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Looking forward to 2021

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Peter Ward, UKWA CEO, considers what this year may bring.

PETER WARD.jpgAs we return to work after a locked down Christmas and New Year, we face the possibility of further restrictions as the new highly infectious variant of COVID gathers force and brace ourselves for the full impact of finally leaving the EU. However, despite these twin issues, which continue to dominate our lives as well as our business planning, there are – hopefully – a few reasons to be cheerful looking forward, and I remain confident that our resilient industry will rise, as ever, to meet the inevitable challenges ahead.

First, we have a UK-EU trade agreement. This is good news indeed and a better outcome than we might have expected given the long days and weeks of impasse. A ‘no deal’ scenario would no doubt have been disastrous, so the Free Trade Agreement is most welcome. However, as usual, the devil is in the detail and it is important to remember that the agreement doesn’t alter the fact that the UK is no  longer in the Customs Union, so export/import businesses will still need to prepare for the momentous changes ahead.

We must align our businesses to new patterns of global trade. While preparation for the changes Brexit will bring is a given (UKWA’s latest member survey suggested that 88% of traders were not prepared), not everything should be seen through the lens of Brexit.

The world remains uncertain and our traditional supply chains are fragile. Consumer behaviour is changing worldwide – we have seen the consequences, from port congestion to spiralling freight rates and more – and we must be ready to adjust our supply chains and logistics networks accordingly.

On the world stage, from January 20th there will be a very different President in The White House – who knows what changes the Biden administration may bring, but the signs are that the inward-looking ‘America First’ era may be replaced by renewed engagement with global trade. US/China trade wars are unlikely to be resolved quickly and relations between China and Hong Kong remain a concern, but the Belt & Road initiative is certain to impact on global supply chains going forward.

Sustainability is another big consideration likely to head back to the top of the agenda as the pandemic recedes; one of the unforeseen benefits of the COVID lockdown of 2020 was a positive environmental effect, and without doubt the climate change lobby will be keen to build on this. As Joe Biden has pledged to bring America back on board with the Paris Climate Agreement, climate change is likely to be a key driver for change in our industry this year  - will government intervention be necessary to sort out final mile delivery, with its excessive fleets of ‘white vans,’ or will we see young environmentally-aware consumers push our industry  into taking action?

We expect to see some of the trends set in motion or accelerated last year continue in 2021. The growth of e-commerce seems unstoppable, for example, and the record take up of warehousing space during 2020 could well be superseded this year as online shopping expands and traders elect to stock product onshore closer to markets in an effort to secure supply chain resilience in the new post-Brexit world.

The problem remains for our industry how to attract sufficient workers to meet the rapidly increasing requirement for online order fulfilment, as the UK’s new immigration policy kicks in. Designed, according to the government, to end ‘reliance on cheap labour from Europe’, the consequent ‘Brexodus’, particularly of Eastern European workers, has hit our sector hard. The impact of the pandemic has further exacerbated the situation, with an estimated 700,000 migrant workers leaving Britain just since March last year.

 Our labour shortage seems here to stay for the foreseeable future, despite rising unemployment amongst the young in this country and our support of government employment schemes such as ‘Kickstart’. Young people are unwilling to work for the minimum wage and until we address the issue of low margins, we will be unable to shake off our reputation for low pay, which is a key driver for workforce shortages.

Finally, we hope to see Boris Johnson’s promise of reform to land use and planning come to fruition in 2021 – this has been a long running message from UKWA and continued demand for dwindling supply of warehouse space is bringing this critical issue to a head.

During 2020, the warehousing and logistics industry took centre stage along with health workers and supermarket staff. Our key role is set to continue for 2021 – but the challenges on this journey of transformation are unrelenting.

Our message for this year, is that to reap the rewards we seek, we must optimise our assets, embrace digitalisation and drive continuous improvement of productivity, efficiency and sustainability.

2021 will be an exciting year for the logistics industry, the Prime Minister has reiterated his commitment to establishing Freeports across the nation and we look forward to working with the government on this and taking full advantage of this opportunity along with those afforded by the explosion of e-commerce and rising demand for warehousing services. As ever, the UKWA stands ready to play its part.

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