FTA: urgent investment needed
A new report has called for urgent investment into transport and logistics infrastructure or the UK will risk losing out on significant international investment.
The 2019 Logistics Report, launched by 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.
It concluded that the UK’s global competitiveness has dropped significantly and investment is needed to boost its attractiveness to international investors.
Elizabeth de Jong, director of UK Policy at FTA, the organisation representing the interests of the logistics sector, 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 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%.
Elizabeth continued, ‘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 nine per cent had implemented such a plan.
Elizabeth 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.
