Logistics industry resilient in face of Brexit uncertainty

Resilience dominates business thinking and planning where trade and the movement of goods are concerned, according to The Logistics Update report, launched by FTA in partnership with Santander.

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The report polled the opinions of more than 370 freight and logistics businesses operating in the UK and internationally, to provide industry insight into latest political and economic developments.

Despite a challenging economic climate, the future looks more positive with a predicted 1.5% growth in GDP in 2019, and three quarters of logistics companies are confident their business will grow over the next three years.

Elizabeth de Jong, FTA’s Director of UK Policy, commented:

The logistics industry is facing a challenging road ahead. With Brexit negotiations stalling, businesses are in a difficult position as they try to plan for an uncertain future. Despite this, three quarters of logistics companies are confident their business will grow over the next three years.

In the event of a no-deal exit, logistics businesses are most concerned about the potential impact on infrastructure plans, labour shortages and border delays. While the government has provided companies with some information, in the form of no-deal contingency papers, there are still several key processes to be agreed if the UK logistics sector and just-in-time economy is to be protected. FTA, which represents the interests of more than 17,000 logistics businesses, urges the government to seek an agreement on trade and customs as an urgent priority – no-deal must be the last resort.

As we leave the EU, it is vital the UK’s economy remains efficient and competitive internationally. There is much the government can do to help make this happen: investing in road and rail infrastructure; creating a favourable fiscal environment; improving initiatives to address skills shortages; and facilitating cleaner fuels through use of duty differentials while protecting modal choice.

The continuing increase in the price of oil is a defining feature of the update. Brent Crude’s price increased by just over 18% since December 2017, to a monthly average of $75.94 a barrel in June 2018. The price of fuel is now one of logistics operators’ most troublesome concerns.

Elizabeth de Jong continued:

Logistics businesses are facing rising operating costs. The ongoing increase in fuel prices – up 18% since December 2017 – presents a key challenge. While FTA is pleased the government decided not to increase Fuel Duty in its Autumn Budget, we’re disappointed it didn’t take the opportunity to reduce it, given this rise. The report also discovered that operators are struggling with increased warehouse rates and are finding it difficult to pass these increased input costs on to customers.

John Simkins, Head of Transport and Logistics, Santander Corporate and Commercial Banking, commented:

It is positive to see that despite the slower than anticipated growth in the economy during the first half of the year, and a number of other challenges faced by those operating in the sector, confidence remains high. Logistics, and the industries it serves, need to be able to rely on coordinated plans and legal certainties. Contingencies need to be in place to ensure that planes, trains and vehicles can cross UK-EU borders and ensure vital supplies are maintained. Brexit uncertainties, rising oil prices, staff shortages and economic instability are all presenting serious challenges to the logistics industry.

With growth in both British exports and imports, the transport and logistics sector has shown itself to be adaptable, resilient and optimistic in the face of uncertainty. With an outlook for the global economy that is relatively benign, transport and logistics companies will be at the forefront of helping UK businesses to overcome the headwinds and prosper on the global stage.

The Logistics Update is the companion document to FTA’s annual Logistics Report, bringing the developments and trends that were identified in the main report, published in May, up to date while reflecting on the latest political and economic news affecting logistics. The update splits its focus between the UK’s economy and logistics performance in the period since the main report and the latest developments affecting logistics.

To read the full report please visit the FTA’s website.

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