The UK's International Supply Chain
The economic performance of the UK depends to great extent on the quality of the supply chain linking it to the rest of the world.
Increasingly the UK is outsourcing its production overseas, meaning that more and more goods need to be imported. The price that UK consumers and business pay for all these goods in shops or over the internet is affected by the cost of the supply chain bringing it to them. Equally, the competitiveness of exports from the UK is affected by the ability of our industries to get their products out to the global market quickly, reliably and, above all, cheaply.
FTA works to ensure that the UK, EU and international policy makers are fully informed about the needs of UK business in regard to the international supply chain.
The FTA’s work in this area is led by the British Shippers' Council - the FTA’s international supply chain council.
Sea Freight
Sea freight accounts for 95 per cent of UK imports and exports by tonnage. This means almost 600m tonnes a year - totalling goods worth £336 billion. Sea freight is also an important source of domestic freight movements - getting freight closer to its destination by environmentally friendly means.
In recent years FTA has led the debate in introducing competition to the liner shipping industry - currently they are allowed to act effectively as cartels. In a substantial success for the needs of UK business, from October 2008 the full force of EU competition law will apply to the liner shipping industry - forcing them to compete.
FTA believes this will open up a new era for sea freight. The debate now moves on to issues such as service levels, documentation and cost. FTA aims to lead the debate again in helping operators such as shipping lines and ports work with the users of sea freight to provide a more flexible and customer oriented service.
Building transparency into supply chains - Service performance indicators
Ports
The competitive nature of the UK’s ports has seen great benefits for the UK economy. Services have become more customer focused and efficiencies have been gained.
However, the UK’s major ports are increasingly congested. The delays, costs and rejections resulting from the planning process for new port facilities are leaving shippers reliant on existing facilities. Ports such as Felixstowe, Southampton and Liverpool are experiencing congestion. This can result in delays for ships but, just as importantly, in congestion for the onward transport links - to get the goods into or out of the port on the landside. As limits are reached, either goods will not come in or will have to reroute to less convenient ports - adding time and cost to both imports and exports, hurting the UK economy.
Click here to read FTA's policy document on UK port development.
Air freight
Air freight is a vital link in making the UK a competitive centre of world business. It is used to transport high value, small sized commodities quickly to markets around the world. Frequently these are products with a short life span, such as medicines, or those that underpin the UK service economy, such as financial documents.
The importance of air freight is shown by the fact that whilst it represents less than 1 per cent of UK trade in products by tonnage, it represents 30 per cent of exports by value.
International rail and road freight
The quality of land transport links on the Continent are also vital for the UK’s supply change - the majority of the UK’s trade is with our fellow EU members. The ongoing liberalisation of European rail freight should be a positive development for the UK, as operators compete and services improve. This will bring the rest of Europe further into line with the competitive market in the UK. Road links on the Continent face the same challenges as in the UK - congestion and how to address the environmental debate.
