FTA Logistics report shows UK global competitiveness deteriorating

The UK’s transport and logistics infrastructure “urgently” needs to boost its attractiveness to international investors, according to a new report released today.

The 2019 Logistics Report, launched by the Freight Transport Association (FTA) in association with Santander Corporate and Commercial Banking, polled the opinions of more than 500 freight and logistics businesses operating in the UK and internationally, to provide industry insight into the latest political and economic developments.  

Elizabeth de Jong, director of UK policy at FTA, said: “With Brexit set to change the face of our trading environment in the UK, this year’s Logistics Report has found that UK’s global competitiveness is deteriorating. 

“It is clear that investment into the nation’s transport and logistics infrastructure is urgently required to ensure the UK remains an attractive place to do business.

“Quality of infrastructure is a key priority for any business looking to invest in the UK, but this has been weakening for several years due to underinvestment in the road network, rocketing fuel prices, limited accessibility to all forms of transport, and an overall lack of innovative transport solutions.”

According to the 2018 Global Competitiveness Report published by the World Economic Forum, the UK is now the eighth most competitive nation, a drop of two places since 2017.

The UK ranks 29th for road connectivity and 26th for road quality worldwide. And a report by Ernst & Young (EY) confirmed that the UK’s transport and logistics infrastructure has become less attractive to investors, yielding an attractiveness score of 62% in 2018, a long way below its previous high of 80%.

De Jong said: “Reducing logistics costs is often the number one priority for a businesses’ bottom line. However, with profit margins of only two per cent in 2018, logistics companies are very vulnerable to increases in operating, fuel and freight costs.

“As a low margin activity, we need to see new thinking and innovative solutions to ensure the UK can offer the highly competitive conditions that draw international companies to our shores, while also supporting homegrown businesses.”

The survey also found that the uncertainties surrounding Brexit are taking their toll on the logistics industry; 61% of respondents say this uncertainty is a barrier to the growth of their businesses internationally. While at the time of survey (January 2019), 37% of respondents had not taken any action to prepare for Brexit, 17% had created a plan for a No Deal Brexit and 9% had implemented such a plan.  

De Jong continued: “With no firm progress made on the withdrawal negotiations, FTA is continuing to advise its members to prepare for the worst-case scenario: a No Deal Brexit. 

“Respondents to this year’s survey are most concerned about the impact this outcome would have on customs obligations; the employment status of their EU workers; access to non-UK workers; and the potential lack of permits for cross-border movements.

“While the industry is prepared to work through the challenges a No Deal Brexit would undoubtedly bring, FTA is calling for negotiators to keep working towards an acceptable solution for both parties.”

The survey also found that staff shortages continue to blight the UK’s logistics sector: respondents anticipated that 15% of their current HGV driver vacancies will not be filled in the near future, due to a nationwide shortage of staff with appropriate skills.

John Simkins, head of transport and logistics at Santander UK, concluded: “Uncertainty has been the inevitable reality for UK businesses over the last year, especially for those operating in transport and logistics. 

“In order that UK businesses can continue their operations with as little disruption as possible, it is vital that we work closely with the transport and logistics industry.

“The importance of the sector must not be undervalued, which is why we remain committed to continuing our work with the FTA and businesses in the sector in 2019 and beyond.”

The report can be accessed online by clicking here.

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