The government has announced a ten-year Industrial Strategy focused on reducing energy costs for manufacturing businesses, which could have indirect implications for logistics and supply chain operators.

More than 7,000 electricity-intensive manufacturing businesses will see bills reduced by up to 25% from 2027 under the British Industrial Competitiveness Scheme. The programme targets sectors including automotive, aerospace and chemicals - industries that rely heavily on logistics and transport services.

Manufacturing firms supporting over 300,000 jobs may receive energy savings of up to £40 per megawatt hour, whilst steel, chemicals and glass producers will see electricity network charge discounts increase from 60% to 90% from 2026. These sectors form part of many supply chains served by logistics companies.

The strategy includes plans for a Connections Accelerator Service to address grid connection delays that have affected some business expansions. Scheduled to begin by end-2025, this could potentially benefit warehouse and distribution centre developments requiring grid connections. 

Manufacturing sector plans include a target to increase vehicle production to 1.35 million units, which would generate additional freight volumes for transport operators. The Government has allocated £2.8 billion for manufacturing R&D over five years, aimed at supporting domestic production.

Infrastructure measures include a £600 million Strategic Sites Accelerator and proposed planning reforms to reduce development timelines. These could affect logistics facility development, though details on implementation remain unclear.

Mike Hawes OBE, SMMT Chief Executive, said: "The number one priority must be addressing the UK's high cost of energy, enabling the sector to invest in the technologies, the products and the people that will give the UK its competitive edge."

The manufacturing sector has welcomed the strategy, with Stephen Phipson CBE, CEO at Make UK, stating: "British industry has been in desperate need for a government who understands our sector and had the strategic vision for a plan for growth. Today's Industrial Strategy is a giant and much needed step forward."

Prime Minister Keir Starmer said: "This Industrial Strategy marks a turning point for Britain's economy and a clear break from the short-termism and sticking plasters of the past."

Business and Trade Secretary Jonathan Reynolds acknowledged that energy costs have been a major concern for businesses: “Not only does this Strategy prioritise investment to attract billions for new business sites, cutting-edge research, and better transport links, it will also make our industrial electricity prices more competitive.”

The broader business community has also responded positively, with Rain Newton-Smith, Chief Executive of the CBI, calling it "a significant leap forward in the partnership between government and business that sets us on the path to our shared goal of raising living standards across the country."

However, the strategy does not directly address logistics sector challenges such as fuel costs, driver shortages, or transport infrastructure. The eight priority sectors focus on manufacturing, energy, creative industries, defence, digital technologies, financial services, life sciences, and professional services.

The potential benefits for logistics operators would primarily come through increased business from manufacturing clients with reduced operating costs, rather than direct support for transport and logistics companies themselves.

You can find out more about the government’s industrial strategy here: https://www.gov.uk/government/publications/industrial-strategy