Logistics Report 2016

Jul 20, 2016
Author: Paul Wormald
Paul is a partner at our Doncaster office. Paul specialises in advising small businesses and businesses in the transport & logistics sector. Paul also specialises in providing cloud accounting services to our clients.
lorry drivers

Logistics Report 2016 – shifts in activity, demand, costs & regulation

The long-awaited FTA Logistics Report 2016 has now been published. The FTA Logistics Report is published each year, providing detailed analysis of the key events, trends and news in the sector over the previous 12 months.

David Wells, Chief Executive of the FTA, said: “This year’s report highlights the contradiction inherent in the UK economy; on the one hand we are doing well, with increased consumer confidence driving up the demand for goods and services but, on the other hand, we would be foolish to ignore the significant economic headwinds that are building, especially with regards to the emerging economies.”

You can download the full FTA Logistics Report 2016 here.

In this article we summarise the key aspects of the report and what they mean for the logistics sector.

Logistics activity – cautiously optimistic

As the graphic on the left-hand side highlights air freight, vans and HGVs saw an increase in activity in 2015, whilst rail freight saw a significant decrease. Those retail and the related distribution and haulage operators saw the biggest increases in activity in 2015, particularly as online sales continued on an upward trend.

Incidentally, over 370,000 new vans were registered in 2015 – 60% more than in 1994, highlighting the need and demand for that particular logistics sector. Unsurprisingly, with the growth of online sales showing no signs of slowing down, those were the firms that were the most optimistic about the year to come.

On the other hand, as the decline in steel production continues and coal-burning power plants begin to be phased out, rail freight operators are likely to be very tentative about the remainder of 2016.

FTA logistics

Logistics costs – not much change

The FTA Logistics Report also included the annual the FTA Logistics Industry Survey – which had 340 respondents – and found that input costs in 2015 saw moderate increases (compared to 2014), with the exception of fuel costs.

Wage rates were the input cost that saw the biggest increase in 2015. As well as general salary rises, increases in the National Minimum Wage in October 2014 and again in October 2015, as well as the continued implementation of auto enrolment, impacted a high number of operators.

Other costs, such as maintenance and insurance, also saw small increases.

Of the logistics input costs that decreased, the continued freeze in fuel duty and the significant falls in the price of a barrel of oil in 2015 helped to reduce the impact of fuel price volatility.

Top three actions for the government to take

Responses to the FTA Logistics Industry survey also provided the top three actions they would like the government to take:

  • Invest in road improvements
  • Recognise the essential role of logistics in the economy
  • Cut fuel duty

Other key findings

  • The number of fatal accidents per billion lorry miles fell by 3.5% – a figure which is 43% lower than a decade ago
  • A stronger economy is leading to increased demand for logistics
  • The skills shortage remains a major issue for logistics – average age of lorry driver has increased from 45.3 to 48 since 2001
  • There continues to be a fundamental change in the way we shop and the way we move goods (more sales online)

We will comment as the matter develops.

More from our transport and logistics experts

You can find all of our latest transport and logistics sector news and newsletters here.

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Paul Wormald is a partner at Hawsons, working in the Doncaster office. He worked previously with two national firms of Chartered Accountants prior to joining Hawsons in 2001. For more information or advice on anything covered in this article, please contact Paul on pw@hawsons.co.uk or 01302 367 262.[/author_info]