KN60024

KEY NOTE Distribution Industry Market Review : June 2004

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This report covers: distribution industry, recent legislative and organisational developments, privatisation, transport safety legislation, Marine Safety Act 2003, Railways and Transport Safety Act 2003, domestic, international, road, pipelines, water, inland waterways and coastal shipping, international transport by sea, air, cargo, handling, storage, and, warehousing, rail, key trade associations and professional abodies, UK organisations, national politiacal background, extent of state ownership, working time directive, skills development, night-time delivery, congestion charging, ports, digital tachograph, E-fulfilment, vehicle suppliers, fuel suppliers, exhibitions, conferences and trade shows, UK events, rail freight funding,

Companies covered include: Royal Mail Holdings, Exel, Wincanton, Tesco Distribution, TNT UK, Tibbett Britten Group, English, Welsh and Scottish Railway, Christian Salvesen, Securicor Omega Express,TDG, Associated British Ports Holdings, British Airways, Eurotunnel, Network Rail, Peninsular and Oriental Steam Navigation Company, Hays, Eddie Stobart, DHL, Parcelforce, Eurotunnel, Freightliner,

EXECUTIVE SUMMARY

This Review deals with the UK market for the physical distribution of goods and the industry that serves this market. Distribution is defined broadly, to include all modes of freight transport (rail, road, pipeline, sea and air), as well as other activities that form part of the supply chain, such as cargo handling and storage, freight forwarding and the supporting activities provided by port and airport authorities. It also covers the activities of the national post and courier/express companies, which transport items by any or all modes of transport, either on their own services or on those of other operators.

Key Note estimates that the UK freight transport and distribution market as a whole was worth £66.68bn in 2003. This figure represents the total turnover of UK companies in this market, and it inevitably includes some 'double counting', because some transport operations include more than one mode of transport and because supporting sectors such as ports and airports handle the same items as the transport principals. Figures for individual sectors of the market are presented within the relevant chapters of this Review.

The level of activity and rate of growth in the UK economy have a clear effect on demand for freight transport and distribution services, with increased production, export and import of goods leading to growth in the volume of freight transported. Since 1999, however, the market has grown more slowly than the UK economy as a whole. There is a continuing trend for the economy to be less freight-intensive than it was in the late 1970s, partly because of improvements in transport efficiency and an increase in the share of national income that is accounted for by consumer services.

In recent years, new legislation — notably in the fields of employment and safety — has affected many companies operating in this market. Employment legislation, in particular, has had a disproportionate effect on the operations of small and medium-sized enterprises (SMEs), which are well represented in the industry. The way in which drivers are rostered and their working hours are recorded is also about to change, with the introduction of the digital tachograph and the EU Working Time Directive. Deregulation of freight transport in the UK and the rest of Europe has reached an advanced stage in the air and road transport sectors, but it still has a long way to go in the markets for rail, maritime and postal services.

Key Note forecasts that the UK freight transport and distribution market as a whole will see continuing growth between 2004 and 2008, although there will be differences in the performance of its constituent sectors. Despite the fact that road transport dominates the domestic freight transport market, the UK road transport sector is expected to continue to grow more slowly than the economy as a whole. However, the inherent advantages of road transport, in terms of its flexibility and adaptability, are likely to ensure the continuation of its leading role.

TABLE OF CONTENTS

Text © 2004 Key Note

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Last updated by Amanda Porteous July 2004