The role and state of freight and logistics in the UK economy

The movement of freight is vital to the British economy, whether it is raw materials for manufacturing, fuel for electricity generation or the transport of consumer goods, the population of Britain relies on freight transport for its high standard of living and economic prosperity

Freight and logistics is a very significant part of the economy, estimates vary significantly and depending on research definitions the sector employs 1.7 to 2.2 million people across 63,000 to 193,000 companies which is up to 8% of the UK workforce. These companies have a collective turnover of £770bn and a GVA of circa £55-96bn which equates to 26% of the total economy

On a global level UK Supply Chains are co-dependent with international logistics to a significant degree, and UK capabilities playa a major role outside our island boundaries. We exported £298bn and imported £399bn of goods in 2011 all of which are handled by the freight and logistics sector with a direct impact on UK value add and competiveness

Labour costs are beginning to increase in the developing world by the end of Sept 2012 31 Chinese regions had increased minimum wages by 21.7% while other developing nations such as Bangladesh and Vietnam are benefitting, the lack of skills and infrastructure coupled with the increasing costs of global freight transport are leading many businesses to consider returning production to the developed world Reducing UK logistics and transport costs substantially would enable the UK to compete more effectively beyond labour unit costs and productivity   

The UK is ranked 10^th out of 155 in the world for logistics by the World bank in their 2012 logistics performance index, in contrast the UK was ranked 8^th in 2011, however it is important to note that the UK is in the top ten percent for its freight and logistics capabilities and is widely recognised for its supply chain leadership through world leading institutes such as Cranfield  

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