Comments provided by Head of Transport & Logistics Mark Perrin.
With the Chancellor’s Spring Budget fast approaching, Menzies Transport & Logistics sector team look ahead to discuss what Philip Hammond’s 8th March announcement could bring for the UK business community.
The economic outlook post Brexit looks challenging and the financial stability of the UK economy very much depends on how the UK exit from the EU is managed.
With a weaker pound, transport and logistics businesses working for exporters continue to generate good activity levels. However, there is considerable uncertainty surrounding Brexit and concern exists over trading relations with Europe. For example, disruption to the Dover-Calais and Channel Tunnel route caused by the migrant crisis seems to have subsided, but it remains uncertain whether this will be sustained. The potential impact of tariffs and other barriers to market also needs to be considered.
Cutting fuel duty would be a welcome relief for transport & logistics companies at a challenging time where most costs are escalating and the commercial impact of Brexit is looming. The weaker pound is expected to keep fuel prices high in the foreseeable future. Some operators have managed to negotiate fuel escalators into contracts to help pass on some of the cost increases but smaller operators may not have done this and will suffer from squeezed margins.
Subsidies and tax incentives for new cleaner vehicles
The government’s focus on introducing “clean air zones”, aimed at restricting the movement of diesel vehicles with higher emissions in town and city centres, is a challenge for the transport and logistics sector. The reduction in sterling makes the cost of vehicles more expensive for UK operators purchasing from foreign suppliers, thus compounding the problem. The government should introduce tax incentives for UK operators vehicles with lower emissions.
In particular, smaller businesses will need further support and tax incentives to enable them to fund fleet renewals and avoid them being penalised when clean air zones are introduced.
This continues to be a problem and the government needs to invest more in apprenticeships as well as offering loans/bursaries to ensure driver shortages don’t become critical.
Operator Licences and the Department for Transport
Traffic Commissioners need additional resources to enable them to cut the time for granting operator licences to compliant operators from 9 week down to their target of 3 weeks. This will free up more resources to target less compliant operators, which is a real issue in the industry. The RHA estimate there are 100,000 HGVs in circulation which do not require a qualified transport manager and these are the companies which often have the most issues.
Additional resources should also be invested in the DVSA to undertake more vehicle checks on the roads. There is a worrying ongoing trend that foreign vehicles have more issues than UK trucks and this creates an unfair commercial playing field for UK operators.
£2.6bn was committed during the Autumn Statement, but UK infrastructure still lags behind where it needs to be. There is a need to ensure that spending not only brings this up to an appropriate standard but future proofs the UK to accommodate more traffic and pave the way for driverless vehicles and smart motorways. A joined up approach with transport hubs (airports, ports) needs to be taken rather than scattergun projects.
Get more input on the 2017 Spring Budget implications for the Transport & logistics sector by speaking to our sector team.
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