Is an extension to the furlough scheme needed to help the logistics industry?

Nearly 11% of logistics businesses are still reporting severe or extreme disruption to their overall freight volumes in light of the Covid-19 pandemic.

Feedback from a new industry panel also showed that more than a third of companies would need an extension of the coronavirus job retention scheme to 2021 in order to allow them to continue or resume trading effectively. Around half will be seeking relief to business rates or deferring their VAT, NI or corporation tax payments.

Logistics UK said that its logistics industry panel had been created in order to identify where support was needed most as restrictions are eased and that it comprised “a significant group of businesses”, which would help inform the trade association’s discussions with the government.

Elizabeth de Jong, policy director at Logistics UK, said: “While the future shape of the economy and the ongoing economic impact of Covid-19 is still unclear, it is critical that Logistics UK ensures the government understands the effect of its policies and the support businesses require.”

This comes on the back of Logistics UK's warning earlier this week that the government it needs to act now to stimulate economic activity and restore consumer confidence amid claims the nation’s businesses are "stagnating" after two months of cautious re-opening following the pandemic.

“Logistics businesses of all types are finding it increasingly difficult to remain solvent, with the end of the furloughing scheme fast approaching, and it will become more expensive for those who remain in the scheme,” said chief executive David Wells.

“At the same time, faltering growth is delivering little or no uplift in revenues to meet government demands for repayment of deferred taxes and increased staff costs. Forget the credit crunch – without a strong, consistent recovery in economic activity, businesses are now facing a cash crunch and their survival is in doubt."

Wells said logistics was a "perfect barometer of economic activity" and the organisation had access to tens of thousands of data points.

"What the numbers tell us is increasingly worrying," he said. “While the rate of growth was encouraging as the country came out of lockdown, driven by the reopening of some sectors of the economy, that pace of expansion has now slowed to a crawl. While our larger operators are holding steady, SMEs across the sector are finding things increasingly tough, with less subcontracted work, squeezed rates and fewer jobs of their own to sustain the recovery.

"This is bad news for the economy, for employees and for the longer-term future prosperity of our nation and does not tally with the expected ‘bounce back’ or ‘recovery’ we have been told is under way.

"Either we need a strategy to stimulate demand, and generate growth, or a strategy for containing infection, which will require a significant support package for the long term right across the economy - at the moment, we have neither.

"Because of the risk of a second wave of the pandemic, the government might well be apprehensive about opening up the economy further. But if the strategy is to slow or reverse growth in order to stem infections, then urgent action is needed to protect struggling businesses to avoid an avalanche of redundancies and insolvencies. Currently, business is caught in the middle without a plan for either strategy, and a vacuum of government policy, advice and action, and that’s the most dangerous place to be.

“Without urgent action and a clear strategy to re-start or re-stop the recovery, the recent flurry of redundancies from big brands like Marks & Spencer and Harrods will only be the tip of a fast-approaching iceberg.”