Logistics Sector Sets Out Priorities Ahead of UK Autumn Budget
UK transport and logistics organisations are pressing the government to address rising fuel costs and provide greater certainty over planned customs reforms for low-value imports ahead of the Autumn Budget, scheduled for Wednesday, 28 October. The financial statement is due to be delivered by Chancellor of the Exchequer John Healey.
Logistics UK and the Chartered Institute of Logistics and Transport UK (CILT UK) are calling for the existing 5p cut in fuel duty to be maintained at a minimum, with the possibility of further reductions. Meanwhile, Agency Sector Management (ASM) wants the government to commit to a clear timetable for publishing the outstanding financial and technical details of its low-value imports policy.
Although aviation fuel is currently exempt from duty in the UK, rising fuel costs continue to affect road feeder services and road transport operations. Industry representatives warn that additional expenses could put further pressure on logistics businesses, many of which operate on tight margins.
Ben Fletcher, chief executive of Logistics UK, said fuel remained an unavoidable cost across delivery operations. He urged the Chancellor to retain the current 5p fuel duty cut in the upcoming Budget.
According to Fletcher, removing the existing freeze on fuel duty would cost businesses and consumers an additional £2.8 billion annually. Given the logistics sector’s role in supporting the wider UK economy, he warned that higher operating costs could ultimately be passed on to customers.
Such an increase could create a double inflationary effect, with consumers facing higher prices both at fuel pumps and for goods sold in shops.
Geopolitical Disruption Adds to Supply Chain Pressures
The calls for greater cost stability come as Beazley publishes its latest analysis of geopolitical and economic risks, based on a survey of 3,500 business leaders worldwide.
The findings indicate that 69% of respondents expect to change suppliers or restructure their supply chains in response to current levels of geopolitical disruption. Meanwhile, 42% identified economic slowdown, inflation, recession and sovereign debt as their greatest risks, representing an increase of 32% compared with January this year.
These pressures also have implications for air freight. The wider air cargo ecosystem depends heavily on the cost and reliability of its ground transport connections, particularly for road feeder services and last-mile deliveries.
As a result, higher road transport expenses can affect the overall viability and cost of moving freight, even when the main international leg of a shipment is completed by air.
CILT UK Warns of the Wider Impact of Fuel Costs
CILT UK has also highlighted the growing financial pressure facing transport operators and is calling for the Budget to provide support for logistics businesses and supply chains.
The institute argues that fuel costs affect far more than private motorists, directly influencing the movement of goods and the operation of public transport. With international oil prices remaining high, it considers maintaining the existing 5p fuel duty cut an important measure to help businesses manage current cost pressures.
However, CILT UK also emphasises the need for longer-term measures that give companies the confidence and practical support required to invest in cleaner transport.
Dr Shareef Abdul Khader, chairman of ABC Cargo Group of Companies, highlighted the interconnected nature of international freight and domestic distribution.
He noted that a shipment may travel thousands of miles to the UK by air or sea, but its journey frequently continues by road to a warehouse, distribution centre, business premises or final customer.
International freight, domestic transport, warehousing and distribution must therefore be considered as parts of the same supply chain, rather than as separate operations.
Khader also stressed that fuel represents only one element of the overall cost of moving goods. Warehousing, energy, business rates, staffing, infrastructure and equipment investment all contribute to operating expenses.
For freight companies, he said, one of the key issues following the Budget will be the combined impact of the measures announced, rather than the effect of any single policy in isolation.
ASM calls for firm deadline on low-value import reforms
Agency Sector Management is also calling on the Chancellor to signal a firm commitment to releasing the outstanding financial and technical details of the UK’s low-value imports (LVI) reforms by 30 June 2027 in his first Budget, adding to concerns over the cost of fuel.
The organization says companies need enough time to get ready for the changes, which will end the current customs duty relief for shipments worth £135 or less entering Great Britain and add new customs requirements.
Under the proposed system, sellers and online marketplaces would be required to provide item-level data and pay customs duties on a quarterly basis. Traders will also need to correctly classify their goods and apply the relevant UK Global Tariff rate.
The reforms will include an additional fee to cover the cost of administering the new arrangements. The government has not yet announced the amount of the fee, or the basis on which it will be charged.
Overseas sellers and online marketplaces not based in the UK will be subject to additional obligations. They will need to appoint a fiscal representative in the UK who will be liable for their customs debts.
Also, a number of important elements of the new framework are still unresolved. These include the final VAT collection model, official guidance, technical specifications and the phased implementation and testing timetable.
Logistics Businesses Need Clarity on Changes
Simon Adams, program manager at Agency Sector Management, cautioned against placing the financial burdens and operational risks of an incomplete policy framework onto the logistics industry.
Freight forwarders, customs intermediaries, parcel operators and software providers could not prepare anything until the government confirmed the required data, technical specifications and testing schedule, he said.
“The Chancellor must set a firm deadline for these decisions in the Budget, because general assurances that more details will be provided later will not do for businesses which have to make major changes to their systems and processes,” Mr Adams also urged.
The two issues highlight the problems facing the UK logistics sector as it braces for the government’s fiscal decisions. For businesses engaged in customs clearance, parcel distribution and cross-border e-commerce, the uncertainty surrounding low-value import reforms presents a different planning challenge from the immediate fuel duty concern for transport operators.
The Budget therefore provides a crucial chance for the industry to lobby for both short-term cost stability and greater regulatory certainty, enabling companies to plan investment, adapt operations and maintain efficient UK supply chains.
