Our latest guide assesses the UK transport and logistics industry’s current state and major business challenges such as transport funding, new technologies and skills shortages. We also reveal how firms operating in the sector can hope to benefit from cashflow support mechanisms like invoice finance and asset finance, whether they’re seeking to grow their enterprise or simply ensure stability in a fiscal year wrought with political uncertainty.
UK transport and logistics today – trends, technologies and challenges
Were we to judge the current welfare of UK transport and logistics firms on the basis of recent official data, then our initial assessment might appear to reveal an industry flourishing moreso than most. The industry’s contribution to domestic services, for example, has remained relatively consistent over the past 12 months, dropping just 0.3% between January / February 2017 (13.5%) and January / February 2018 (13.2%) according to the Office for National Statistics. Indeed, GOV.UK’s latest transport statistics dataset revealed that the sector’s consumer and client demand only continued to rise in the last few years, with HGVs hauling 170bn tonne kms’ worth of domestic freight in 2016 and 7.8m tonnes moving internationally into / from the UK that year.
Beyond rising demand and services contributions, another clear developing ambition for the sector of late has been to achieve enhanced environmental and operating efficiency via new technologies. Industry analysts are increasingly taking note of the rapid rise to fame for electrical and self-driving vehicles alike, the former showing the potential to lessen transport firms’ fleet maintenance costs while improving their sustainability levels and the latter to reduce the manpower needed to drive consumers’ goods to their allocated destination. With that being said, we should briefly note that with autonomous motor technology still undergoing its testing stages at the time of writing, the likelihood of firms needing to consider securing transport funding for self-driven vehicles seems, for the time being, relatively slim.
Yet figures and trends such as these hide substantial challenges for UK transport and logistics firms beneath the surface, many of which pose particular difficulties for up-and-coming players. GOV.UK’s previously-discussed investigation highlighted how fuel duty tax revenue “more than tripled between 1987 and 2010” before settling at £28bn in 2016, with vehicle excise duty also generating £6bn that year, a marked 1.5% rise on 2015, costs which will only escalate as the government / other authorities continue to tax petrol / diesel vehicles infamous for their CO2 emissions. Even more concerning, perhaps, is that while escalating demand and the emergence of electric vehicles might offer a roadmap for the sector’s future, that won’t make life easier for businesses now facing the prospect of hiring more drivers – despite the latest Paragon Systems Survey’s respondents citing skills shortages amongst their biggest obstacles – along with more environmentally friendly vehicles for their fleet and superior software to manage consumers’ ever-diversifying needs for tailor-made goods.
So just how can UK firms hope to secure the transport funding that they need to prepare for and grow their business amidst the industry developments ahead, not to mention sustain the working capital required for their day-to-day operations such as paying staff wages, maintaining their fleet, managing delivery schedules and collecting or submitting payments from / to their supply chain partners? Keep reading to find out…
Overcoming business trials with transport funding – key scenarios
Below you’ll find several brief business scenarios, each of which reveal how different financial solutions can help transport firms to overcome many of the industry challenges discussed in the previous section, namely by generating the transport funding needed to prepare for whatever lies around the corner this fiscal year.
- Expand your workforce to meet rising consumer demand – The notion that the UK transport and logistics industry is likely to garner further demand for increasingly specialized goods from consumers may sound quite daunting if your business is an SME with insufficient funds or even a larger firm struggling with the sector’s 30-120 day payment cycle. In the former case, an unsecured business loan could prove of immeasurable benefit to your business, providing crucial cashflow injections for your firm to invest in new drivers over as short or long a period as desired. Meanwhile firms suffering from prolonged / late payments might alternatively consider invoice finance, a cashflow facility allowing firms to bring forward the credit terms that they’ve given to customers for completed work from 30+ days to often as little as 24 hours, thereby again providing the funds needed to expand your workforce and ensure that any seasonal demand spikes don’t catch you off-guard.
- Combat new industry expectations with new technology investment – Or perhaps your business’ hopes lie more in the area of developing its technologies, whether by investing in new Enterprise Resource Planning (ERP) software to strengthen the communication between its departments or by pursuing ecological vehicles to lower your fleet’s environmental impact. It’s here where asset finance can potentially come into play, allowing your business to acquire further vehicles or equipment before repaying their value over an agreed period of time, rather than having to significantly risk your working capital / profit levels by making the full payment in one potentially damaging instalment.
- Prepare Brexit contingency strategies – Although just 2% of those businesses surveyed in the Paragon Software Systems investigation called Brexit a major concern, there remains the possibility that taxes such as fuel / vehicle excise duty could shift upon the projected transition period for our EU departure’s December 2020 conclusion. In addition, further tariffs on vehicle purchases / international goods haulage may come into effect depending on whether we ultimately leave the single market and / or customs union in 1.5 years’ time. That makes invoice finance one of the more attractive options for businesses concerned about post-Brexit transport funding uncertainty, the flexible nature of this facility meaning businesses won’t find themselves in unexpected levels of debt if work diminishes and can utilize the advance funds provided by their funder against their invoices to pay taxes / further expenses should they ever arise.
Find out more
We hope that this guide has served as an insightful overview of the trends and challenges facing the UK transport sector right now, along with the financial solutions which can provide the transport funding needed to overcome these hurdles. Be sure to consult our transport finance page for dedicated information on how Touch Financial works to support businesses in your industry, then take a look at our financial products page for details on the individual benefits of invoice finance, unsecured business loans, asset finance and a range of other facilities.
Still got questions? Then get in touch today and our expert team of consultants will be on hand to clarify any queries that spring to mind and help you to find the most suitable funder on our panel for all your transport finance needs.