…a beast of a burden
August 1st 2011 As Derrick Potter ends his term as UKWA chairman, he warns the sector’s tax burden in the UK is pushing many companies to relocate hubs to mainland Europe
Derrick Potter, UKWA’s national chairman for the past four years, handed over to his successor, John Maguire, at the association’s recent AGM.
As he handed over, Potter reflected on the sector’s tax burden, saying successive governments have failed to grasp the vital role the logistics industry plays in the national economy. Indeed, he contends that both the Labour and Conservative- Liberal coalition Governments’ failure to reduce the high cost of fuel in Britain has led many companies to relocate their major UK-based warehouses and distribution centre hubs to mainland Europe with many hundreds of jobs lost as a result.
“Fuel represents a large percentage of an operator’s costs and the UK Treasury imposes the highest level of fuel duty throughout whole of Europe – significantly more than any other state,” says Potter.
“But the logistics industry isn’t just about lorries.Modern third party logistics contracts comprise a range of services – including distribution, storage, packaging etc –rolled into one. So, if - as has been demonstrated - a lorry refuelled in northern Europe pays over Ł10,000 a year less than a similar vehicle doing the same mileage that fills up in the UK, it is easy to see why a 3PL might be persuaded to relocate its distribution hubs to mainland Europe.
“With around 2.3 million people employed in a wide variety of roles within the UK logistics industry, if the Government doesn’t do more to bring UK fuel prices closer into line with the rest of Europe, it won’ t be just the HGV drivers that suffer.”
Skills shortage
Derrick believes that the industry can claw back some of the commercial advantage lost to the high price of fuel by developing the skills of its workforce and urges companies operating in the logistics industry to increase their investment in training. In fact, he contends such investment is essential if the sector is to avoid a skills shortage in the future.
“I believe most employers understand the importance of developing the skills of their workforce but, generally, supply chain companies have been slow to invest and, as result, the Sector Skills Council for our industry – Skills for Logistics – faces a funding challenge.
“With an ageing workforce and a perception among those currently in education that logistics does not offer an attractive career path, the sector may well find itself facing a skills shortage in the near future. It is therefore vitally important that we begin to attract young people and bring a greater diversity of skills into the sector.
“One of UKWA’s key objectives over the coming years will be to encourage members to engage with Skills for Logistics to develop logistics related apprenticeship schemes that will attract Government funding.”
Environmental credit
Further reflecting on his four years at the helm of the logistics industry’s leading trade body, Potter believes the sector has not received the credit it deserves for the manner in which it has embraced environmental issues.
“The industry has made great strides to become greener in recent years, and there are many examples of energy efficiency best practice within the warehousing industry, ” he says.
“My own company (The Potter Group), for example, continues to invest in modern equipment and systems to raise productivity, control rising costs – and, equally importantly, to lower our corporate carbon footprint.
“At our Northern distribution centre in Selby we recently replaced the old sodium and metal halide lighting with a more energy efficient system incorporating integral daylight saving and movement sensors. The system is expected to cut energy costs by more than half, while providing more effective lighting across all working areas.
“And we are by no means alone - many businesses have realised that the benefits of environmental and energy efficiency projects are not only a nice ‘green’marketing story but can result in real bottom line benefits.
“There are a number of grants as well as tax incentives available to ease investment in energy saving products. The new Carbon Trust Energy Efficiency Financing Scheme, for instance, is a way for all businesses to receive financial help towards implementing projects and I would urge all UKWA member companies to explore how it might benefit them.”
However, Potter points out that the implementation of the CRC Energy Efficiency Scheme for larger companies is a significant and new expense for the industry. “What started life as a tax neutral scheme has changed and what’s more, increasing numbers of businesses will qualify for the tax over coming years,” he says. More articles from United Kingdom Warehouse Association: | 
