Logistics sector seeks more UK government support
Intermodal transport links deliver economic benefits and the UK’s logistics network is a prime example from London Heathrow Airport (LHR), the country’s largest port by value, to the expanding East Midlands Gateway. The East Midlands development, which is built around East Midlands Airport (EMA), is an example of how coordinated air, rail and road freight infrastructure can attract investment and strengthen supply chains.
The UK is an island country , separated from the road network of continental Europe , so it has some special geographic limitations . But its position on the edge of mainland Europe has also provided important commercial opportunities. Investment in transport infrastructure and policies to support the long-term competitiveness of the logistics industry will be needed to protect this strategic advantage.
“The sector is entering what could be a very significant period. As Prime Minister Keir Starmer prepares to deliver his first Autumn Budget, Logistics UK has submitted a new report to Parliament, highlighting logistics as a key driver of economic growth. The government has also appointed its first minister with logistics specifically in the ministerial title raising hopes the industry will get more recognition in national policymaking.
The question is whether the government’s financial decisions will deal with the sector’s immediate pressures, while creating conditions for sustained investment.
Autumn Budget highlights industry priorities
“The Autumn Budget is a crucial opportunity to strengthen the businesses that support domestic commerce and international trade,” said Ben Fletcher, chief executive of Logistics UK.
The association, which represents companies across the UK’s transport and logistics industry, said the sector needs practical financial help and a policy environment that allows it to compete in global markets.
“We do around a trillion pounds of international trade, there aren’t that many industries that can talk in trillions,” said Fletcher.
Logistics UK has identified three immediate priorities for government.
It first wants ministers to cut fuel duty or freeze the current rate to help operators control one of their biggest operating costs. Secondly, it is calling for relief from business costs, including business rates, that continue to burden companies and logistics providers. Thirdly, the association wants to see electricity prices fall, which would make electrification financially more attractive and help progress net-zero targets.
To achieve the latter objective, Logistics UK is calling for the sector to be included in the British Industrial Competitiveness Scheme (BICS) which could help cut electricity costs and encourage investment in cleaner technologies.
These demands come amid continuing disruption in the global economy. Geopolitical tensions, conflicts in the Middle East and the Russia-Ukraine war have created an uncertain operating environment, with fuel costs putting further pressure on transport businesses. But logistics operators still need to move goods and maintain supply-chain continuity.
The association sees the Budget as an opportunity to safeguard the industry’s ability to continue to support economic activity in a time of international instability.
A ministerial role could give logistics greater visibility
The government has already taken a step towards strengthening the industry’s representation in Westminster. On 22 July, Keir Mather’s responsibilities as Minister for Aviation, Maritime and Logistics were expanded to give logistics a more explicit place within his portfolio.
It remains too early to determine whether Mather will become the strong political advocate the industry hopes for. Nevertheless, the appointment gives the sector a more clearly identified ministerial contact through which to communicate its priorities.
Fletcher believes the change may already be helping to bring logistics issues further into government discussions.
“We’ve had more inquiries from Treasury, more requests for evidence. The Department for Business are now thinking about how you take forward the industrial strategy in a slightly different way under the Burnham administration, and again are reaching out to understand more about the industry, and I don’t think it’s entirely coincidental that coincides with a new Minister for logistics,” he said.
The increased interest from government departments could indicate a growing willingness to understand the industry’s economic contribution and consider how it can be better incorporated into industrial strategy.
For Logistics UK, the challenge is to turn that interest into tangible policy measures, investment decisions and support for businesses operating across the supply chain.
Logistics UK report highlights £356bn economic contribution
The importance of the sector to the country is also underscored by a report submitted to Parliament by Logistics UK on the day before the Budget. The study commissioned from Capital Economics, sees logistics as a key driver of growth and investment across the UK economy.
The report estimates logistics underpins £356 billion of economic activity each year. It also finds that for every £1 of economic activity generated directly by the sector, a further £1.04 is supported across the wider economy, highlighting the influence of the industry beyond its own businesses.
“Without logistics, nothing moves,” the report’s executive summary says.
Employment numbers back up that assessment. The study reveals that logistics accounts for some 8% of the UK workforce with a total of 5.3 million jobs. It employs as many people, and in some cases more, than construction, manufacturing, and financial and professional services.
London Heathrow Airport is a particularly good example of the extent of the sector. The UK’s largest single-site employer, with over 90,000 people working at and around the airport.
The report also points out that besides jobs, infrastructure that can link different freight modes and allow goods to move between domestic and international markets is important.
East Midlands Gateway shows the benefits of multi-modal investment
The East Midlands Gateway, based around East Midlands Airport, is a prime example of how integrated freight infrastructure can improve the UK’s logistics capabilities.
The development combines air cargo, rail freight and road transport, giving companies the opportunity to move goods through a co-ordinated network. It has also drawn significant investment and has played a key role in developing some of the country’s most modern logistics facilities and capabilities.
Fletcher regards such development as an important model for future infrastructure planning.
Look at things like the East Midlands Gateway project around East Midlands Airport and it’s one of the most sort of sustained areas where we’ve got the ability to bring together air freight, rail freight, road freight, it’s driven a huge amount of investment. This project has some of the most modern facilities and capabilities in the country. “Multimodal capabilities are going to be a big part of the future. “It’s important that the country gets value from these projects across the country,” he said.
The association is calling for similar opportunities to be developed across the country so that the benefits of integrated transport infrastructure are not limited to a small number of locations.
Another priority is investment at Heathrow. Fletcher pointed to the potential importance of expanding the airport’s infrastructure, such as the proposed third runway. But the project is still awaiting planning and development consents.
“The approval process itself is a bigger issue for the logistics industry. Long and complicated planning processes can delay infrastructure projects which businesses see as necessary for future capacity, efficiency and economic growth.
Planning rules remain a challenge for freight infrastructure
Although there are signs of change, Logistics UK believes the planning system does not always give sufficient consideration to the wider economic benefits of freight and logistics developments.
Fletcher explained that planning authorities can be required to treat freight activity as something to minimise when assessing the cumulative effects of a proposed development.
“When you look at planning, we are seeing some things starting to change, but I think generally, the criteria that fall upon planning authorities often require them to look at freight and logistics as something that needs to be minimized as a as an aggregating factor,” he said.
The concern is that this approach can make it more difficult to deliver infrastructure that supports the movement of goods, even when the broader economic benefits could be substantial.
There are, however, reasons for cautious optimism. Changes in planning practices could help create a better balance between local considerations and the national economic advantages associated with transport and logistics investment.
For the sector, the objective is to ensure that decisions about major developments reflect their contribution to employment, trade, productivity and supply-chain resilience.
Air freight and logistics could help drive the next phase of growth
Despite the opportunities highlighted in the report and the growing engagement with government, Logistics UK acknowledges that the outcome of the Autumn Budget remains uncertain. Political commitments will need to translate into concrete financial support and a more favourable environment for investment.
Air freight is one area where the sector’s contribution is particularly clear. By connecting products with markets quickly, it allows businesses to respond to the demands of an increasingly fast-moving global economy.
“In terms of air freight, you know, you need to connect your product to your market, and air freight does that very quickly in a very fast-paced world,” Fletcher said.
He also emphasised that logistics has the potential to generate economic benefits throughout the country rather than in a handful of major commercial centres.
“It’s part of the economy, it’s a part of getting the economy firing again, and unlike a lot of industries, this genuinely is an industry that can deliver growth in every postcode. I think we are at the beginning of that journey rather than at the end of it,” he added.
The combination of a new ministerial portfolio, growing government engagement and fresh evidence of the sector’s economic impact offers a basis for optimism. However, the real test will be whether the government’s decisions provide the financial relief, infrastructure investment and policy certainty that businesses need.
For Logistics UK, the Autumn Budget is therefore more than an annual financial announcement. It is an opportunity to establish logistics as a central component of the UK’s economic growth strategy.
