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  • Overview

    Home deliveries are booming. According to Business Live, the UK’s top 100 retailers’ online traffic has increased by 52% since the pandemic whilst online food shopping has seen a staggering 94% rise on average.  It is predicted that the UK will see a continuing trend of growth in online shopping, with the number buying online likely to grow 30% by 2024.

    Consumer expectations of e-commerce

    During the pandemic itself, according to Business Live, 89% of retailers admitted that their digital and e-commerce platform capabilities failed to keep pace with the customer demand which in turn led to slower delivery turnaround time.  Since time taken from order confirmation to  delivery is becoming one of the most competitive factors in the online buying process, it is becoming increasingly more difficult for those who do not have current or up-to-date e-commerce platforms to compete.  Consequently, 31% of retailers now want to build e-commerce apps and 32% of retailers are looking to launch or improve their social media presence. 

    Staff shortages and rising fuel costs 

    If businesses are struggling to keep pace with the demand for e-commerce, logistics businesses are inevitably facing similar problems.  38% of retailers say they are dissatisfied with the warehousing, distribution and logistics systems and associated infrastructure.

    The evolution of online retail sales is continuing to increase demand for carrier firms such as Evri (Hermes), Parcel Force and DPD.  However, there is also a huge opportunity for independent companies. Companies House data shows that were more than 120,000 new transportation businesses were incorporated between 2014 to 2021.  A large number of these are likely to be smaller companies helping to deliver goods from large retailers, such as Amazon.

    Whilst delivery companies may be plentiful, there have been ongoing issues with driver shortages. The Road Haulage Association (RHA) conducted a survey in 2021 which estimated that there is a shortage of more than 100,000 drivers in the UK.  There has been a general decline in the number of HGV drivers in the UK for the past four years.  According to the study, most of that decline has been in the previous two years, particularly during the pandemic.  This was not only due to the pandemic itself but also due to the role of Brexit which caused severe disruption to international freight, particularly once the Brexit transition period ended.  According to figures provided by RHA, in comparison to the 5-year average from 2014 to 2019, goods imported in 2021 were down by 30% and goods exported were down 35%.  Further, the increase in fuel prices has also had a severe impact on the transportation industry. In November 2020, prices started soaring and have remained historically high ever since, especially as a result of UK imposed Russian sanctions, which has also had a huge impact on the cost of living.  

    Required strategic road network upgrades

    Statutory consultations and procurement processes all take time, but the need for strategic road network improvement is acknowledged and action is being taken.  In 2021, Highways England announced a £200 million investment to improve roads across the South West of England.  The M20 in Kent is currently undergoing huge construction work to reduce congestion.  The A14 is being improved to provide crucial network links between the Midlands and East Anglia.  Consultation is also underway for a third lower Thames crossing linking Kent and Essex which would involve the longest road tunnel in the UK being created between the A2/M2 and  the A13/M25 and see roads widened and capacity doubled whilst allowing vehicles to avoid the Dartford Crossing.

    Improvements in such road infrastructure will create opportunities for new logistics hubs.  

    Climate change

    The pandemic placed much of global travel and logistics on hold - global air traffic fell by 65%, rail traffic dropped by between 40-60%, and Transport for London reported fare income falling by 90% cent in the first two months of the lockdown.  Post-pandemic, as demand recovers, how can the transport and logistics sector keep up with demand for its infrastructure whilst also keeping its emissions in line with global climate goals?

    The UK itself has pledged to reduce its greenhouse-gas emissions to net zero by 2050.  As part of this, HM Government has introduced progressive bans for diesel HGVs from 2035-2040 which will have a huge impact on transport as most HGVs on the road are diesel.  The sale of all diesel HGVs will be banned from 2040 as part of the Government plan to cut carbon emissions from the transport sector. The sale of smaller diesel HGVs will be banned from 2035, with ones weighing more than 26 tonnes prohibited five years later.  However, green couriers are beginning to emerge, with battery powered and low emission vehicles.  Larger companies, such as Amazon are following the initiative and have unveiled a fleet of electric vehicles.

    Infrastructure also needs to be prepared for increasing frequency of extreme weather due to climate change as global average temperatures rise by between 1.5°C and 5°C over the next 30 years.  For example, research found that one quarter of the world’s 100 busiest airports are situated less than 10 meters above sea level and are therefore exceptionally vulnerable to flooding and storm surges. In order to protect these vulnerabilities, greater thought needs to be given in ensuring infrastructure is adaptable to rising sea levels – such as in Japan, at Kansai ‘floating’ airport, where adjustable columns are used to compensate for land and sea shift.

    Harnessing technology

    Technology is critical in the move to greater sustainability. 

    Where goods are being moved by air it has been shown smart metering and low energy products can reduce an airport’s 24 hour carbon footprint.  For example, devices can support staff and passenger flow by automatically adjusting facilities and conditions (such as lighting and air-conditioning) during peak times in the day, or in accordance with data analytics. 

    In the shipping supply chain, automated routes and schedules respond in real-time to develop the quickest and most eco-friendly routes between locations depending upon the accepted cargo on board.  And then, once aboard, containers can be monitored via Blockchain from current temperature controls to access requirements, helping to ensure secure and stable shipment without tampering and reducing the wastage of products which may otherwise have been spoiled due to inadequate storage conditions.

    Other initiatives include smart maintenance which helps to reduce pollution through the effective scheduling of traffic lights and planned works and national holidays and events. 

    The pressure to become more sustainable will be felt on both the warehouse front in terms of electrical charge points or locations near to hydrogen refuelling facilities, and by logistics companies in terms of switching their vehicles to use sustainable forms of energy.  This requires considerable investment to make both electric vehicles and hydrogen powered vehicles a viable option.

    Flexible contracts

    Flexibility is one of the most important lessons of the pandemic and transportation and logistics needs to be able to accommodate abrupt and significant shifts in demand - both foreseen and unforeseen. Flexibility in contracts is key, and therefore all attempts should be made to ensure that infrastructure (as the biggest cost) can be scaled up and down in accordance with this. There will clearly be a need for substantial investment in the sector, with both transport companies and warehouse owners working together in partnership to meet both consumer demand and to keep up to date with the latest sustainability targets and initiatives. Significant collaborative work and thinking as well as investment is required on all counts. 
     

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