Shadow play from Tories
January 1st 2010 While there are signs the UK economy may be emerging from the recession, the next 18 months will continue to be extremely difficult for the third party logistics sector, cautions Derrick Potter, chairman of the UKWA
I have been around long enough to have experienced several recessions during my career, but none has been as damaging to the UK as this,” says Derrick Potter.
He feels that some of the present Government’s policies have damaged the UK logistics industry and there is little reason for optimism that the sector will fare better under a Tory administration.
“While the Conservatives are making noises about taxing foreign lorries that use UK roads - which is good news - Stephen Hammond, the Shadow Transport Minister, has declined to give the industry an assurance that a Conservative Government will cut the duty on fuel which is taking so much cash out of our sector,” he explains.
“Fuel represents around 35 per cent of a haulier’s operating costs and because diesel is so much cheaper on the continent, foreign haulage companies are taking business away from their British counterparts, but it seems that none of the major political parties is planning to do anything of significance to redress the balance,” he adds.
He continues: “Since 1993 the price of diesel in the UK has increased by 21p per litre more than if it had gone up in line with inflation. This has no impact on foreign operators – many of whom arrive in Britain with their vehicles filled with enough cheap fuel for a week’s work in the UK. If the Government steadfastly refuses to reduce fuel duty, surely it would be a sensible step to restrict the amount of fuel foreign hauliers can bring into the UK with them?”
In Derrick Potter’s view, the UK logistics industry is also hampered by the fact that Eastern European drivers can be employed on much lower wages than their UK counterparts. In addition, he believes that many foreign operators fail to adhere to the strict domestic and European rules that govern the sector.
He says: “It is widely accepted that many of the smaller countries that have recently joined the EU to do not enforce drivers hours rules as vigorously as we do in the UK. This has created another disadvantage for the UK industry and one which our politicians seem happy to accept.”
The Government’s intransigence over the widely criticised decision to change the rules relating to Empty Property Rates – a move that has resulted in empty warehouses becoming liable for the same rates as occupied buildings – is also adding to the sector’s burden.
“Given that the Government has picked up an estimated £800 million in extra revenue since the new ruling was introduced, most commentators feel that the chances of the ruling being reversed are, at best, slim,” says Potter.
In his opinion, the fact that insolvencies in the logistics industry are not running at higher levels than they are is due in no small part to the skill, hard work and determination of those people – at levels – that work within the sector.
He concludes: “The effects of the last two years’ trading conditions will shape the logistics sector well into the next decade and operators must stay positive, focused and entrepreneurial in their outlook, while at the same time keeping a tight control on costs. By doing so, it should still be possible to make a profit in an industry that appears sadly undervalued by politicians of all parties.”
Roger Williams, chief executive officer of UKWA, added: “Derrick’s comments reflect the feelings of many of our members who have become frustrated during 12 years of a Labour government which has imposed an increased burden of taxation and bureaucracy on a sector which has always worked on a small profit margin.” More articles from United Kingdom Warehousing Association (UKWA): | 
