The Autumn Statement should prioritise support for the logistics sector to avert the damage that an economic downturn could cause to the nation’s finances, according to business group Logistics UK.
As David Wells OBE, the organisation’s Chief Executive explains, logistics underpins every sector of UK business, and needs to be supported to help prevent long term economic damage caused by lack of activity.
“Every single business in the UK relies on the logistics sector in order to operate effectively,” he says, “and despite the best efforts of our member businesses, storm clouds are gathering on the economic horizon. The industry is going backwards, both domestically and internationally, in terms of profitability, activity and investment, and needs the support of government to enable it to help turn the UK’s economic fortunes around.
“The UK saw no GDP growth from July to September and, with the logistics sector often signalling what is to come for the wider economy, it is deeply concerning that activity in our industry is slowing, with fewer goods being moved as the cost-of-living crisis bites. The use of warehousing (an indicator of how many goods are in circulation) is down by more than 50% year on year in the first nine months of 2023. At the same time, insolvencies across the sector are up more than 8% compared with a year ago, and employment figures are falling for the same period as demand slows, (by 13.6% for HGV drivers).
“Internationally, the cost of shipping containers is the lowest it has been for three years, indicating a lack of demand. And this is all at a time when crude oil prices, which are linked intrinsically to the price of diesel – on which our sector relies – are forecast to remain historically high at around $95 per barrel throughout 2024, placing further inflationary pressure on logistics operations.”
As Mr Wells continues, the industry has some key asks to help logistics businesses continue to operate effectively and weather the pressures on the economy:
“To keep goods moving, and logistics businesses growing, our industry needs to see financial measures in the Autumn Statement that back business investment. We are urging the Chancellor to make the current full expensing allowance for capital spending (due to expire in March 2026) permanent to enable effective succession and expansion planning.
“This should include the cost of acquiring leased or hired vehicles, as well as those purchased outright, and the cost of installing the infrastructure required to help the industry decarbonise.
“Without support in the Autumn Statement, the logistics sector will continue to battle rising costs and business pressures that will stifle growth and slow the economy still further. We urge the Chancellor to help our member businesses to keep Britain trading and reverse the current slump our industry is experiencing.”
The Road Haulage Association (RHA) is calling on the Government to introduce an emissions-linked rebate to encourage hauliers and coach operators to switch to low-carbon fuels.
A move to make low-carbon fuels such as HVO more cost effective could help the industry accelerate its decarbonisation journey. Whilst zero-emission technologies are developed, low-carbon fuels can help operators reduce CO2 emissions by up to 90%.
RHA is urging ministers to increase the heavy vehicle mechanic apprenticeships funding band to £23,000. This could incentivise training providers to run much-needed programmes amid a growing shortage of mechanics. Reforming the Apprenticeship Levy into a more flexible Skills Levy for apprenticeships and approved vocational courses such as skills bootcamps would help plug skills gaps in the industry.
The RHA is also calling for planning reforms including the National Planning Policy Framework to be strengthened to make it easier to secure planning permission for much-needed new lorry parking facilities.
Funding for lorry parking should be ring-fenced and a cross-departmental taskforce established to review existing facilities with industry and other stakeholders to develop long-term solutions.
Richard Smith, RHA Managing Director, said: “Moving people and goods is a fundamental building block for the economy and society – it’s the core enabler of all economic activity.
“Hauliers and coach operators need consistent laws and regulations that allow the sector to work and invest in a predictable way so they can continue to deliver for us all.”
Mark Perrin, Business Advisory Partner and Transport & Logistics Sector Specialist at accountants Menzies, outlined his top wishlist items that he thinks would benefit the sector.
“We would support a longer-term investment plan for the freight industry: a plan which spans several terms of government office, enabling sufficient time to implement a futuristic and sustainable infrastructure. Short-term planning is ineffective for a key sector for UK businesses and economy. We also recommend a “multimodal” approach to the logistics industry looking at how road, sea, rail and air can play their part.
“The ongoing impact of Brexit is resulting in continued disruption and delays at cross border checks. Increasing the number of trade agreements and actively negotiating better cross border processes will help logistics businesses in the UK.
“Skills and resource shortages continue to impact the T&L industry and more investment, potentially tax incentives, are needed to encourage new recruits into the industry.
“The shortfall of drivers in the haulage industry continues to be a significant issue and new investment and initiatives are desperately needed. Investment is also needed in providing safe and secure parking spaces for truckers in the UK as there is a significant shortage. We recommend an expansion of the apprenticeship levy to help fill the skills gap and fund approved vocational courses.
“SMEs require additional tax incentives to help them to compete with larger businesses on sustainability. Enhanced tax incentives for SMEs investing in greener fleets would be welcome. We would also recommend the Government looks at the potential for emissions rebates to encourage the take up of greener fleets and fuels, including biodiesel ‘HVO’.
“Additional investment in the infrastructure for electric vehicles is required to encourage further investment by businesses in greener vehicles. We would encourage further tax incentives for SMEs investing in AI to enhance their business and compete with larger and global businesses.”