Special report: Scotland’s logistics sector sets the pace
WE all take the lorries and vans t hat seem t o stream endlessly along Scotland’s road network for granted, but as the team at the Logistics and Research Centre at Heriot Watt University points out in a recent press release, if road freight transport were to stop moving, for some unimaginable reason, the entire UK economy would be paralysed within four to five days. The UK sector as a whole has an annual turnover of about £24 billion, with some 290,000 drivers employed to operate over 400,000 lorries, and with tens of thousands of staff in supporting roles.
As if simply keeping goods flowing between businesses and keeping the supermarket shelves stacked were not mission enough, the sector is under huge pressure to “green-up” and cut its carbon dioxide emissions as part of the UK’s commitment to sustainability under the Kyoto Agreement. According to UK government statistics, the transport sector as a whole was responsible for some 24% of the UK’s greenhouse gas emissions in 2012. Further pressure comes from the fact that the EU white paper on transport sets a 60% emissions reduction target for transport.
All of this makes sustainability a major issue for companies in the sector and sustainability is taken very seriously by all companies – not least because cutting emissions is often synonymous with more efficient route planning and lower fuel consumption, both of which mean lower costs for companies. And in a sector where margins can be wafer thin, lowering costs is an essential part of generating profit.
A recent study of Scotland’s road freight transport commissioned by the Scottish Executive starts from the premise that road speed and journey time reliability are crucial to haulage operators. Road freight traffic only accounts for around 13% of the total number of vehicles on Scotland’s roads with private vehicles being far and away the most numerous. Congestion on the roads is no friend to haulage operators, particularly where perishable goods are concerned. Distance is another challenge. The Scottish Executive study found that haulage operators in Scotland are having to struggle with the fact that there are more deliveries into Scotland than from Scotland to the south.
On the positive side, the report found the road freight market is moving in the direction of containing a higher proportion of high value, fast moving consumer goods, calling for a flexible and responsive service from logistics companies.
Scotland, with its far flung rural communities, presents particular challenges as the sector responds to internet shopping, and smart routing and empty leg utilisation will be key here. Fuel costs and market resistance to rising prices are a perennial headache for operators but the opportunities for delivering value added services, particularly around issues such as returned goods, offer ways forward.
Transport and logistics encompass the interplay between road haulage, rail and ferries and getting the balance right between them, along with the smart use of Scotland’s ports, requires skill and planning.
The sector is vital to Scotland’s growth and future prosperity and does a tremendous job of delivering the right goods at the right time. This report spotlights some of the major players as they grapple with the challenges involved in keeping commerce moving.