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UK Logistical Services market report

Everything you need to make the right decisions

Providing the most comprehensive and up-to-date information and analysis of the Logistical Services market, and the behaviours, preferences and habits of the consumer.

Mintel has the answers you’re looking for

What are the key challenges facing the industry and how fast are its rates of growth? Who is the consumer and what do they want? Where are the opportunities, where are the risks and what lies ahead?

Key Issues Covered

  • What are the key determinants driving the industry?
  • Has the industry recovered alongside the economy since the financial crisis? What impact could Brexit have on performance?
  • How have government schemes influenced market demand and supply?
  • How have regulations and the threat of climate change changed the industry’s approach?
  • What are the key issues the industry needs to address to diversify its service provision and continue to compete globally over the long term?
  • What does the future hold for UK logistical services?

Definitions

The industry revolves around four main components: 1PL, 2PL, 3PL and 4PL. Some industry experts argue that a fifth component has also emerged: 5PL, which involves broadening operators’ scope to e-business.

First Party Logistics (1PL) concerns beneficial cargo owners, which can be the shipper (such as a manufacturing firm delivering to customers) or the consignee (such as a retailer picking up cargo from a supplier). They dictate the origin (supply) and the destination (demand) of the cargo, with distribution an entirely internal process assumed by the firm. With globalisation and the outsourcing and offshoring of manufacturing, distribution services that used to be assumed internally tend be contracted to external service providers.

Second Party Logistics (2PL) concerns the carriers providing a transport service over a specific segment of a transport chain. It could involve a maritime shipping company, rail operator, or trucking company hired to haul cargo from an origin (such as a distribution centre) to a destination (such as a port terminal).

Third Party Logistics (3PL) involves the outsourcing of all or much of a company’s logistics operations to a specialised company. The term was first used in the early 1970s to identify intermodal marketing companies (IMCs) in transportation contracts. Contracts for transportation had previously featured only two parties: the shipper and the carrier. When IMCs entered the picture as intermediaries accepting shipments from shippers and tendering them to rail carriers, they became the ‘third party’ to the contract - the 3PL. The definition has now broadened to the point that every company offering some kind of logistics service for hire calls themselves a 3PL. Preferably, these services are integrated or bundled together by the provider. Services provided include transportation, warehousing, cross-docking, inventory management, packaging, and freight forwarding.

Fourth Party Logistics (4PL) differs from 3PL in the following ways: a 4PL organisation is often a separate entity established as a joint venture or long-term contract between a primary client and one or more partners; a 4PL organisation acts as a single interface between the client and multiple logistics service providers; most aspects of a client’s supply chain are managed by the 4PL organisation itself; and it is possible for a major third-party logistics provider to form a 4PL organisation in its existing structure. 4PLs have also been referred to as ‘lead logistics providers’, while a new crop of companies has emerged who are actual transportation companies. A 4PL is sometimes described as ‘a non-asset-owning service provider’, but their role is to provide broader scope managing of the entire supply chain.

Market Segmentation

  • Road freight
  • Rail freight
  • Port (marine) freight
  • Air freight
  • Other

Company Profiles

  • Canute Distribution
  • CEVA Logistics (formerly TNT Logistics)
  • DHL Supply Chain
  • Eddie Stobart
  • Gist Limited
  • HOYER Petrolog UK (Formerly HOYER UK Limited)
  • Kuehne + Nagel
  • Lloyd Fraser Group
  • NFT Distribution Holdings
  • Wincanton Holdings

Expert analysis from a specialist in the field

Written by Lewis Cone, a leading analyst in the B2B sector, his extensive knowledge delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

Businesses in the sector need to embrace new and innovative technological solutions to traditional challenges in order to reinforce business efficiency and remain competitive in an increasingly time-pressurised environment. Adopting new technologies can help move goods as efficiently as possible and companies could suffer if they fail to integrate new tech into operations - especially in a trading environment that is likely to become more challenging after the UK leaves the EU. Lewis Cone
Research Analyst

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Table of contents

  1. Overview

    • What you need to know
      • Covered in this Report
      • Executive Summary

          • The market
            • Growth expected in 2018 despite ongoing economic uncertainty
              • Figure 1: UK logistical services market value, 2014-18, (£ billion)
            • Road freight drives industry growth in 2018
              • Figure 2: UK logistical services market segmentation, by type, 2014-18, (£ billion)
            • Stable growth anticipated until 2023
              • Figure 3: UK logistical services market value forecast, 2019-23, (£ billion at 2018 prices)
            • Companies and brands
              • What we think
              • Issues and Insights

                • Use of technology could help dampen impact of Brexit and workforce shortages
                  • The facts
                    • The implications
                      • Changes to transport strategy will affect business costs and vehicle usage
                        • The facts
                          • The implications
                          • The Market – What You Need to Know

                            • Growth expected in 2018 despite ongoing economic uncertainty
                              • Road freight drives industry growth in 2018
                                • Stable growth anticipated to 2023
                                • Market Size

                                  • Growth expected in 2018 despite ongoing economic uncertainty
                                      • Figure 4: UK logistical services market value, 2014-18, (£ billion)
                                  • Market Segmentation

                                    • Road freight drives industry growth in 2018
                                      • Figure 5: UK logistical services market segmentation, by type, 2014-18, (£ billion)
                                    • Road freight
                                      • Market records fall in goods lifted and moved in 2017
                                          • Figure 6: Annual road freight transport in the UK, 2013-17, (million tonnes lifted, billion tonnes kilometres moved and vehicle million kilometres travelled)
                                        • Level of international road freight shows improvement in 2017
                                          • Figure 7: Annual international road freight transport by UK-registered vehicles, 2013-17, (million tonnes lifted and billion tonne kilometres moved)
                                        • Second successive annual decline in the amount of goods lifted in 2017…
                                          • Figure 8: Annual goods lifted in the UK, 2013-17, by commodity group, (million tonnes)
                                          • Figure 9: Annual goods lifted in the UK, 2013-17, by region and country of origin, (million tonnes)
                                        • ...but the volume of goods lifted inward to the UK by UK-registered vehicles rose in 2017
                                          • Figure 10: Annual goods lifted outward from and inward to the UK by UK-registered vehicles, 2013-17, by commodity group, (000 tonnes)
                                        • International goods lifted outward from and inward to the UK by foreign-registered vehicles reaches five-year high
                                          • Figure 11: International goods lifted outward from and inward to the UK by foreign-registered HGVs, 2012-16, by European country, (000 tonnes unloaded in the UK)
                                        • Small 1% decline in the goods moved in the UK in 2017
                                          • Figure 12: Annual goods moved in the UK, 2013-17, by commodity group, (billion tonne kilometres)
                                          • Figure 13: Annual goods moved in the UK, 2013-17, by region and country of origin, (million tonne kilometres)
                                        • Recent international performance continues to contrast with domestic market
                                          • Figure 14: Annual goods moved outward from and inward to the UK by UK-registered vehicles, 2013-17, by commodity group, (million tonne kilometres)
                                        • Port (marine) freight
                                          • Port freight traffic continues to decline
                                            • Figure 15: UK port freight traffic, by major and minor ports, 2013-17, (000 tonnes)
                                            • Figure 16: International and domestic major and minor port freight traffic, by traffic direction, 2013-17, (million tonnes)
                                          • Fall in dry bulk traffic drives decline in major port traffic in 2017
                                            • Figure 17: UK major port traffic, by commodity group, 2013-17, (000 tonnes)
                                          • Grimsby & Immingham represents busiest UK port in terms of tonnage
                                            • Figure 18: Major UK ports, top 10, by total tonnage, 2016 and 2017, (000 tonnes and % of total UK tonnage)
                                          • Number of vessels arriving at UK ports fell in 2017
                                            • Figure 19: Number of ship arrivals at UK ports, by type and deadweight, 2013-17, (number of vessels)
                                          • UK interest in large trading ships rises for the first time in five years
                                            • Figure 20: UK interest in trading ships of 100 gross tons and over, by type of interest, 2013-17, (deadweight million tonnage)
                                          • Non-trading vessels most commonly owned by the UK, but UK-owned ‘other’ dry cargo vessels carry the most freight
                                            • Figure 21: UK-owned vessels of 100 gross tons and over, by type, at 31 December 2016 and 2017, (number of vessels and gross tonnage in 000 tons)
                                          • Rail freight
                                            • Fourth year of decline in freight train movements recorded in 2017
                                              • Figure 22: Great Britain freight train movements, 2013-17, (number)
                                            • Mass of freight goods carried continues to fall
                                              • Figure 23: Mass of freight goods carried on the rail network, by type of good, 2013/14-2017/18, (million tonnes)
                                            • Volume of freight moved on rail network has fallen since 2013/14
                                              • Figure 24: Amount of freight moved on the rail network, by type, 2013/14-2017/18, (billion net tonne kilometres)
                                            • DB Cargo UK travels furthest for freight means
                                              • Figure 25: Actual freight train kilometres on network rail infrastructure, by operator, 2013-17, (million kilometres)
                                            • In the five-year period to 2016, the number of lorry journeys saved by rail freight peaked in 2014
                                              • Figure 26: Impact of rail freight on road haulage, 2012-16, (number of equivalent HGV lorry journeys in millions and equivalent distance travelled in billion kilometres)
                                            • Air freight
                                              • Air freight market marks five-year high level in 2017
                                                • Figure 27: UK air freight, by aircraft configuration and area, 2013-17, (tonnes)
                                            • Market Forecast

                                                • Stable growth anticipated until 2023
                                                  • Figure 28: UK logistical services market value forecast, 2019-23, (£ billion at 2018 prices)
                                                • Road freight set to drive market growth, though recruitment and capacity could limit development
                                                  • Figure 29: UK logistical services market segmentation forecast, by type, 2019-23, (£ billion at 2018 prices)
                                                • E-commerce growth continues to provide storage and distribution challenges
                                                • The Impact of the Economy

                                                  • GDP growth rebounds in Q2 but challenges remain
                                                    • Figure 30: GDP growth rate, Q2 2014-Q2 2018, (% change on previous quarter)
                                                • Market Trends

                                                    • Latest industry confidence index shows fall in confidence with market conditions expected to get more difficult
                                                      • Industry-wide recruitment and staff retention problems continue to restrict growth
                                                          • Figure 31: Number of practical LGV tests conducted and pass rate, 2013/14-2017/18, by gender, (% pass rate and number of practical tests)
                                                        • Other trends
                                                          • Demand for logistics space reaches high in 2018 as online sales force storage changes
                                                            • Slight decline in the percentage of vehicles running empty in 2017
                                                              • Figure 32: Vehicle percentage empty running and loading factors, 2013-17, by type and weight of vehicle, (%)
                                                            • Average haul length on the rise, with pledges to improve fuel efficiency to reduce environmental impact
                                                              • Figure 33: Average length of haul, 2013-17, by type and weight of vehicle, (kilometres)
                                                          • Market Drivers

                                                            • Threat of a no-deal Brexit generates uncertainty
                                                              • Retail sales continue to grow in value, maintaining demand for logistical services
                                                                • Figure 34: Retail sales trends, 2016-18, (percentage volume change on same month in previous year, seasonally-adjusted)
                                                              • Fuel prices rise in 2018 to date, but fuel duty will remain constant until 2019
                                                                • Figure 35: Typical retail cost of fuel and the fuel duty level in the UK, 2014-18*, (pence per litre)
                                                                • Figure 36: European petrol prices, 2018, (€ per litre)
                                                                • Figure 37: European diesel prices, 2018, (€ per litre)
                                                              • Skills and driver shortage continue to threaten the industry’s ability to respond to growing services demand
                                                              • Companies and Brands – What You Need to Know

                                                                • Interest in industry assets remains high among investors as consolidation continues
                                                                  • Providers are seeking to digitalise their operations
                                                                  • Industry Structure

                                                                    • Industry development
                                                                      • Interest in industry assets remains high among investors as consolidation continues
                                                                        • Changes in the structure of the industry
                                                                            • Figure 38: Analysis of the changes in the structure of the freight transport by rail industry, 2013-17, (number of outlets and businesses)
                                                                            • Figure 39: Analysis of the changes in the structure of the freight transport by road industry, 2013-17, (number of outlets and businesses)
                                                                            • Figure 40: Analysis of the changes in the structure of the removal services industry, 2013-2017, (number of outlets and businesses)
                                                                            • Figure 41: Analysis of the changes in the structure of the sea and coastal freight water transport industry, 2013-17, (number of outlets and businesses)
                                                                            • Figure 42: Analysis of the changes in the structure of the freight transport by inland waterway industry, 2013-17, (number of outlets and businesses)
                                                                            • Figure 43: Analysis of the changes in the structure of the freight transport by air industry, 2013-17, (number of outlets and businesses)
                                                                            • Figure 44: Analysis of the changes in the structure of the operation of warehousing and storage facilities industry, 2013-17, (number of outlets and businesses)
                                                                            • Figure 45: Analysis of the changes in the structure of the services incidental to water transportation industry, 2013-17, (number of outlets and businesses)
                                                                            • Figure 46: Analysis of the changes in the structure of the other transportation support activities industry, 2013-17, (number of outlets and businesses)
                                                                          • Structure by employment
                                                                            • Figure 47: Analysis of the employment structure of the freight transport by rail industry, 2016-17, (number of outlets and outlet employment size)
                                                                            • Figure 48: Analysis of the employment structure of the freight transport by road industry, 2016-17, (number of outlets and outlet employment size)
                                                                            • Figure 49: Analysis of the employment structure of the removal services industry, 2016-17, (number of outlets and outlet employment size)
                                                                            • Figure 50: Analysis of the employment structure of the sea and coastal freight water transport industry, 2016-17, (number of outlets and outlet employment size)
                                                                            • Figure 51: Analysis of the employment structure of the freight transport by inland waterway industry, 2016-17, (number of outlets and outlet employment size)
                                                                            • Figure 52: Analysis of the employment structure of the freight transport by air industry, 2016-17, (number of outlets and outlet employment size)
                                                                            • Figure 53: Analysis of the employment structure of the operation of warehousing and storage facilities industry, 2016-17, (number of outlets and outlet employment size)
                                                                            • Figure 54: Analysis of the employment structure of the services incidental to water transportation industry, 2016-17, (number of outlets and outlet employment size)
                                                                            • Figure 55: Analysis of the employment structure of the other transportation support activities industry, 2016-17, (number of outlets and outlet employment size)
                                                                          • Structure by turnover
                                                                            • Figure 56: Analysis of the financial structure of the freight transport by rail industry, 2016-17, (£ 000 and % of total turnover)
                                                                            • Figure 57: Analysis of the financial structure of the freight transport by road industry, 2016-17, (£ 000 and % of total turnover)
                                                                            • Figure 58: Analysis of the financial structure of the removal services industry, 2016-17, (£ 000 and % of total turnover)
                                                                            • Figure 59: Analysis of the financial structure of the sea and coastal freight water transport industry, 2016-17, (£ 000 and % of total turnover)
                                                                            • Figure 60: Analysis of the financial structure of the freight transport by inland waterway industry, 2016-17, (£ 000 and % of total turnover)
                                                                            • Figure 61: Analysis of the financial structure of the freight transport by air industry, 2016-17, (£ 000 and % of total turnover)
                                                                            • Figure 62: Analysis of the financial structure of the operation of warehousing and storage facilities industry, 2016-17, (£ 000 and % of total turnover)
                                                                            • Figure 63: Analysis of the financial structure of the services incidental to water transportation industry, 2016-17, (£ 000 and % of total turnover)
                                                                            • Figure 64: Analysis of the financial structure of the other transportation support activities industry, 2016-17, (£ 000 and % of total turnover)
                                                                        • Competitive Strategies

                                                                          • Providers are seeking to digitalise their operations
                                                                            • The e-commerce boom is reshaping fulfilment services
                                                                            • Company Profiles

                                                                              • CEVA Logistics
                                                                                • Recent company activity
                                                                                  • Financial information
                                                                                    • Figure 65: Financial analysis of CEVA Logistics, 2012-16, (£ million)
                                                                                  • DHL Supply Chain
                                                                                    • Recent company activity
                                                                                      • Financial information
                                                                                        • Figure 66: Financial analysis of DHL Supply Chain, 2013-17, (£ million)
                                                                                      • Eddie Stobart
                                                                                        • Recent company activity
                                                                                          • Financial information
                                                                                            • Figure 67: Financial analysis of Eddie Stobart, 2013-17, (£ million)
                                                                                          • Hoyer Petrolog
                                                                                            • Recent company activity
                                                                                              • Financial information
                                                                                                • Figure 68: Financial analysis of Hoyer Petrolog Limited UK, 2013-17, (£ million)
                                                                                              • Kuehne + Nagel
                                                                                                • Recent company activity
                                                                                                  • Financial information
                                                                                                    • Figure 69: Financial analysis of Kuehne + Nagel, 2013-17, (£ million)
                                                                                                  • Wincanton Holdings
                                                                                                    • Recent company activity
                                                                                                      • Financial information
                                                                                                        • Figure 70: Financial analysis of Wincanton Holdings, 2014-18, (£ million)
                                                                                                    • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                        • Abbreviations
                                                                                                          • Methodology
                                                                                                          • Further Sources and Contacts

                                                                                                            • Trade associations
                                                                                                              • British International Freight Association (BIFA)
                                                                                                                • European Logistics Association (ELA)
                                                                                                                  • Freight Transport Association (FTA)
                                                                                                                    • Road Haulage Association (RHA)
                                                                                                                      • Society of Motor Manufacturers and Traders (SMMT)
                                                                                                                        • The Chartered Institute of Logistics and Transport (CILT)
                                                                                                                          • United Kingdom Warehousing Association (UKWA)
                                                                                                                            • Trade magazines
                                                                                                                              • Cold Chain News
                                                                                                                                • Freight Industry Times
                                                                                                                                  • Motor Transport
                                                                                                                                    • Transport Monthly
                                                                                                                                      • Transport News
                                                                                                                                        • Trade events
                                                                                                                                          • Commercial Vehicle Show 2019
                                                                                                                                            • Future Logistics Expo 2018
                                                                                                                                              • Leading Logistics – Overcoming the Skills Shortage 2018
                                                                                                                                                • IMHX 2019
                                                                                                                                                  • Seawork 2019
                                                                                                                                                    • Supply Chain Conference
                                                                                                                                                      • The Richmond Supply Chain Forum 2018