Greater government investment, an improved flow of goods across borders and a closer partnership between government and the logistics sector could boost Gross Domestic Product (GDP) by £3.9bn by 2030.
The findings are revealed in a new report by Oxford Economics for Logistics UK, dubbed Logistics: Delivering a Solution to the UK’s Productivity Puzzle.
The report, sponsored by Amazon and Volvo Trucks, has found that post-Brexit border friction and a lack of investment in national infrastructure, innovation and skills is hampering the UK’s logistics system and impacting on the UK economy.
It states: “In recent years, the efficiency of goods movement within the UK and across its borders has declined compared to international peers.
It added: "The largest falls related to ‘timeliness’, infrastructure quality’ and the ‘quality and efficiency of customs operations’, For the latter, it is notable that the drop coincided with the implementation of the UK’s new trading arrangement with the EU27.
"This change has resulted in additional administrative complexities for businesses seeking to trade with partners that account for 42% of the UK’s international trade by value."
The report said another key factor is the lack of transport infrastructure investment over the last decade, which at 0.8% of UK GDP is considerably lower than rates in comparable economies.
It notes that the UK is in joint 19th position in the World Bank logistics rankings, down from an average ranking of 6th between 2012 and 2018 and outlines how a return to the top ten would unlock a significant boost in GDP through productivity gains.
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The report calls for four key actions to redeem the UK's standing. These are the creation of an innovative and integrated infrastructure; a fair transition to a green economy; the development of a skills partnerships to support a thriving sector, and the expansion of trade, as a driver of innovation and productivity.
It warns that the decline in the UK’s performance cannot be reversed by the logistics sector alone. It states: "Logistics UK believes that that the challenge ahead, both on productivity and decarbonisation, highlights that public-private partnership is vital."
David Wells, Logistics UK chief executive, said if the reports recommendations are acted upon it would result in an approximate £80 per annum increase to the annual income of the UK’s 30 million households – a £2.3bn boost to domestic budgets by 2030 – and if the UK was to become a global leader in logistics, this benefit would be doubled to £7.9bn a year.
He added that to achieve these gains there needs to be a strategic partnership between the logistics sector and government. He called for the creation of a cross-Whitehall Logistics Productivity Forum to deliver improved infrastructure, reduce friction at the country’s borders to boost trade, resolve skills gaps and invest in innovation to drive efficiency.
Turning to the need to deliver the transition to a green economy, he added: “If the UK gets the transition to net zero right, it will align with long term higher productivity.
"In the short-term, significant levels of investment are required to make the necessary switch efficiently. Both public and private investment needs to avoid stranded assets."