Transport and logistics experts are urging the Government to build on positive steps following the Chancellor’s Autumn Budget by addressing the cost pressures facing operators and accelerating investment in cleaner transport and infrastructure – all to help create more resilient supply chains.
Following today’s (28 October) budget announcement the Chartered Institute of Logistics and Transport (CILT (UK)), and its experts, are now highlighting the impact for transport operators, the logistics sector and the wider economy.
Whilst freezing the 5p fuel duty cut is welcome, reducing electricity costs and increasing transport infrastructure support will offer greater provision with a longer-lasting impact. The aim is to give businesses the confidence to invest in sustainable supply chains, improve regional and national connectivity and make cleaner transport more affordable.
We welcome the proposed scheme to reduce electricity bills, but clarity is needed on eligibility for transport and logistics operators, particularly those investing in fleet electrification and decarbonisation. Alongside managing these immediate challenges, the Government must create the conditions for businesses to invest in cleaner alternatives.
Changes to business rates and employment costs will also be important for transport and logistics operators, many of which already face pressure from rising operating expenses and the need to invest in new vehicles, technology and infrastructure.
Daniel Parker-Klein, Director of Policy and Communications at CILT(UK), said: “We need to look beyond immediate cost pressures and ensure businesses have the confidence and practical support to invest in sustainable transport. But high electricity costs and limited grid connections continue to make investment in electric vehicles, charging facilities and electric rail services challenging – and most importantly less appealing. If we want a more resilient and sustainable economy, companies and organisations need to be attracted to cleaner energy with the necessary pull factors.”
Cutting prices at local, lower-powered public chargers to reduce costs for electric vehicle drivers is positive, but further action is needed for businesses. In particular, the sector needs clear commitments to expand charging infrastructure for electric vans and HGVs – coupled with grid upgrades required to support greater electrification and selective electrification of key rail freight routes.
Daniel added: “The Government should increase support for the electrification of freight transport, across both road and rail, and address the barriers that make this transition. This also includes supporting short-sea ferries and ensuring ports have the affordable electricity and reliable grid connections needed to provide shore power to vessels at berth.
The proposed regional transport investment and road repairs remain important to maintaining connectivity - supporting local economies and keeping logistics moving. Reliable road connections are vital to supply chains, and reported cancellations of major schemes, such as the A127 Corridor for Growth scheme in Essex, raise concerns about the infrastructure needed to support economic growth.
CILT(UK) has also highlight the potential impact of business rates on transport and logistics operators, particularly those running warehouses, distribution centres and other large bases. As business rates are devolved, the Barnett consequentials gives Scotland, Wales and Northern Ireland the option to fund equivalent support, but do not guarantee it. CILT(UK) welcomes the move but seeks clarity on how the measures will affect logistics businesses across the UK and encourage a consistent approach to avoid regional disparities.
Progress towards Great British Railways and investment in rail infrastructure will help create a more coordinated and efficient railway, but CILT (UK) warns the needs of freight must remain central to any planning. Clear commitments to rail freight are needed to support the Government’s ambitions for growth in this area.
The Institute is calling on the Government to:
Make electricity more affordable will help make cleaner transport a more viable investment. VAT reductions on public charging should form part of a wider approach to reducing the cost of electrification.
Improve access to the electricity grid to expand vehicle charging infrastructure, strengthen power supplies to the rail network and provide shore power for ships and short-sea ferries. This should include a clear plan for the charging and power infrastructure needed by electric vans and HGVs.
Accelerate investment in cleaner transport by supporting the electrification of road and rail freight, alongside short-sea ferry services and shore power infrastructure at ports and removing barriers that prevent businesses from adopting lower-emission alternatives.
Invest in key rail freight routes — particularly connections between container ports, quarries, distribution centres, manufacturing sites and areas earmarked for development. This would help move goods and construction materials more efficiently and help the national house building targets.
Back rail freight growth targets with funding and practical measures, including the Government's stated ambitions for 40% growth by 2040 and 75% by 2050. Infrastructure investment in capacity and electrification and the development of Great British Railways should recognise freight's central contribution to economic growth and decarbonisation.
Support reliable regional transport and road infrastructure, including the planned investment in road repairs and schemes that improve connectivity, strengthen local economies and support the efficient movement of goods and people.
Maintain support on fuel duty while world oil prices remain high, the move to maintain the 5p duty freeze will help the sector through one its most challenging periods.
Support the move to reduce business and employee costs. These changes will ensure that Budget decisions do not undermine the ability of transport and logistics businesses to invest, recruit and deliver essential services.
Additional energy-related Budget points
• Electricity grid infrastructure: Great British Grid is intended to accelerate network upgrades and connections for renewable generation and industrial demand. Long-term funding remains subject to future spending decisions.
• Renewables and energy storage: The Budget’s wider policy direction supports investment in clean power, energy storage and low-carbon technologies, although any new allocations need to be distinguished from existing commitments.
• Energy market reform: The Government intends to reduce the influence of volatile gas prices on electricity costs over the longer term, potentially improving cost certainty for businesses and consumers.
The Institute has welcomed news in the budget but is urging the Government to link decisions to its wider priorities, including resilience, housebuilding, trade, infrastructure development, regional connectivity, rail freight growth and environmental goals.
Daniel concluded: “Going forward we need to provide a clearer direction for infrastructure investment across road, rail, public transport and maritime, rather than leaving businesses to navigate uncertainty over future costs and infrastructure.
“We welcome steps and look forward to working with Government on these moves which recognise the importance of transport and logistics to the UK economy, but there is much more to do. The sector needs support to manage the cost pressures it faces today, alongside a clear, long-term commitment to sustainable, resilient transport and better infrastructure.”
Making electricity more affordable, improving grid access and investing in the infrastructure needed for cleaner transport will help businesses make the transition to more sustainable operations. The Government must ensure that its decisions support the resilience of supply chains today while enabling cleaner, more efficient transport for the future.