UK logistics firms have demonstrated impressive resilience throughout the COVID-19 pandemic, adapting their operations quickly and efficiently in the face of unprecedented pressure to ensure the nation keeps stocked with the good and services it needs, according to Logistics UK.
However, the trade association has warned that the cost of moving goods and services is likely to increase in the short to medium term, as the economy feels the impact of the pandemic, reports Fleet Point.
At the launch of the association’s annual Logistics Report 2021 on 21 May, Logistics UK policy director Elizabeth de Jong warned: “The logistics industry has proved invaluable to the UK economy throughout the COVID-19 pandemic, with businesses across all modes of freight transport taking quick action to adapt their operations to meet the needs of consumers.”
However, she added, a reduction in the supply of international shipping containers, and vessels to carry them, will lead to significant increases in the cost of moving goods internationally.
“By the end of 2020, shipping container rates had increased by 185 per cent year-on-year and air freight costs rose significantly when cargo space was constrained due to the grounding of passenger flights,” she said
Fuel prices, which collapsed at the beginning of the pandemic have now recovered to pre-pandemic levels, she continued, which may have helped offset inflation in the short term, but the rates charged for all modes of transport are predicted to increase this year, which in turn will drive prices across the economy.
She explained that for many logistics organisations who are already operating on very tight profit margins of around 2 per cent, and as little as 1 per cent for those in road transport, the increases will make it more difficult to find revenue to develop operations by investing in green technology, alternatively fuelled vehicles, or retraining and upskilling the existing workforce.
These tight margins may mean businesses could be left with little choice but to pass these additional charges onto their customers, rather than focus on building upon the resilience the sector demonstrated in 2020.
“Logistics businesses face a myriad of challenges on the road ahead, with the cost of vehicle repair and maintenance also increasing in 2020, and cash flow restrictions remaining a barrier to recovery for 40 per cent of logistics businesses,” she concluded.
The Logistics Report 2021 also shares insights into the UK’s competitiveness, international trade, connectivity, labour and skills, sustainability, and safety and innovation.
Logistics UK is one of the UK’s leading business groups, representing logistics businesses that are vital to keeping the UK trading, and more than seven million people directly employed in the making, selling and moving of goods.
With COVID-19, Brexit, new technology and other disruptive forces driving change in the way goods move across borders and through the supply chain, logistics has never been more important to UK plc.
Logistics UK says it supports, shapes and stands up for safe and efficient logistics, and is the only business group that represents the whole industry, with members from the road, rail, sea and air industries, as well as the buyers of freight services such as retailers and manufacturers whose businesses depend on the efficient movement of goods.
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