughout the year, with each individual benefit capped at £50. It’s an excellent way for directors to reward themselves without incurring additional tax liabilities. If you want to discuss the contents of this article and taking advantage of this benefit, contact a member of the team at Nicholsons at hello@nicholsonsca.co.uk. Newland House, The Point, Weaver Road, Lincoln, LN6 3QN King’s Head Office Suite, 52 Queen Street, Market Rasen, LN8 3EN The Enterprise Village, Prince Albert Gardens, Grimsby, DN31 3AT © stock.adobe.com/BullRun investors willing to lend money, though interest rates can still be high depending on when the loan is repaid. Government grants and subsidies provide further financial support to businesses accessing capital without the need for traditional banks or financial institution. These grants can help offset costs associated with innovation and expansion, reducing these areas’ financial burden. They often come particularly invested in initiatives engaged either in research and development, or operating in specific industries targeted for growth, providing a welcoming foot in the door for businesses offering these particular boons. Raising capital is all part of the game in business – knowing the rules and tools at your disposal is what sets you up to win. Whether embracing the new or taking a more traditional route through banking investment, just about any business is bound to find their best fit for long-term sustainability and success. A few smart service picks will not only give security to fall back on, but provide the foundation to focus on growing your ideas, and opportunities to share your worth with loyal, paying customers.Next >