There are 65,280 enterprises in the UK logistics sector of which 64.5% are primarily involved in road freight transport. The UK logistics sector is estimated to be worth £55 billion to the economy.

The sector is comprised of a large number of small or medium sized organisations, with a much smaller but influential number of large organisations employing more than 200 employees (1%). The larger organisations’ activities include air, rail and inland or coastal shipping.

94% of organisations in the sector have less than 50 employees. Medium sized organisations (between 50-199 employees) account for 4% of organisations in the sector.

82% of freight in the UK is moved by road. Some of the larger organisations in the sector move freight by inland waterway, air and rail. International operators transport large volumes by sea. Freight transport by air is minor compared to the number of air passenger movements.

It is estimated that there will be a 28% increase in turnover of freight logistics organisations between 2003-2007. The largest turnover increases are forecast in freight forwarding (35%) and supporting transport activities (29%).

Source: UK Logistics Sector Profile 2006, Skills for Logistics website 2006 and Skills for Logistics – Stage 1 2005

For more information on the logistics sector and its links with other sectors in the UK economy see:

Logistics activities can be defined with reference to Standard Industrial Classifications (SICs), but there are many people engaged in logistics who work in organisations falling outside those SIC areas. The total UK logistics workforce is approximately 1,753 million, which is divided into those employed in the logistics sector (996,000) and those in logistics roles in other sectors (757,000). Overall, the sector accounts for 6% of all UK employment. The largest single group of over 249,000 is in national postal activities

It is estimated that 10% of the road freight workforce can work flexibly (compared to the national average of 20%) and 60% work over 48 hours per week (compared to 17%). Over the next 3 years, there is estimated to be a shortage of approximately 15,000-20,000 LGV drivers.

Total employment in this sector is forecast to remain stable over the next decade, but employers across all regions expect staff numbers to increase. However, the composition of employment is expected to change. The number of part-time jobs is expected to increase and an increasing share of jobs will be held by women: 

• part-time employment will increase from 14% to 20% of total employment in this sector by 2014.
• the number of women employed in the sector will increase from 22% to 30% over the same period

13% of the UK logistics workforce work part-time, compared to 26% across all UK sectors.  National post activities have the highest proportion of part-time workers at 20%.

8% of the UK logistics workforce is self-employed, compared to 13% across all sectors in the UK.  14% of people in the freight transport by road are self-employed, 1% in storage and warehousing and 2% in national post activities.

Over the next 10 years, a total requirement in excess of 250,000 recruits is forecast. Future employment difficulties are anticipated for harbourmasters, pilots, port managers and for most categories of lower paid staff.

Source: UK Logistics Sector Profile 2006, English Logistics Sector Profile 2006, Working Futures 2006 and Skills for Logistics – Stage 1 2005  

Source: UK Logistics Sector Profile 2006.  Table 2.5.

For further data on the sector by gender and employment status plus predicted changes in numbers see:

The rail freight industry employs approximately 7,500 people in total, so is a relatively small industry in the overall logistics sector. The principal employment categories include: technical and engineering; operations; customer relations; and management. Employment levels in the industry have reduced over the last few years due to redundancies, retirements, employees moving to better paid work with consultancy firms in the industry, and those leaving the sector.

Significant problems are forecast over the next ten years as large numbers will be retiring and few engineering graduates are entering the industry. The industry has serious recruitment problems and shortages in train drivers and customer service staff are expected.

There is little data on the inland waterways industry as it is very small. Despite the potential expansion of water borne freight traffic and as a more environmentally friendly mode of transport, it remains under utilised compared to other modes of transport.

Freight transport by air is small despite the high volume of air passengers. However, freight loaded by tonnes and transported by air has increased since 1995. Employment levels are not predicted to increase in the near future.

Source: Skills for Logistics – Stage 1 2005

59% of employers consider their staff to be 100% competent at their jobs. However, there is a shortage of multi-skilled staff. Skills shortages are frequently reported for: general managers; harbourmasters; and plant operatives.

The skills shortage in the sector is caused both by the skill-levels of applicants and lack of applicants generally. Other problems contributing to skill gaps in logistics, distribution and warehousing include the:

• failure to train staff at all levels
• need for new skills following the introduction of new products/technology
• need for new skills following the introduction of new working practices

Similar to the UK average, internal skills gaps are reported in 19% of organisations in the sector. 8% of organisations in the sector report skills shortage vacancies, compared to 6% in the whole economy.

The growing impact of technology on the sector has highlighted both the relatively low levels of basic skills and the need for higher level skills in the workforce. The logistics sector has been radically altered by new technology and supply chain systems.

Across the English regions, the extent of skills gaps are varied. For example, there are better paid jobs for LGV drivers in the South East, further education colleges in the Humber have been responding to local skill demands, and a private sector provide in the East of England has achieved CoVE status (see education and training section) and is providing high quality logistics training.

Source: Skills for Logistics – Stage 3 2006, SSDA 2004 and FTA/Skills for Logistics 2003

Future skills needs in the sector will be determined by:

• the speed and direction of technological change – suggesting the need for higher skilled jobs
• globalisation – requiring some organisations to restructure and divert functions overseas
• changing and increasing consumer pressures – affected by market campaigns, increased environmental awareness, public education and fashion
• government activities – including EU initiatives, increased regulation and local planning decisions
• response from training providers and employers regarding changing skill needs and trends
• availability for funding and investment in training infrastructure
• co-operation within the sector in which organisations recognise the need to collaborate to overcome skill deficits

Source: Skills for Logistics – Stage 3 2006

Future challenges for the sector include a need:

• for a wider and more intensive range of management training to address the growing management skills gaps
• to address workforce deficiencies in basic skills (notably numeracy and literacy) among lower levels of the workforce
• to challenge the poor image of the sector by correcting misconceptions about working conditions
• for a more diverse labour force profile
• to address the limitations of current education and training provision
• to improve understanding about the business case for training

For more information on the ways in which these challenges are to be addressed by the sector go to the Skills for Logistics Analysis of Gaps and Weaknesses in Workforce Development Activity (Sector Skills Agreement - Stage 3) (2006) available on the Skills for Logistic website.   

Source: Skills for Logistics – Stage 3 2006

Globalisation is identified has a key external driver of change in the sector. It is impacting on production, procurement and distribution, e-logistics and e-transport, but also outsourced activities. With the enlargement of the European Union, it is estimated that road freight will increase by 50% to 2010.

New technology favours large companies which tend to be more willing and financially able to invest. For example, only large distribution companies are able to afford the systems that link directly with those of major retailers. Improvements in technology will assist the monitoring of the flow of stock, which will further speed up the handling and processing of goods. E-commerce and direct sales require fast response systems to enable goods to be delivered within very short timescales, which better IT systems will enable. The changes in technology will have impacts across the employment spectrum in the industry.

The development of e-commerce, including home shopping using the internet, is a major driver of the distributive industry. However, the rate of expansion and the extent of development of e-commerce are still uncertain.

‘E-tailing’ will lead to a number of changes in the industry, including price savings and easier access to information as it cuts out the ‘middleman’. This is likely to lead to a transformation of the role of the store, along with further blurring between retail and distribution and warehousing.

Local, national and European concerns over environmental issues will continue to intensify, and these will be more evident in legislation and/or restrictions around the movement of all road vehicles. Current and future policies appear set to increase the importance of the rail network in the movement of goods.

The EU Working Time Directive is having a significant impact on the sector because of the long driver hours required for transporting goods around the UK and Europe. Many companies have had to re-organise operations both to cater for a 24-hour 7-day a week service (to meet the just-in-time business customer demands and increasing direct domestic customer delivery demands) and to enable operators to work a shorter working week. To reconcile these conflicting pressures firms will need to invest in higher levels of technology.

There is an urgent need for trained managers in both rail freight and water-borne freight. Demands for expansion, privatisation and deregulation, together with increasing customer expectations, environmental standards and safety levels, have all impact on industry management.

Source: Skills for Logistics – Stage 1 2005

For more information on the EU Driving Training Directive 2006 go to the Skills for Logistics website.