Road Freight, Logistics and Post
Sector trends & challenges
Adoption of new technologies
New technologies are being intertwined with the logistics industry at an increasing pace, the use of which can improve fuel consumption, reduce crashes and help preserve the quality of goods in transit.
Environmental regulation means improving transport emissions is now a necessity. The British government published its UK Energy White Paper in December 2020 resulting in the need for businesses to phase in hybrid and EVs.
Brexit is having an adverse impact on the industry’s already challenging workforce problem. A reduction in available EU workers is adding fire to the issue of tackling an ageing workforce across the industry.
Sector rating profile
As the UK transitioned to a world outside the European Union we observed adminsitrative complexity adding challenge to the sector. The onset of the COVID-19 pandemic has however delivered a welcome and unexpected boost to certain parts of the sector as consumer shopping trends moved more significantly online.
Road Freight, Logistics and Postal Services
The UK logistics industry has been on an upward trend since before the COVID-19 pandemic began. However behavioural changes caused by the pandemic have driven growth even further, with the Office for National Statistics (ONS) stating that internet shopping in the latter part of 2020 contributed 26.1% of all retail sales, up from 18.1% in 2019. We expect the logistics industry to continue to prosper even after the COVID-19 restrictions end, but there are dynamic challenges that companies must address.
Short-term issues include an increase in costs which may not be recoverable from customers; very high demand for warehousing resulting in space being sold at a premium; and Brexit causing additional bureaucratic complexity. There are however opportunities for operator consolidation in order to reduce costs and environmental footprint, for example by using mixed-use solutions and improving ‘last mile’ efficiency. In addition, logistics companies can use new technologies to become more elastic in dealing with seasonal variations or environmental events. We expect to see new technologies appearing in the industry on a regular basis as businesses seek to capitalise on growth opportunities by overcoming the difficult challenges faced.
Recent environmental regulation means improving transport emissions is no longer a nice-to-have but a must. For example, central London will soon have the world’s first Ultra Low Emission Zone (ULEZ) and Clean Air Zones (CAZs) are to launch in Birmingham and Bath this year, and we expect other cities will follow suit. Logistics fleets will have to make short-term plans such as fitting abatement technology to purify emissions. The British government published its UK Energy White Paper in December 2020 which highlights emissions targets up to 2050, resulting in the need for transport businesses needing longer-term plans to phase in hybrid and electric vehicles.
Find Your Expert
David Pike is Interpath Lead for the Transport & Logistics sector, which includes Road Freight, Logistics and Post as one of four core segments. Phil Lyons leads our approach to this sector nationally with wider support from Kenny McKay. For a full list of our senior people with experience in the sector use the button below.Our senior team