Written evidence from Skills for Logistics
(TE 83)
SECTOR SKILLS
COUNCIL FOR
FREIGHT LOGISTICS
INDUSTRIES
Skills for Logistics (SfL) is led at Board level
by logistics employer representatives. We work alongside companies
in the UK that are involved in moving, handling or storing goods.
We work with logistics employers to provide free, specialist and
impartial advice with regards to learning and skills development;
with the aim of improving business performance and articulating
their demand to external stakeholders.
The response to this consultation has been produced
after communications with staff from within the organisation who
engage with operational companies and have experience within this
environment. The only focus of our response is, as the Skills
for Logistics remit, the impact that such schemes would have on
the skills of the employees of the industries that we support.
Therefore, the questions that have been answered are limited
to this remit, as follows:
Have the UK's economic conditions materially changed
since the Eddington Transport Study and, if so, does this affect
the relationship between transport spending and UK economic growth?
Transport's role in supporting the productivity of
the UK economy is vital. The freight Logistics Sector employs
2.3 million people (8% of the UK's workforce) across 190,000 workplaces[270].
Evidence from the Annual Business Inquiry 2008 suggests that
the logistics sector approximate Gross Value Added totalled £103 billion
- 11% of the UK's GVA.
SfL commissioned research (unpublished at present)
indicates that there is a strong relationship between global performance
and logistics performance. At a lower level, the environment
in which logistics operates has been shown to affect the overall
performance. There are six ratings and our findings show that
infrastructure (the quality of trade and transport related infrastructure
(e.g. roads, ports, railroads, information technology)) has the
strongest significant relationship on performance. However, the
UK logistics is ranked 16th from 155 countries - behind a number
of European competitors, US, Japan and Singapore. The UK is ranked
within the top ten for the other five areas - customs, international
shipment, logistics competence, tracking & tracing and timeliness.
We have also determined a link between logistics
performance and training. Training can impact all of these areas
and hence further increase the performance of the sector. While
we advocate training across the sector, it is also vital to maintain
transport investment schemes that benefit the logistics sector.
Since the Eddington Report the government has published
Delivering a Sustainable Transport system: the logistics perspective
(2008). It is recognised that freight transport however has a
number of environmental impacts. The transport sector accounts
for 21% of UK's domestic greenhouse gases emissions, with CO2
representing about 96% of the emissions. Freight transport (HGVs
and vans) accounts for 31% of these emissions, which represents
around 7% of the overall figure.
The Logistics Sector can help reduce carbon emissions
in two ways; firstly by supporting a shift to new technologies
and fuels, and secondly by promoting lower carbon choices. However,
the sector is particularly interested in finding solutions that
can create win-win situations, i.e. solutions that are not only
good for the environment but also for profitability of the company
and thus the economy.
What type of transport spending should be prioritised,
in the context of an overall spending reduction, in order best
to support regional and national economic growth?
Evidence shows that the sector has and is expected
to grow. The turnover of the UK companies operating in the freight
and distribution sector totalled £86.54 billion in 2008,
having increased by 1.8% compared with the previous year
(see table 1). Over the last five years, turnover in the
sector has increased by 32.7%. The sector has experienced a downturn
in 2009 as a result of the recession in the UK and world economies.
The main issue facing the sector over the next few
years is the likely length of the recovery. There are many uncertainties
regarding the future, but it seems likely that the recovery will
be slow, with a return to trend growth rates expected in 2011.
Overall growth of 23.1% is expected between 2009 and 2013. From
2011 growth year on year is expected to be around 7%.
All subsectors are anticipated to grow, year on year,
from 2009 to 2013 (please see table below). Supporting transport
activities (i.e. warehousing and freight forwarding) and road
transport are anticipated to see the largest growth, with 28.7%
and 25.4% respectively.
Rail is expected to increase by 18.3% with turnover
increasing from £925 million to £1,062 million,
while freight transport by water is anticipated to grow by 12.1%,
air by 13.9%, postal and courier activities 8.3%. If the anticipated
grow is to happen then the infrastructure to accommodate this
would have to be in place.
Table 1
FORECAST TURNOVER OF UK COMPANIES AT CURRENT
PRICES, 2007-13 (£ million)
| 2007 | 2008
| 2009 | 2010 |
2011 | 2012 | 2013
|
| Rail | 925 | 957
| 898 | 906 | 950
| 1,004 | 1,062 |
| Road | 26,338 | 27,717
| 25,389 | 25,693 | 27,389
| 29,526 | 31,829 |
| Water | 2,020 | 2,080
| 1,993 | 2,005 | 2,071
| 2,152 | 2,235 |
| Air | 892 | 898
| 855 | 861 | 893
| 933 | 974 |
| Supporting Transport Activities | 40,327
| 39,452 | 35,729 | 36,208
| 38,881 | 42,285 | 46,001
|
| Postal and Courier | 14,508
| 15,438 | 14,992 | 15,053
| 15,388 | 15,800 | 16,231
|
| | |
| | | |
|
| Total | 85,014
| 86,542 | 79,856
| 80,726 | 85,573
| 91,699 | 98,331
|
| % change year on year | 10.3
| 1.8 | -7.7 |
1.1 | 6.0 | 7.2
| 7.2 |
Source: Key Note 2009. Market Review Distribution Industry.
How should the balance between revenue and capital expenditure
be altered?
Unable to comment as SfL's focus is purely around skills development
Are the current methods for assessing proposed transport schemes
satisfactory?
One of the reasons for road's high freight market share is the
relatively short distances that much freight travels. Analysis
of the origins and destinations of goods shows that, on average,
around 70% of road freight has its origin and destination within
the same region of the UK. The East and West Midlands are significant
destinations for freight (given their agglomeration of national
distribution centres).
These key origins and destinations lead to concentrations of freight
traffic on particular parts of our national networks. Key road
routes include the M25 (particularly the north eastern section),
the M1 (particularly south of Nottingham), the M6 south of Manchester,
and parts of the M62, A1 and A14. The routes used by most rail
freight services broadly follow the same spatial patterns, with
the East and West Coast Main Lines carrying the bulk of the traffic.
Partly because freight is ultimately travelling to and from major
population centres, these key routes are also important for commuting,
business and leisure traffic, and so there appears to be some
commonality with the routes of most importance to other traffic.
Across the road network as a whole there is an overall average
of 16 cars and vans travelling for every one HGV. (DfT Sustainable
Strategy Report)
Sir Eddington's Report stated that "urban areas are likely
to deomonstrate the characteristics that would be expected of
rapid economic growth: high levels of congestion; high wages;
and high land prices. It seems clear that these large urban areas
will be the drivers of UK growth over the next few decades. In
turn, it is clear that their respective transport networks will
continue to play a crucial role in supporting their ongoing success
….."
This is still very much the case and therefore when it comes to
assessing proposed transport schemes small scale projects and
their ROI should be looked at (page 38 1.99 The Eddington
Transport Study: The case for action) along with current Government
policies around the Green Agenda and new technologies should be
taken into account.
From a skills point of view, SfL is fully aware that such agendas
have an impact of the development needs of employees in the sector
forming a circle - Government Agenda impacts on decisions being
made around planning = new infrastructures come into play = new
skills are required of the logistics workforce to accommodate
these decisions.
How will schemes be planned in the absence of regional bodies
and following the revocation and abolition of regional spatial
strategies?
There are a number of key strategic partners who produce Labour
Market Intelligence (LMI) which could be used constructively when
planning takes place. Tapping into industry related forums, trade
associations , SSCs and data supplied by blue chip organisations
would enhance this process
September 2010
270
Skills for Logistics, 2010. Sector Skills Assessment UK Report. Back
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