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The government has promised this year it will publish “a new plan for freight and logistics … so that the sector can continue to play its part in growing the economy” as part of its newly published Industrial Strategy.
The Industrial Strategy was described as “unashamedly place-based, recognising that stronger regional growth is critical” both for growth and economic resilience. It briefly highlighted the freight and logistics sector, saying it “makes a vital contribution” to the competitiveness of eight industrial sectors named as priorities in the Strategy, and it said that “With 76% of logistics employees based outside London and the South East, the sector supports local economies and job creation across all four nations, with major hubs in the Midlands and the central belt of Scotland”. In 2023, it contributed approximately £379.8bn in GVA.
However, in the Industrial Strategy most support for the freight industry and for zero-carbon freight was indirect, such as ensuring strategic investment projects receive timely grid connections, removing planning barriers and backing “transformative infrastructure projects”.
For example, the strategy did not link the logistics and freight sector explicitly with support for the supply chain, one of the Industrial Strategy’s eight main sectors, “which will be required to provide vital materials and parts, from steel to chemicals, or manage essential infrastructure, from ports to electricity networks”.
The Industrial Strategy cited an Oxford Economics report that estimated that in 2019 every pound of output from the freight and logistics sector generated £2 of spending elsewhere in the economy, through supply chains and employee spending, which it said was “one of the highest economic footprints of any UK sector” (see Logistics: Delivering A Solution To The UK’s Productivity Puzzle, produced by Oxford Economics for Logistics UK).
The Oxford Economics report said that “if the UK was to return to the World Bank’s top ten for movement of goods within the country and across its borders, it would see an estimated £3.9 billion boost in GDP through productivity gains. If the UK were to become a global leader, this benefit would be doubled”. It said pressures that need to be resolved include
border friction, transport congestion and declining connectivity, and challenges with skills and innovation.
Net Zero logistics
On Net Zero, the Strategy promised to improve connectivity by investing in new transport infrastructure across England and Wales. It promised £400 million during this Spending Review period (ie to 2028/29 for capital spending) to support the roll-out of charging infrastructure across the country, “including to facilitate the deployment of zero emission vans and HGVs”, without saying how that would be split.
The Oxford Economics report suggested that the benefits of low-carbon logistics are often underestimated, because in official statistics, “Some of the contribution of the manufacturing and construction sector is associated with the logistics sector, relating to wholesale and warehousing businesses, as well as to other transport businesses, or the sector’s investment in constructing facilities”.
It said a key challenge was “establishing the infrastructure required for a seamless transition to zero-emission road freight vehicles, while also bolstering hauliers’ confidence in the accessibility of charging or alternate refuelling facilities (eg, for hydrogen fuel) comparable to the convenience of refuelling with petrol or diesel”.
A longstanding issue of delays in connecting to the electricity network, which has been a barrier to high-voltage connections that can serve electric HGV charging, is also to be addressed this year.
The Industrial Strategy promised a new ‘Connections Accelerator Service’ to provide support connecting to the grid for demand projects, prioritising those that create jobs and bring the greatest economic value, which is due to begin operating at the end of 2025. Also this year energy regulator Ofgem has promised to publish this year the outcome of an end-to-end review of the connections process, with proposals to strengthen the incentives and obligations on network companies to deliver timely connections.
Commenting on what the announcement will mean for the future of the commercial EV industry, Richard Earl, R&D Director, EO Charging, said: “The government’s Industrial Strategy should be welcomed as a pivotal policy for EVs and EV Charging Infrastructure.
“The EV & Charging Industry has repeatedly raised concerns about high electricity costs, unstable legislation, slow grid connections, and a lack of skills that has hindered the decarbonisation of transport in recent years.
“I’m pleased that this Industrial Strategy sets out to address these issues head on, providing the clarity, coordination and commitment from government to businesses that has been desperately needed.
“We’ve seen from economies like China that long-term planning is critical to the success of their Electric Vehicle market. Therefore it’s a relief that the UK now has a 10-year plan in place to drive the growth in the critical automotive and clean energy sectors.
”The coordinated approach across energy cost reduction, focus on strategic industries, regional development and export strategies lay the foundations to allow the UK to lead the world in decarbonising transport.”
