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UK logistics resilient against ‘a perfect storm’ of issues

Sector faces challenges from geopolitics, government policy, labour shortages, and demands for fast but sustainable e-commerce logistics solutions, leading executives tell Multimodal 2019 event.

The UK logistics industry is currently being battered by a perfect storm of challenges including government policy, geopolitics, labour shortages and demands for high velocity but low environmental impact e-commerce logistics solutions, according to leading executives.

Opening a seminar at Multimodal 2019 yesterday at NEC Birmingham, Peter Ward, CEO of the United Kingdom Warehousing Association (UKWA), said UK companies were grappling with huge shifts in the logistics environment in addition to the threat of Brexit.

He cited rapid recent changes in the geopolitical landscape which were proving difficult to navigate such as the rise of a “new politics”. This ranged from emerging new political movements as led by President Macron in France, through to populism across Europe and in the US as typified by President Trump.

Logistics companies were also coping with the US-China trade war, rising protectionism around the world and an ambitious China whose ‘One Belt One Road’ project aimed to capture some 65% of global trade over the next two decades.

“Then we’ve got labour and skills shortage issues looming,” he added.

He noted that some of the latest challenges were also opportunities. “Our industry is now at the forefront of enabling e-commerce and online retailing - in some ways logistics is the new retail,” he said.

However, as UK logistics attempted to establish more flexible and agile supply chains to satisfy the demands of e-commerce - for example by putting warehousing nearer consumers to meet the needs of e-commerce - it was doing so using “infrastructure that is creaking, and in some parts of the country is not fit for purpose”.

He added: “There’s an unprecedented rate of change, but I see a lot of madness out there like delivery times for Amazon. How do we get a return on investment? We’re supposed to be investing in technology, but not on 1% ROI.”

Duncan Buchanan, policy director for England and Wales at the Road Haulage Association, said investment was critical to meeting such challenges head on, but said government policy on issues such as emissions zones had to be more logical.

“If we’re going to invest in cleaner trucks, we need to know we’re going to get a full life out of them [without policy changes]. It’s the same at rail and ports; we all need a return on investment.

“Our members are livid about government policies on clean air zones because those policies are undermining investment.”

Policy decisions were often, he insisted, being made by people with “very patchy” skills and knowledge of freight.

He questioned, for example, how the environmental pros and cons of certain vehicles were judged, particularly policies that restricted van deliveries in cities when often they reduced petrol-guzzling road trips by consumers.

“People talk about [deliveries by] electric bicycles - that’s fine, but it’s miniscule,” he added. “People don’t’ like vans, but often that saves people a trip to the shops. So, assuming freight or vans is a bad thing isn’t correct.”

Buchanan also said the looming threat to oil prices as tension – and attacks on tankers – in the Middle East increased could quickly change the availability and price of fuel used by UK transport companies.

“It’s about how we manage the change, and there’s a lot of uncertainty at present in the freight sector about change,” he added.

Maggie Simpson, director general of the Rail Freight Group, said labour shortages, government policy and potential fuel price increases would accelerate the “sustained growth of modal shift” witnessed in the last 5-10 years.

“Rail has an inherent advantage environmentally,” she said. “People are also coming to rail because of driver shortages, so they use us for their trunk routes and use trucks more sensibly (for the final haul). So, there is a response to the skills shortage in road.”

She also said rail hauliers were now striking deals with transport companies which enabled synergy to be leveraged across customer bases - an improved business model when compared to rail hauliers attempting to be fully formed logistics businesses.

“After that it’s about the next level of productivity which is about technology and innovation and here rail is in catch up mode, particular in terms of infrastructure,” she added.

Despite all the challenges, Richard Ballantyne, chief executive of the British Ports Association, sounded a positive note. He said that whatever happened with Brexit, the UK would remain “a stable economy and a strong market” and the UK logistics industry would cope with any challenge thrown at it.

“Market decisions lead to changes and traders spy the most efficient route on time and cost,” he added. “The market always decides.

“When there are emergencies, you see how resilient the logistics industry is.”

Source: Lloyds Loading List

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