• Industry bodies in the transport and logistics sector are raising concerns over confidence in future legislation related to low value goods duty exemptions in the UK and fuel costs.
• This comes ahead of the UK Government’s Autumn budget, or Financial Statement, set to be delivered this Wednesday 28th October
• Logistics UK and the Chartered Institute of Logistics and Transport (CILT UK) have called for maintaining the current rate of fuel duty at 5 pence or or lowering the rate, while ASM have called for certainty over the future planned changes to low value goods policy.

Leaders in the logistics sector are raising their priority issues ahead of this Wednesday’s Autumn Budget in the UK, set to be delivered by the Chancellor of the Exchequer, John Healey.

While aviation fuel in the UK is currently exempt from duty, fuel costs for road feeder systems and automotive transport is on the rise. Logistics UK have called for lower fuel duty, or as a minimum maintain the current 5 pence cut in the upcoming Budget.

“Fuel is a non-negotiable cost in any delivery, which is why Logistics UK is urging the Chancellor to, as a minimum, maintain the current 5p cut in Fuel Duty in his Autumn Budget. Removal of the current freeze on Fuel Duty would cost businesses and consumers an additional £2.8 billion per year, and as the logistics sector underpins every part of the UK economy while operating on narrow margins, any rise in costs might have to be passed onto customers. This could lead to a double inflationary impact, where consumers have to pay higher prices for fuel at the pumps and for more expensive goods in stores,” Ben Fletcher, CEO of Logistics UK commented.

This comes as Beazley released its latest analysis of geopolitical and economic risk, comprising a survey of 3,500 global business leaders which illustrated: 69 perscent expecting to change suppliers or rework supply chains due to the current level of geopolitical disruption and 42 percent ranking economic slowdown, inflation, recession and sovereign debt as their greatest risks. This is up 32 percent from January this year.

The wider air freight ecosystem is intrinsically linked to the costs of road feeder networks, last mile deliveries and the connectivity of viable options that lay within its ground network.

The Chartered Institute of Logistics and Transport (CILT UK) has also warned of the rising fuel costs are increasing pressure on transport operators, and are equally calling for logistics businesses and supply chains to be supported within the budget.

“Fuel costs are not just a concern for motorists. They directly affect the cost of keeping supply chains and public transport moving. The sector is already feeling the strain of rising costs, and maintaining the existing 5p fuel duty cut is an important consideration while world oil prices remain high. But we also need to look beyond immediate cost pressures and ensure businesses have the confidence and practical support to invest in cleaner transport.”

The Institute has joined the same call for the maintaining of the 5 pence fuel duty, or cutting this rate in the short term.

“A shipment might travel thousands of miles to the UK by air or sea, but its journey does not end when it reaches an airport or port. It will often still require road transport to reach a warehouse, distribution centre, business or customer. That means international freight, domestic transport, warehousing and distribution all form part of the same supply chain. Fuel is also only one part of the cost of moving goods. Warehousing, energy, business rates, staffing and the cost of investing in infrastructure and equipment all need to be considered together. For freight businesses, I think one of the most important questions following this Budget will therefore be the cumulative effect of the measures announced,” Dr. Shareef Abdul Khader, Chairman of ABC Cargo Group of Companies stated.

Warehousing and rates

The UK Warehousing Association (UKWA) have also raised concerns about how warehouses have been hit hard by business rate changes this year.

It has submitted to the Treasury that these rates should not be be touched by further increases, new analysis by the trade body shows that seven in ten large distribution warehouses are caught by the new high-value multiplier, which applies to properties with a rateable value of £500,000 or more. Four in five warehouses saw their business rates bills rise in April. A large warehouse can face a business rates multiplier up to a third higher than that applying to high street shops.

“The Chancellor has rightly said that businesses have been carrying the burden of rising costs. For warehousing, business rates have become an increasingly heavy part of that burden. Our sector has repeatedly been singled out as a convenient source of additional revenue, but warehouses do not sit apart from the rest of the economy. They are part of virtually every supply chain in Britain. Whether goods are bought online or on the high street, they almost certainly pass through a warehouse somewhere along the way. Raise costs for our members, and you push up inflation for consumers. This Government has already taken some welcome steps to recognise the importance of logistics, including planning reforms and the appointment of a Minister for Aviation, Maritime and Logistics. A further increase in business rates on warehouses would undermine that pro-growth agenda. Our message to the Chancellor is simple: give businesses certainty, freeze the rates burden on warehousing, and allow the sector to invest in the people, technology and infrastructure Britain needs,” Clare Bottle, CEO of the UKWA, said.

Bottle’s reference to Keir Mather being appointed the new Minister for Aviation, Maritime and Logistics comes as the Minister himself affirmed his support for the organisation at an event last month in Westminster.

Warehouses are critical logistics infrastructure, and rising business rates are thought to have a wider impact on air freight costing upstream and downstream in the UK should they continue to rise. Conversely, the EU’s removal of low value goods exemptions has seen its spokespeople advocate the use of building European housed product stock to ship goods in bulk in the face of eCommerce rises.

Read more here about the latest changes to EU import rules here

Certainty over low value good regulations

Meanwhile, Agency Sector Management (ASM) is calling on the Chancellor of the Exchequer to use his first Budget to commit to publishing the remaining financial and technical details of the UK’s low value imports (LVI) reforms by 30th June 2027 to allow industry time to prepare.

The reforms will remove the existing customs duty relief for consignments valued at GBP 135 or less entering Great Britain and introduce new customs requirements. Sellers and online marketplaces will be responsible for providing item level data and paying customs duty quarterly, while traders will need to classify goods and apply the appropriate UK Global Tariff rate.

An additional fee will be introduced to cover the cost of administering the new system, but the Government has not yet confirmed the amount or charging basis. Overseas sellers and online marketplaces without a UK presence will also be required to appoint a UK based fiscal representative responsible for their customs debts. The final VAT collection model, guidance, technical specifications, and phased implementation and testing timetable remain outstanding.

“The new government must not leave the logistics industry to absorb the cost and risk of an unfinished policy. Forwarders, customs intermediaries, parcel operators, and software providers cannot prepare properly until the data requirements, technical specifications, and testing timetable are confirmed,” said Simon Adams, Program Manager, Agency Sector Management.

“The Chancellor should use his first Budget to put a firm deadline on these decisions, because assurances that detail will follow are not enough for businesses facing substantial system and process changes.”

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