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What do Boris’ recovery plans mean for the logistics sector?

TAGS: News UKWA Brexit
As lockdown is eased, Peter Ward, CEO of the United Kingdom Warehousing Association (UKWA), asks: What do Boris’ recovery plans mean for our sector?

As COVID-19 lockdown eases and businesses tentatively emerge from hibernation, there is no doubt the world has changed. Although the extraordinary scenes of excited shoppers queueing outside re-opened stores and families thronging to beaches in the sunshine might suggest a return to ‘normal’, in fact the country faces the worst economic outlook for decades, with the virus still far from being under control and the added pain of Brexit yet to come.

For the warehousing sector, while many operators have been busy providing ‘essential’ supply chain services for the last three months, others have seen their incomes decimated over the period of closure for ‘non-essential’ manufacturers and retailers. Although the opening of shops and factories have started to ease the pressure on space as outbound flows resume, for many coming back into full operation cash flow will determine whether or not they survive.

Quarterly rent was payable in June, with next payment due in September, by which time the government will have reduced financial support for employers furloughing workers, adding to the squeeze. Accordingly, UKWA will continue to lobby government for a six-month holiday on business rates to mitigate the immediate impact on members and the wider logistics community.

Meanwhile, the reduction of the two-metre distancing rule to ‘one metre plus’ was a welcome move, but even so, many will be unable to bring back their full workforce immediately. Fewer workers will in turn mean lower productivity and longer lead times, so that customers must be patient, pay their bills on time and support the supply chain that supports them.

So, what of the Prime Minister’s plans for post-coronavirus economic recovery? His new mantra of ‘build, build, build’ speaks of helping young people onto the housing ladder, £5bn to build ‘fantastic new homes’ and infrastructure. Great news, but as ever, the devil is in the detail. In recent times UKWA has frequently pointed out that every new home represents a new delivery point, this is now the case more than ever before. A key impact of COVID-19 lockdown has been a huge surge in online grocery shopping. Research firm GlobalData has forecast that the online grocery market alone is expected to grow 25.5% in 2020 – significantly ahead of the 8.5% previously anticipated. The future picture clearly should be one of mixed-use developments, with a ‘beds and sheds’ infrastructure to enable our sector to support retailers in providing the same or next-day home delivery services consumers now expect.

This will require the changes in planning use classes UKWA has long called for. In an ambitious rhetorical flourish, Boris Johnson has pledged, ‘the most radical reforms to our planning system since the second World War’. Time will tell whether this will yield the fresh approach we need. As the voice of the industry, UKWA will, of course, continue to push for government to address ‘nimbyism’ and build new communities that embrace logistics as a force for good in our brave new post-coronavirus world.

As for Brexit planning, it seems that finally the government has recognised that multifunctional inland sites will be required for customs and SPS procedures, as the UK ports are simply not geared up to manage the estimated 200 million extra customs declarations and related inspections post-Brexit and have no room for expansion.

This has been another of UKWA’s key messages for some time. We have repeatedly recommended utilising existing inland warehouse facilities as inspection depots. Plenty of our members operate customs bonded warehouses and temperature-controlled facilities within reach of the major ro/ro ports and have the experience, skills and labour to provide necessary inspection services. This is an opportunity for warehouse operators to extend their service offering and for the government to achieve a cost-effective, turnkey solution in the face of enormous challenges ahead.

The results of our recent Freeports survey – on which UKWA will base its contribution to the government’s Freeports consultation process on behalf of the industry - raised more questions than it answered. While respondents clearly recognised the potential customs & excise benefits, the positives on the tax front were less clear. It was felt that in the past Enterprise Zones in general have not met job creation targets and that tax incentives have been largely unsuccessful in attracting higher skilled workers, so that for existing companies with well-established supply chains, the tax benefits alone were unlikely to provide sufficient incentive to relocate; moreover, the current definition and location of Freeports were thought not to be attractive. Rather, we would see an industry-specific scheme being more successful than one aimed at ‘levelling up’ specific regions.

As it stands, our view is that the Freeports proposal lacks ambition and is not the most practical solution for a developed nation with an established infrastructure.

However, as we digest the PM’s post-coronavirus recovery plans alongside government proposals for supporting business in the face of post-Brexit impact, we look for some much needed joined-up thinking and stand ready to ensure that the voice of the industry continues to be heard – and heeded!

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