| MP60043 |
| MAPS : Road Transport Logistics: March 2003 |
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This report covers: road, transport, logistics, rail, water, inland waterway, sea, air, steel tariffs, Associated British Ports, British Airways fWorld Cargo, English Welsh & Scottish Railways, Eurotunnel, Exel, Ikea, Peninsula and Oriental Steam Navigation Company, P & O, J. Sainsbury, TNT,
EXECUTIVE SUMMARY
| Executive Summary |
| The movement of goods from point of manufacture to the end user relies upon the four basic transport modes: road, rail, water and air. Each mode has evolved independently of the others, and each has its roots embedded in its own particular social and industrial history. The four sectors have become industries in their own right with their own infrastructure, cultures, jargon and identity. |
| It is, therefore, not surprising that these industries — road haulage, the railways, shipping and aviation — are often seen taking robust positions to lobby for, and protect, their particular interests. Today, however, there is a greater awareness of the benefits of integrating one transport mode with another: this has resulted in providers of one type of distribution service moving across into what was the traditional domain of others. |
| Since 1997, there have been radical changes in the way freight transport and distribution is organised. Today, the principles of logistics are applied to the distribution industry to achieve savings and efficiencies. These changes have come about as a result of competitive market forces, through political, economic and social pressures, and as a result of technological advances. Another important influence has been the evolution of supply-chain management (SCM), which has forced managers to optimise the flow of goods by employing more efficient logistical practices. |
| The future holds many further developments as the business of freight logistics evolves and as greater economies and efficiencies are achieved. The sector is, therefore, at a dynamic and exciting stage in its evolution, presenting both risk and opportunity for those involved. |
| The report explains the evolving relationship between the supply chain and the business of freight logistics. It reports on the way in which the different transport modes serve that market, how they compete and integrate with one another and how their respective infrastructures are also developing. |
| Other influences are also at work. To stay ahead, companies are continuously rethinking their strategies, acquiring and merging with others, and forming alliances with customers in ways that would have been unimaginable a decade ago. |
| The globalisation of both the production and retailing of goods has had the effect of internationalising the freight-logistics business. Today's logistics providers must build both a global network of their own offices or partner companies, and an effective communication system for the flow of data and information. Software that facilitates the control of goods in transit and delivers savings and efficiencies within the supply chain is now available. |
TABLE OF CONTENTS
| Executive Summary 7 |
| 1. Strategic Overview 9 |
| INTRODUCTION 9 |
| DEFINITION 9 |
| SCOPE OF REPORT 9 |
| Other Key Note Reports 10 |
| SUSTAINABILITY 10 |
| Modal Shift 10 |
| Intermodalism 11 |
| Just-in-Time 11 |
| Government Incentives 11 |
| Optimising the Supply Chain 12 |
| Penetrating the Supply Chain 12 |
| STANDARD INDUSTRIAL CLASSIFICATIONS 12 |
| 60.10/2 — Other Transport via Railways 12 |
| 60.24 — Freight Transport by Road 13 |
| 61.10/2 — Freight Sea and Coastal Water Transport 13 |
| 61.20/2 — Other Inland Water Transport 13 |
| 62.10/2 — Other Scheduled Air Transport 13 |
| 62.20/2 — Other Non-Scheduled Air Transport 13 |
| 63.11 — Cargo Handling 13 |
| 63.21 — Other Supporting Land-Transport Activities 13 |
| 63.22 — Other Supporting Water-Transport Activities 14 |
| 63.23 — Other Supporting Air-Transport Activities 14 |
| 63.40 — Activities of Other Transport Agencies 14 |
| 64.12 — Courier Activities Other Than National Post Activities 14 |
| MARKET SIZE 15 |
| Table 1: The UK Market for Freight-Logistics Services by Value and Volume (£m and million tonnes), 1997-2002 15 |
| Table 2: Output of Key Sectors of the UK Economy — Gross Value Added at Current Basic Prices (£bn), 1997-2002 16 |
| MARKET SEGMENTATION 17 |
| By Major Sector 17 |
| Domestic Freight 17 |
| Table 3: Volume of Domestic Freight Transported in Great Britain by Mode of Transport (million tonnes), 1997-2002 17 |
| International Freight 18 |
| Table 4: Volume of International Freight Transported to and from the UK by Mode of Transport (million tonnes), 1997-2002 18 |
| By Mode 19 |
| Road 19 |
| Rail 19 |
| Water 20 |
| Inland Waterway 20 |
| Sea 20 |
| Air 20 |
| Infrastructure 20 |
| NUMBER OF COMPANIES 21 |
| Table 5: Number of UK Vat-Based Enterprises by Turnover Sizeband (£), 2002 21 |
| Employment 24 |
| Trends in Employment 24 |
| Table 6: Number of Employees in the Major Transport and Distribution Sectors in Great Britain (000), June 2000 25 |
| TRADE ASSOCIATIONS AND PROFESSIONAL BODIES 26 |
| Institute of Logistics and Transport 26 |
| Freight Transport Association Ltd 26 |
| 2. PEST Analysis 28 |
| INTRODUCTION 28 |
| POLITICAL FACTORS 28 |
| Political Background 28 |
| Transport Legislation 28 |
| Transport Regulation 28 |
| ECONOMIC FACTORS 29 |
| The Euro 29 |
| Fuel Taxes 29 |
| The Influence of the Economy 29 |
| SOCIAL FACTORS 30 |
| Environmental Awareness 30 |
| Employment and Other Social Legislation 30 |
| Consumer Power 30 |
| TECHNOLOGICAL FACTORS 31 |
| Information Technology 31 |
| Emission Controls 31 |
| Other Technologies 31 |
| EU Transport Policy 31 |
| 3. Freight Logistics in the Supply Chain 33 |
| SUPPLY-CHAIN MANAGEMENT 33 |
| TRENDS AND DEVELOPMENTS 34 |
| Globalisation of Production and Sourcing 34 |
| Inventory Management 35 |
| Service Performance 35 |
| Integration of Logistics Providers into the Supply Chain 36 |
| Factory-Gate Pricing 36 |
| E-Fulfilment 37 |
| Information Technology 37 |
| 4. Transport Modes — Road 38 |
| DEFINITION 38 |
| MARKET SIZE AND SEGMENTATION 38 |
| Domestic Road Transport 38 |
| Table 7: Domestic Road Haulage in Great Britain by Commodity Grouping by Volume (million tonnes and %), 1997-2002 39 |
| International Road Transport 39 |
| Table 8: Number of Road-Goods Vehicles Travelling from the UK to Mainland Europe by Country of Disembarkation (000), 1997-2002 40 |
| Own Account 40 |
| Contract Distribution Services 41 |
| Courier, Express and Parcel Services 41 |
| COMPANY STRUCTURES 41 |
| Table 9: Breakdown of VAT-Based Enterprises in the UK Road-Transport Sector by Turnover (£000, number and %), 2002 42 |
| Employment 42 |
| TRENDS AND DEVELOPMENTS 42 |
| Easing the Pressure on the Roads 42 |
| EU Working Time Directive and Driver Shortages 43 |
| The Role of the Supermarkets 44 |
| IT Developments 44 |
| FORECASTS 45 |
| Table 10: Forecast Turnover of UK Companies from Road-Freight Transport at Current Prices (£m and %), 2002-2007 45 |
| 5. Freight Forwarding 46 |
| DEFINITION 46 |
| MARKET SIZE AND SEGMENTATION 46 |
| Table 10: Trends in UK Freight Forwarding and Related Sectors by Turnover (£bn), 1997-2002 46 |
| The Freight Forwarder as Logistics Provider 47 |
| Third-Party Logistics Provider 47 |
| Fourth-Party Logistics Provider 48 |
| NUMBER OF COMPANIES 49 |
| Table 11: Breakdown of VAT-Based Enterprises in the UK Freight-Forwarding Sector by Turnover (£000, number and %), 2000 49 |
| Employment 50 |
| TRENDS AND DEVELOPMENTS 50 |
| Penetration of the Customer's Supply Chain 50 |
| Opportunities for the Small Forwarder 50 |
| IT Developments 51 |
| FORECASTS 51 |
| Table 12: Forecast Turnover of UK Freight-Forwarding Companies at Current Prices (£m and %), 2002-2007 51 |
| 6. Infrastructure 52 |
| DEFINITION 52 |
| ROADS 52 |
| RAILWAYS 52 |
| The Rail Network 52 |
| Freight Route Strategy 53 |
| Key Routes 53 |
| Document Current Capability 53 |
| Development of Freight Terminals 54 |
| Secure Former Route Sections and Relevant Land 54 |
| Additional Development 54 |
| PORTS 54 |
| AIRPORTS 55 |
| 7. Company Profiles 57 |
| INTRODUCTION 57 |
| ASSOCIATED BRITISH PORTS 58 |
| Corporate Strategy 58 |
| Profitability 58 |
| Table 13: Financial Results for Associated British Ports (£000 and %), Years Ending 31st December 1999-2001 59 |
| BRITISH AIRWAYS WORLD CARGO 59 |
| Corporate Strategy 59 |
| Profitability 59 |
| ENGLISH WELSH & SCOTTISH RAILWAYS LTD 60 |
| Corporate Strategy 60 |
| Profitability 60 |
| Table 14: Financial Results for English Welsh & Scottish Railways Ltd (£000 and %), Years Ending 31st March 1999-2001 60 |
| EUROTUNNEL PLC 61 |
| Corporate Strategy 61 |
| Profitability 61 |
| Table 15: Financial Results for Eurotunnel PLC (£000 and %), Years Ending 31st December 1999-2001 61 |
| EXEL PLC 61 |
| Corporate Strategy 61 |
| Profitability 62 |
| Table 16: Financial Results for Exel PLC (£m and %), Years Ending 31st December 1999-2001 62 |
| IKEA LTD 62 |
| Corporate Strategy 62 |
| Profitability 63 |
| Table 17: Financial Results for Ikea Ltd (£000 and %), Years Ending 31st August 1999-2001 64 |
| PENINSULA AND ORIENTAL STEAM NAVIGATION COMPANY 64 |
| Corporate Strategy 64 |
| Profitability 65 |
| Table 18: Financial Results for Peninsular and Oriental Steam Navigation Company (£m and %), Years Ending 31st December 1999-2001 65 |
| J SAINSBURY PLC 65 |
| Corporate Strategy 65 |
| Profitability 66 |
| Table 19: Financial Results for J Sainsbury PLC (£m and %), Years Ending January 28th 2000, 2nd February 2001 and 1st February 2002 66 |
| TNT LTD 67 |
| Corporate Strategy 67 |
| Profitability 67 |
| Table 20: Financial Results for TNT Ltd (AUD000 and %), Years Ending 30th December 2000 and 31st December 2001 67 |
| 8. Security 68 |
| INTRODUCTION 68 |
| ROAD 68 |
| RAIL 69 |
| WATER 69 |
| AIR 70 |
| THE SUPPLY CHAIN 71 |
| 9. Legislation and Regulation 72 |
| INTRODUCTION 72 |
| THE WORKING TIME DIRECTIVE 72 |
| ROAD PRICING 72 |
| CUSTOMS DECLARATIONS 73 |
| THE BILL OF LADING 73 |
| REGULATION 4056/86 74 |
| OPEN SKIES 74 |
| IATA DENSITY RULES 74 |
| US STEEL TARIFFS 75 |
| 10. The Future 76 |
| FORECASTS 2002 TO 2007 76 |
| Table 22: Forecast Turnover of UK Companies from Freight Transport and Distribution Services by Major Sector and GDP at Current Prices (£m and £bn), 2002-2007 76 |
| CONCLUSION 77 |
| 11. Further Sources 78 |
| Associations 78 |
| Publications 81 |
| Directories 82 |
| General Sources 83 |
| Bonnier Information Sources 83 |
| Government Publications 84 |
| Other Sources 85 |
Text © 2003 Key Note
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Last updated by Amanda Porteous 2003
