Logistics UK wants to see a range of measures from the Chancellor
Business group Logistics UK has urged the government to provide a package of support for the country’s logistics sector to avoid rising costs caused by the Middle East conflict from having a knock-on impact on the UK’s economy.
The organisation pointed out that logistics businesses operate on very narrow margins but are facing spiralling costs, most notably the price of fuel, with the cost of filling up a large HGV having risen by 30 per cent to nearly £1,000 between 23 February and 6 April.
Around half of businesses surveyed by Logistics UK say they are passing on a lot of that cost – leading to higher prices on the shelves – and the other half are unable to, creating severe cash-flow issues.
Chief executive Ben Fletcher said: “The pressures on our sector are unsustainable, and risk pushing up inflation, weakening growth and creating severe cash-flow issues for those who are responsible for keeping our shops stocked with food, our hospitals with medicines and our homes with access to the goods we rely on every day.
”What our members need is an urgent package of support from government to help weather the storm. The policies we have proposed would also support logistics businesses to switch to net-zero technologies over time, increasing the UK’s energy independence.”
In the short term, Logistics UK is pressing Chancellor Rachel Reeves to reconsider her plan to begin increasing fuel duty by 5p from September.
It is also urging Reeves to support the logistics sector with its electricity costs and the costs of decarbonisation, by including logistics in the British Industrial Competitiveness Scheme, and to bring it forward from 2027.
“The government’s energy support for businesses is focused on manufacturers,” Fletcher continued, “but no sector can succeed without the logistics businesses that underpin them, and many parts of our industry, from chilled warehouses to electric HGVs, are facing higher electricity bills due to the conflict.
”Not only is this increasing costs for our members and across the economy, but it is also making it harder to switch to electric vehicles and support the UK’s energy independence. Reducing the duty on liquid low-carbon fuels would also be a welcome step towards decarbonisation and away from dependence on the Gulf.”
Finally, Logistics UK urged the Chancellor to take action on business rates. “The recent increase in business rates on warehouses and other parts of the logistics sector could not have come at a more unfortunate time,” Fletcher said, “which is why we are calling for it to be reversed for at least a year, and for the system to be properly reformed, so that businesses can better manage the pressures caused by the conflict and invest for the future.”
