Kevin Buchanan, Group Managing Director, Pall-Ex

Sector needs investment, incentives and a cut in fuel duty!

Group Managing Director | Pall-Ex

Every five years, companies pause their investment decisions while the nation decides which party will be in government.  It puts the country’s economic recovery on hold, but having seen a Conservative majority win, confidence in the market has soared.

As a logistics firm, we are reliant on a robust transport infrastructure to successfully operate our national network.  This takes investment from the Government, and incentives for businesses and commuters.

There has been a woeful lack of public investment for generations, coupled with a poor provision for private investment in infrastructure projects.  This year, focus will inevitably be on our airways, with the Airport Commission due to make a decision on whether to expand Gatwick or Heathrow later this year.

But the biggest issues can be caused by the smallest problems.

The HGV levy, introduced in 2014, has been successful, raising more than £17 million from foreign lorries to invest back into our road networks.  Too, the last coalition pledged £976 million a year to fix 18 million potholes, but a ‘patch and run’ approach does not disguise the need for new roads and resurfacing on a regular basis.

Last year, as part of the Association of Pallet Networks, Pall-Ex supported FairFuelUK, which campaigns against tax hikes in fuel duty and for a real-terms reduction in fuel duty.  It’s our members’ single biggest cost, no matter what size their fleet, and it’s a major sticking point.

The economic rollercoaster of recent years has meant our members, like all hauliers, had to face the loss and reduction of customer accounts.  This, coupled with soaring fuel costs, left many businesses on the brink.  Meanwhile, the market was saturated by cheap, growth-focussed businesses.  Hauliers faced slim margins and precarious finances as a result of customer demand for reduced prices.  As a network designed to promote success, we knew our members were being squeezed.

Transport is the foundation of a strong infrastructure.  Whether personal journeys or commercial haulage, road transport leads to more money spent elsewhere in the economy.  If the costs of products and services are reduced as a result of cheaper transport, the economic benefits are enhanced.

Meanwhile, if those transport businesses that are in a tight spot now were given a break, by way of a reduction in fuel costs, then their survival and the employment of their workers is good news for both the national and regional economies, and the logistics sector as a whole.  So why must we all pay such extortionate amounts?

It’s nothing more than an unnecessary strangulation on the growth of both the industry and the economy.  The freeze on fuel duty since March 2011 has been a step in the right direction. But, there is still work to do.

There are human resource issues too.  With the media reporting on a UK wide shortage of drivers, experts have suggested the industry needs an extra 150,000 drivers by 2020.  With the average age of drivers being 53 and many approaching retirement, the sector (and the Department for Transport – DfT) will have a challenge to recruit, train, and retain more people in order to keep our supply chain functioning – having a knock on impact in retail, manufacturing and our economy as a whole.

If we are looking for positives, I would like to see the Conservatives provide greater support for small and medium sized businesses, by encouraging access to long-term growth capital.  We also need to simplify corporation tax and business rates.  I’d also like to see more competitive capital allowances, and we must also ensure that as a country we maintain our status as a flexible labour market, particularly within the EU.

For the Conservative government, it would be wise for them to remember that small and medium sized businesses are the backbone of industry.  They are the ones suffering the most from lack of investment in our infrastructure, and the threat of rising costs, such as fuel duty, and they must be listened to.

Pall-Ex