ITC debates improving the efficiency of freight movements
Improving the efficiency of UK freight movements: the contribution to growth
An efficient freight transport system is of crucial importance to the UK economy. At the same time the movement of goods and the infrastructure that supports these movements is changing. We face a challenge adapting to these developments while keeping costs down. The ITC has commissioned a research work stream to investigate these issues, and to mark the launch of this study it held an evening of discussion and debate to explore how we can improve the efficiency of freight transport in Britain.
The Discussion Evening took place on 10th July 2013 and was chaired by Nicholas Finney OBE, ITC Commissioner and former Director of the British Ports Federation. The subject was introduced via presentations from a distinguished panel comprising: Jolyon Drury, Director of Surge Logistics Consultants and Chairman of the Public Policies Committee CILT(UK); Maggie Simpson, Executive Director of the Rail Freight Group; and Peter Harris, UPS Director of Sustainability for Europe, the Middle East and Africa. The Rt Hon The Lord Freeman, a Patron of the ITC, gave a response.
Improving Freight Efficiency – key issues highlighted by the speakers:
- Jolyon Drury provided an overview of key issues affecting the freight and logistics sectors. He noted their importance for the UK Economy, being responsible for 8% of employment and 11% of GVA. Freight was therefore vital to the UK’s economic success, and a small increase in productivity could result in widespread benefits. The UK has an integral role in the European Freight network since the high level of consumption means that many international firms want to supply their goods to our consumers. There is a danger, however, that the UK could become an expensive logistics cul-de-sac if infrastructure is not upgraded, and measures taken to improve efficiency and reduce congestion. The key challenge, he concluded, was how to achieve a world-class intermodal freight system as part of an interconnected national energy and planning strategy.
- Maggie Simpson addressed delegates on the importance of achieving efficiency in rail freight. She reported that rail freight efficiency had been improving in terms of staffing as well as train numbers and volume. Rail freight had a number of advantages when compared to other land-based modes, including high volume movements, good fuel efficiency, relatively high speed and good penetration of urban city centres. However, the sector faced an image problem, and suffered from delays and restrictions as a result of using a passenger-travel focused rail network. The challenge, she explained, would be to make better use of capacity in the future, ensure optimum connectivity to Ports, and move towards a more demand-driven system of operations.
- Peter Harris focused on improving efficiency in the logistics industry. Using examples from UPS practice, he noted the efficiency advantages of a hub and spoke model, and the economies of scale that large logistics firms enjoyed. Numerous measures were taken to ensure improved efficiency of ground operations, including using a single vehicle for pick-up and delivery, use of route-planning technology and vehicle telematics, efficient vehicle and warehouse design for loading and storage, and driver training to promote fuel efficient operations. In the interests of sustainability, new fuels/methods were being adopted for different types of logistics operations; he added that for short journeys this could see a return to tricycles.
Key issues raised in the discussion:
- How do we balance sustainability and efficiency? Delegates questioned whether there was a trade-off between sustainability and financial efficiency. The panel replied that there was often a clear connection between the two, and they could be complementary objectives in the face of fuel price rises. Others noted that it would be important to define what was meant by sustainability: the panel agreed that a good answer was the ability to sustain activity over the long term.
- The need to obtain efficiency is also important for air freight. Some guests noted that air freight should not be neglected due to its importance in transporting high value and time-critical goods. It was suggested that air freight efficiency could be improved by making greater use of regional airports; on the other hand, the panel noted that much air cargo was carried in passenger holds, so a hub airport with higher passenger flight frequency and greater destinations would remain attractive.
- Will rail freight become a more attractive and efficient alternative to road freight? One issue raised was the way in which rail freight was seen as a more sustainable alternative to road freight. Some delegates reported that rail was often seen as preferable for large quantities of bulk goods, but noted that more investment in rail infrastructure was urgently required, as well as the need to improve capacity.
- We need to address the skills shortage in the freight sector. A key theme was the need to improve skills in the logistics and freight sectors so that it could attract more talent. British students were often a minority on logistics courses at UK universities. A higher-skilled workforce could also lead to further efficiency improvements.
- Government policy makers should not consider freight issues in isolation. Some delegates suggested that much more joined-up thinking was required by policy makers in order that freight issues were properly connected with national planning, transport and energy policy. Interventions from Government that were thought to be useful included greater advocacy for freight in the UK and in Brussels, and subsidies to encourage the take-up of new fuels, such as biomethane for freight vehicles.
- Greater co-operation within the industry can result in efficiency gains. A recurring theme was the possibility of behavioural change within the industry, and whether greater co-operation between freight and logistics firms was possible. Delegates noted examples where load sharing had taken place, even between competitors such as Nestlé and United Biscuits, as well as cases of asset sharing in the shipping industry. These measures had resulted in cost savings and there was widespread agreement that such behavioural change should be encouraged.