Comments provided by Andrew Galliers.
Nowhere to run
SMEs within the Transport and Logistics sector often feel like they are stuck on a roundabout with no available exits to take. In addition, with pressures coming from all directions i.e. low margins, the attitude towards environmental considerations, new technology and staff shortages, it is no surprise that in a recent survey 12% of respondents expect to shrink operations or shut their doors before the end of 2018.
Given that the transport and logistics sector is key for the majority of UK businesses (98% of all goods in the UK being carried by a truck at some point in the business cycle) it is vital that there is ongoing investment and support provided by the Government to drive the sector forward.
It was pleasing to hear in the Spring Budget, that the chancellor froze the fuel duty rise meaning the amount per litre has remained static since 2011. Given that SMEs operating in this sector are operating in tight margins, any increases in costs will be difficult to pass onto customers. Therefore looking forward, the sector needs more clarity on what the future holds for fuel duty.
There has also been a drive to move towards green fleets and clean air zones within recent months.
The impact on green fleets may have a knock on effect to fuel duty but at the current time, we’d ask for more support for SMEs as they are being asked to transition fleets in order to remain compliant with targets laid down.
With no joined up plan on the clean air zones, operators are at the whim of the local mayor’s decisions on what they want for their community which may leave local operators exposed. The Government needs to create a level playing field and consider the needs of SMEs during the transition period for any targets set.
There has been a lot of press about driverless vehicles recently and how this could change the industry. However, whilst large corporates are readily able to take the investment risk in this new tech, at the smaller end of the market we feel the Government should incentivise them and ensure that the whole market place embraces the new step towards the future.
For those fans of 70’s sitcoms, no one wants to be in the position of the Goodlife’s Jerry and Margot where Christmas is not delivered. As such the Government needs to help find solutions to this issue.
Current CE Licence (vehicles greater than 3.5 tonnes) holder numbers bring this issue in to stark focus. With only 11% of licences being held by the under 30’s, compared to 67% by the over 40’s, it is inevitable that there is a ticking time bomb that will soon go off and current estimates put the shortage at 1.2 million come 2022.
Given the effect this could have on the rest of the Economy it needs to be responded too.
Dedicated provision of rest stops for long haul drivers can be legislated for improving the attractiveness of the sector as a career choice, but the main focus should be on apprenticeships and answering the Brexit question.
It is positive to see that there has been initial support for apprenticeship schemes, however the uptake amongst SMEs has been small, with some unable to access the funding and others wary of taking on a staff who don’t necessarily generate revenue from day one. Here, the Government need to step in and look at how to make this work for those SMEs.
On the Brexit question, of the CE Licence holders noted above, 8% are Eastern European workers. Given the foreign exchange movement in recent months, working in the UK is not as appealing as it once was previously, but of greater likely impact will be the working rights of non-EU nationals come the exit date. The sector needs early communication on this in order to assess and accommodate any impact.
Get more input on the Autumn Budget 201 implications for the Transport & Logistics sector by speaking to our sector team.
Find out more about the Menzies Transport & Logistics advisory services.