August 2022 data from HMRC, the Office for National Statistics and the UK Government has revealed that the UK’s total exports in the last quarter of 2021 reached £99.8billion – the highest level ever on record.
Cementing the UK’s strength in European trade, Britain sold £94billion worth of goods to the EU in the first six months of 2022. This is a far cry from the uncertainty and cynical predictions made by industry forecasters in the years leading up to Britain’s official divorce from the EU in January 2020.
Rules that have come into force since Britain voted to leave the EU may have sent ripples through Britain’s trade landscape in the last two years, however, favourable export figures demonstrate that despite voting to leave the bloc, initial challenges have been overcome and Britain’s trade is as strong as ever.
The Summer Brought the Winds of Change
Despite record levels of trade in the first two quarters of 2022, the summer saw an 8% fall in goods export values. According to William Bain, Head of Trade Policy at the British Chamber of Commerce (BCC), “June’s trade data ended what was a strong second quarter of the year overall with a ‘damp squib.’”
The fall in goods export value for the month was driven by a range of factors across fuel, chemicals, transport equipment and other manufactured goods, but they are gathering economic headwinds which all UK exporters now face.
Mr Bain warned that there are “gathering economic headwinds” which all UK exporters will now face, that economic measures to support growth in the coming months and that there is the need for “real delivery by the UK Government Export Strategy to support the growth ambitions of UK exporting businesses.”
However, despite the sobering opinions of Mr Bain, let’s not forget that Q2 2022 outperformed the same quarter of the previous 4 years and goods exports were 11% higher than in Q2 2022. There is clear cause for optimism and the strength of the UK’s trade with the EU is not to be underestimated.
A Positive Trade Balance
The UK is still exporting a sizeable – and growing – amount of goods to the EU and around the world. Backing up the UK’s position across international markets is our positive services trade balance – and not just to the EU. The USA is by far the biggest importer of UK goods and services. This strong relationship should be able to weather what industrialists – and the country as a whole – hope is a ‘storm in a teacup.’
HMRC has revealed that the UK sold the largest amount of mineral, fuels and oil to the EU in the first half of 2022. This cost £17.4 billion. The second most popular export to the EU was nuclear reactors, boilers, machinery and medical appliance at a cost of £12.1billion. The remaining most popular exported goods included vehicles, pharmaceutical products and electrical machinery and equipment.
Any talk of a decline in trade has only been accented by the economic uncertainty, such as the much-publicised soaring costs of living, perhaps best exemplified by rising energy prices and the expected economic downturn, tentatively predicted for late 2022/early 2023 by the Bank of England.
However, what’s clear is that despite what could be perceived as economic trepidation as 2022 evolves into 2023, to this point, UK export performance remains strong.
The Importance of the UK Logistics Sector
The logistics sector contributes £127billion Gross Value Added to the UK economy. There are approximately 200,000 logistics enterprises, providing jobs to 1.7 million people across the UK. Logistics is an integral part of the supply chain. It’s not hyperbole to say that the UK economy would be considerably more vulnerable should the logistics sector begin to not perform to expectations.
It’s estimated that 98% of all food and agricultural products, consumer products and machinery in Britain are transported by road freight. The convenient, door-to-door delivery of myriad goods are imperative to the ever-growing eCommerce sector.
Indeed, in less than a decade, the 3PL market (third-party logistics) has expanded by 29%. This has driven a plethora of employment opportunities across numerous disciplines, including, HGV drivers, warehouse operatives and facility owners. Given the breadth of the sector, it’s not hard to see why the sector is so valued.
A Government Boost
On June 15th, 2022, the government launched a huge campaign aimed at recruiting and retaining a skilled workforce. Generation Logistics focused on attracting young talent to the sector and is one of the government’s Future of Freight initiatives, a cross-modal, cross-government plan to deliver a clear growth strategy and encourage people working across different disciplines within the sector to work together to deliver seamless freight across the UK’s roads, railways, ferries and aviation.
It’s believed that the initiatives will create a greener, more resilient logistics sector. However, there’s more to it than that. The government boost to the sector is part of a plan to build on the UK’s strong export infrastructure, support families in the long-term whilst helping the economy to prosper and address the cost of living.
The previous Transport Secretary, Grant Shapps said of the campaign, “The pandemic shone a spotlight on the importance of our country’s freight sector. As a proud, free-trading nation, moving goods home and abroad has always been the backbone of Britain’s economy.”
Steps have also been taken to address the shortage of HGV drivers – a problem that first came to light in 2020. More than 11,000 HGV driver training places have been made available through the skills boot camps, driving tests and investing 52.5 million in improvements in roadside facilities and lorry parking.
The Future of the Logistics Sector
The Russian invasion of Ukraine and the conflict’s effects on the global supply chain industry (Russia is the largest exporter of natural gas and one of the largest suppliers of crude oil, supplying a third of European demands) and the shockwaves this has sent through the global supply chain aside, the logistics sector continues to be a vital component in the UK and global economies.
Prior to the Covid-19 pandemic, the sector’s contribution to and influence on the UK economy was largely hidden. One of the more positive aspects of Covid-19 was how it highlighted the sterling work done by otherwise unheralded industries – with the logistics sector taking its rightful place front and centre in our globally interconnected economy.
Today’s customers are more demanding than ever. They want to know exactly when their products are despatched, the journey their products take and when they will arrive – in as timely a manner as possible. This isn’t likely to change.
What’s clear is that despite the current and forecasted future of the sector, great improvement strides are being made. From digital disruption to new government-backed initiatives aimed at bolstering the long-term prosperity of the sector, there may be challenges in the future, but strong performance, ambition and determination will surely drive the sector towards even greater prosperity in the future.
