With Labour registering a victory in the UK General Election, there is now a significant opportunity for the new government to create a policy environment where the logistics sector can thrive and support economic growth. Logistics underpins all sectors of the economy to deliver for households, businesses and public services every day and is a major sector in its own right, employing 8 percent of the UK workforce. The injection of the appropriate investment, incentives and the right partnerships with the government could see the sector provide a boost of up to £8 billion per year to the UK’s GDP in productivity gains by 2030 and the sector is primed and ready to play its part in driving growth.
Logistics UK’s latest annual Logistics Report, published just before the election, supports this assertion and shows that while the sector is still operating in challenging conditions, it is consolidating and preparing to exploit the opportunities that will present themselves when the overall economy improves.
Airfreight looks well placed to seize these opportunities and projections by respondents to the Logistics Industry Survey reveal a very positive sentiment regarding the outlook for the sector. While overall logistics activity is expected to be relatively unchanged in 2024 compared to 2023, air freight is forecast to see a dramatic rise in the coming months.
The report’s Logistics Activity Index measures how businesses feel ‘on-balance’ about business growth or activity and is scored out of 100, where a score above 50 represents an improvement.
The Index ranks airfreight activity in 2023 at 28.3 but forecasts 2024 levels to reach 64.6, indicating a substantial recovery for the sector. This positive airfreight sentiment is supported by the findings of the February 2024 analysis by the International Air Transport Association (IATA), which reported sustained demand growth, up 11.9 percent year-on-year, and capacity expansion at 13.4 percent. Notably, bellyhold capacity in passenger planes grew significantly in the previous year, boosting overall volumes and demonstrating air cargo’s resilience amid political and economic uncertainties.
This is extremely positive news for the airfreight sector and mirrors overall attitudes across the whole logistics industry, with 38 percent of respondents to Logistics UK’s Industry Survey anticipating economic improvement for 2024 compared with 2023. It is now up to the new government to nurture this positive sentiment and implement decisive policy changes to help the sector thrive and deliver economic growth while helping the UK achieve net-zero and keeping supply chains resilient.
The logistics sector contributed £185 billion GVA to the UK in 2022 (the latest official figures available), which is in line with the 2021 figure of £160.2 billion when other factors are considered, and while this is a great achievement at a time of low activity, it is too soon to say the economy is returning to growth.
Despite this, contributing £185 billion to the UK economy when the logistics sector has been dealing with global geopolitical volatility, new trade processes, a financial recession and pressures caused by changing climate is a measure of the industry’s resourcefulness and adaptability to keep the UK trading and satisfy the demands of businesses and consumers alike. It also suggests the sector could contribute even more if the new government creates the appropriate policy environment in which our industry can flourish.
