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Outlook for UK logistics in 2025

Thursday, January 2, 2025 - 06:21
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The logistics industry in the UK is poised for significant changes in 2025, driven by evolving market demands, technological advancements, and regulatory updates. As businesses adapt to a dynamic landscape, I expect the following trends and developments to shape the sector.

  1. Increased Adoption of Green Logistics

Environmental sustainability remains a top priority for the logistics industry. In 2025, more companies are likely to invest in electric and hydrogen-powered vehicles, reducing carbon emissions across supply chains. The expansion of Low Emission Zones (LEZs) in urban areas and growing government incentives for adopting green technologies will further accelerate this transition.

Chris Hyde, Managing Director – Transport Solutions, GXO Logistics: “The ultimate vision for the logistics industry is to transition to fully electrified, battery-powered fleets, driving sustainability and reducing environmental impact. Achieving this goal remains a challenge for the industry due to current technological and infrastructure limitations. Key hurdles include limited range capabilities, vehicle charging times, charging infrastructure, energy security, and the high upfront costs associated with acquiring electric vehicles (EVs).

“Despite these obstacles, the industry remains committed to easing its impact on the environment and taking proactive sustainability measures both in the short and long-term.   Alternative fuels such as Liquified Natural Gas (LNG), Hydrotreated Vegetable Oil (HVO), and Compressed Natural Gas (CNG) are already playing a vital role in reducing greenhouse gas emissions, improving air quality, alleviating congestion, and reducing strain on existing infrastructure.

“We know that innovation and adaptability are essential for progress. Trialling and adopting new technologies must go hand-in-hand with collaborative efforts involving key stakeholders, including customers, vehicle manufacturers, and property partners. This cooperation is critical to addressing operational challenges, such as ensuring vehicle suitability, building a robust charging infrastructure, securing reliable energy sources, and optimising logistics consolidation centres.

“A unified, multi-stakeholder approach is the cornerstone of long-term solutions. By fostering collaboration and innovation, the logistics industry can overcome the barriers to electrification, achieve substantial emission reductions, and work toward the ultimate goal of eliminating carbon emissions entirely. This journey is essential to creating a sustainable transport sector capable of meeting the growing demands of a modern economy while safeguarding the environment.”

Gavin Williams – Managing Director UK&I, GXO Logistics: “Machine learning and generative AI have already enabled capabilities that were previously unimaginable, revolutionising how logistics and supply chain operations are managed. As we head into 2025 and beyond, we anticipate organisations will increasingly integrate AI into nearly every operational process.

“In warehouses, AI is already proving its value through diverse applications. For example, AI-powered robotic arms can handle repetitive and precise tasks like engraving products, programming electronic devices, and assembling pallets for distribution. These technologies enhance accuracy, reduce costs, and create safer, more ergonomic environments for employees by minimising physical strain and reducing the risk of workplace errors.

“However, as AI adoption accelerates, organisations must address key challenges to fully realise its potential. A significant hurdle lies in adapting the workforce and leadership to this new technological landscape. The skills required for leaders in AI-driven or highly automated environments differ significantly from those needed in traditional manual operations. For instance, leaders will need a strong understanding of AI systems, data analytics, and change management to effectively oversee these advanced operations. Ensuring that workers at all levels have the skills and training required to thrive in AI-integrated environments will be critical to overcoming resistance and maximising the benefits of these technologies.

“While AI offers immense opportunities to revolutionise the logistics sector, its success will hinge on organisations’ ability to invest in both technological infrastructure and the human capital needed to adapt to these advancements. By addressing these challenges proactively, businesses can unlock the full potential of AI, enhancing efficiency, safety, and innovation in the supply chain.”

  1. Digital Transformation and Automation

Digitalisation continues to revolutionise logistics operations. In 2025, advancements in artificial intelligence (AI), machine learning, and Internet of Things (IoT) technologies will enable real-time tracking, predictive maintenance, and optimised route planning. Automated warehouses and the use of robotics in material handling will become more commonplace, improving efficiency and reducing costs.

  1. Impact of Regulatory Changes

Regulatory updates, such as the increase in Employer’s National Insurance from 13.8% to 15% and the reduction in the secondary threshold from £9,100 to £5,000, will have financial implications for logistics businesses. Companies may need to reassess their employment strategies and seek cost-saving measures to maintain profitability.

The anticipated updates to the MYVT (Manage Your Vehicle Testing) service, including the integration of ATF (Authorised Testing Facility) testing for HGVs, could streamline vehicle testing processes and reduce downtime for fleet operators.

  1. Resilience in Supply Chains

The lessons of recent years have highlighted the importance of resilient supply chains. In 2025, companies are expected to prioritise diversification of suppliers, nearshoring, and investment in robust risk management strategies to mitigate disruptions.

  1. E-commerce Growth and Last-Mile Delivery Innovations

The surge in e-commerce shows no signs of slowing. Logistics providers will focus on improving last-mile delivery solutions, such as using drones, autonomous vehicles, and micro-fulfilment centres to enhance speed and efficiency. Partnerships with tech start-ups may also drive innovation in this space.

  1. Workforce Challenges and Opportunities

The ongoing driver shortage remains a concern for the industry. In 2025, companies may increasingly turn to initiatives such as upskilling programmes and offering more flexible work arrangements to attract and retain talent. Apprenticeships and collaboration with training providers could play a key role in addressing the skills gap.

  1. Infrastructure Investment

Infrastructure improvements, including the development of smart motorways and enhancements to ports and rail freight facilities, are likely to bolster the industry’s capacity. Government investment in these areas will be crucial for supporting growth and ensuring the seamless movement of goods across the UK.

James Knight, COO of Gophr:  “For logistics, 2025, could be one of the most dramatic years for some time. Amazon, the undisputed leader in next-day delivery, may look to actually kill it off. Why? Consumer expectations are evolving towards same-day and even within-the-hour delivery windows. This shift will be accelerated by the continued rise of social commerce, which will double to account for more than 10% of all purchases by this time next year. Retailers that fail to adapt to this instant-gratification mindset risk becoming irrelevant.

“All expect to see a significant shift in how businesses handle delivery operations. Next year, all but the most specialist companies will outsource their logistics, recognising that the complex world of same-day delivery is best managed by experts. The baseline expectation for urban areas will become “order in the morning, receive by evening,” and all logistics providers will need cutting-edge AI and dynamic routing tools to meet these demands.

“Drones, of course, will continue to make headlines but don’t expect them to take over the streets. Their real impact will be behind the scenes – for example handling depot-to-depot transport. The last mile, with its challenges of parking, stairs, and locked doors, will remain a uniquely human endeavour for the time being.”


Author: Mark Salisbury, Editor, Fleetpoint

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