The Chancellor should prioritise support for the logistics sector in this week’s Autumn Statement, 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. Growth in warehousing use has halved 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.”
