What is the current and potential future impact on the UK Haulage industry as a result of COVID-19?
Setting the scene before Coronavirus
In 2016 (the last official UK statistics), the Department for Transport stated there was just over 500,000 HGV vehicles registered in the UK and 77,000 goods operators’ licences. That year, there was a 5% increase in distance travelled rising to 19.2 billion kilometres travelled.
Road amounted for three quarters (76%) of all goods moved, with water 15 % and rail 9%.
Whilst there are no official figures, these numbers likely increased over the last 3 years as the UK economy has grown slightly year on year, between 1.3% and 1.9% annually.
Large vans are a growing part of the domestic logistics picture, especially with the growth of internet shopping and home deliveries. As a result, there is some evidence that HGVs are travelling less distance but carrying more goods by weight than in the past.
Current Impact of Coronavirus (COVID-19) on HGV transport
The coronavirus outbreak has brought Britain to a near standstill, with general road travel plummeting by as much as 73%, to levels not seen since 1955, which is astonishing if you think about it. Winston Churchill was the UK Prime Minister at the time.
All forms of travel have plunged in urban areas. Walking, cycling and car and van journeys are all down by about three-quarters, while bus numbers have fallen by 60%.
However, the number of large lorries has declined by just 40% as essential supplies continue to be transported.
Since lockdown, this is much less than other forms of transport as essential goods and medicines are transported – but still a sizable and financially difficult situation for the industry as a whole, especially those independent hauliers reliant on social events and/or import transportation.
Much of the reduction is a decrease in imports from key overseas markets such as China, which has seen a dramatic drop off. Sea and Rail have been all been hit hard, and lack of air imports after airports all but closed down due to the crisis.
And of course, transporting items for key events such as exhibitions and concerts is a not happening at all. The RHA (Road Haulage Association) recent survey has the number of HGV’s not in use as slightly higher than some figures at 46% and Chief Executive Richard Burnett asks for Governmental support to struggling Haulage Operators given that “At this time of national emergency our sector is doing everything it can to ensure critical supplies get to where they need to be.”
In summary, operators having relationships with suppliers of important day-to-day goods have continued to transport good across the UK, and in the early days of the pandemic, more frequently due to panic buying. HGV operators who usually transport non-essential goods have been hit hardest, hence the 40% reduction of HGV vehicles on the UK roads currently.
Potential future impact for the Haulage Industry?
It is becoming clearer just how damaging the Coronavirus has been on the UK economic and business landscape and it will take a long time for all industries to recover.
It is difficult to predict the future of vehicle use in general. Technologies like Wi-Fi, mobile-enabled video conferencing, cloud-based file sharing and document management tools have all responded to the call and more. Covid-19 has forced many to work from home, however it may well become more commonplace and accepted business practice moving forward, reducing road use generally.
Some think that public transport may be shunned by some in favour of “safer” and less social transport, whether this is short or long term remains to be seen.
Moving onto the Haulage industry and future predictions, whilst the industry has undoubtedly been damaged, most believe it will fare better in recovery than other industries. Our essential services, goods movement and deliveries will continue.
E-commerce was already in double digit growth, but even more millions of people are now accustomed to not leaving their homes and shopping online for food, health, beauty, electronics and larger items like furniture and appliances.
It is likely that post-pandemic, this demand for e-shopping and delivery to your door will continue to rise. So HGV’s will be as important as ever to transport goods to distribution hubs, whilst the large increase in couriers and vans for “last mile” logistics and home delivery should proliferate further.
In a recent letter to XPO shareholders, Chief Exec Bradley Jacobs predicted:
“Consumer confidence is very weak right now, but once testing, therapeutic drugs and a vaccine are widely available, confidence will rebound and the global mechanisms for GDP growth will resume. We think that will be in 2021, and when it happens, we have a number of things going for us.
“Transportation and logistics are inherently valuable to all populations; we’re part of the economic and social fabric. Whether COVID-19 is driving permanent changes in behaviour, or will prove more temporary, our industry will still be needed.”
Eddie Johnson, Managing Director of Isis Insurance Services, is an insurance industry veteran and specialist Haulage Insurance broker, speaking with Haulage owners and operators every day.
“Whilst HGV’s have been integral in transporting vital day-to-day supplies during the pandemic crisis, there is no doubt that many operators large and small are hurting right now.
However, I do believe that the Haulage industry may see a quicker recovery than other industries when things return some sort of normality, post Coronavirus. In particular the smaller independent haulier may well be able to take advantage of the opportunities available, as no doubt there could well be a number of the larger operators who may not recover from the downturn.
Transportation of goods will remain vital to the UK economy and e-commerce will grow even faster than ever in my view. Whilst there was a shortage of HGV drivers before the Coronavirus, it is not clear how that may be impacted following the return to some form of normality. Will we see a movement in employment from industries which have not recovered so quickly as the haulage industry?
If fuel prices remain as low as they are currently, this will also aid profitability of both small and large haulage operators. Imports via the ports and airports will need to return to similar levels as previously, as transportation and distribution from these key hubs will help to drive the recovery of the UK’s Haulage industry, and is key to this.”