Identifying the challenge, seizing the opportunity

As we’re slowly coming out of lockdown and restrictions are lifted across the UK, at Logistics UK we are looking ahead to what recovery and beyond looks like for our members. We have been experiencing two of the biggest concurrent shocks to the UK in recent times in COVID-19 and Brexit, which continue to have a huge impact on the logistics industry. How our economic and social activity will be impacted is still evolving, but we can already predict what some of the changes will be and therefore, consider how we can adapt as a sector.

DEFINING THE CHALLENGE

As for the challenges, we know that the nature of work has changed. COVID-19 has increased the number of people, primarily in professional roles, working remotely – reducing travel to offices and for meetings. Continuing lockdown restrictions and the expected trend for many professional companies to facilitate a hybrid working pattern could lead to a commensurate reduction of up to 40% in peak commuting traffic, as well as a likely reduction in business travel. This leads us to ask if now is the time to allocate some of our peak rail capacity from passenger to freight to ease the rail capacity issue. It also opens up the possibility of lifting peak hour bans on road freight vehicles designed to improve congestion for car commuters.

We also know that patterns of consumption have changed. Online retail has doubled its proportion of total retailing since 2019, before which its growth was a steady one percentage point per year. This increases deliveries and reduces domestic traffic into towns and cities – supporting reducing road restrictions for freight vehicles.

BUILDING BACK BETTER

We also already know that government ambitions have grown but funding will reduce. There is a political desire in Britain to build back better from COVID-19 and Brexit, and pre-existing policy goals such as climate change, road safety, and connected and autonomous vehicles are now more ambitious – for example, government has recently accepted the Climate Change Committee’s recommendation to set the Sixth Carbon Budget at a 78% reduction by 2035. However, there is less public and private money to deliver these goals, so we have to ask, what is really possible to achieve?

COSTS EXPECTED TO RISE

Finally, we are anticipating a change in the costs of doing business. Staff costs will likely increase following Brexit as the number of European Union heavy goods vehicle (HGV) and van drivers fell by 36% and 34% from 2019 to 2020 respectively, perhaps exacerbated by COVID-19. There will likely also be pressures on the costs to trade with Europe as additional paperwork and processes take their toll. In fact, 42% of our Logistics Performance Tracker panel members have cited increased paperwork in the first quarter of 2021. Equally, the cost to trade with the rest of the world is expected to increase. Staggered COVID-19 lockdowns have disrupted containers, doubling shipping prices sinch January. We also expect to see trading and logistics companies increase prices to recover stock and cash reserves following global recessions and shortages.

Britain is emerging from COVID-19 and Brexit into a different political, social and economic climate. There are plenty of challenges but also opportunities. Logistics UK will continue to push for policy reform that benefits members and capitalises on the opportunities.

*www.logistics.org.uk/campaigns

Published On: 17/06/2021 17:00:04

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