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Sector Information

Logistics is the movement and supply of all goods (or freight) from raw materials, through all stages of the manufacturing process to the delivery of the finished product to companies and consumers. This is known as the ‘supply chain.’ All forms of transport are involved in distributing freight – road, rail, air, sea and waterways. The Skills for Logistics Sector Skills Council represents seven sub-sectors in the UK labour market:

  • Air freight
  • Couriers
  • Freight forwarding
  • Postal services
  • Road haulage
  • Storage and warehousing
  • Wholesaling

The turnover of UK companies operating in the freight and distribution sector was £86.54 billion in 2008. It seems likely that the recovery from recession will be slow, with a return to trend growth rates expected, at the earliest, in 2011. From 2011 growth year on year is expected to be around 7%. In terms of productivity, the UK logistics sector is not as productive as the EU and USA transport and wholesale sectors.

Source: Skills for Logistics AACS LMI report 2010

Logistics employment

The logistics sector employs 1.7 million people across 194,100 companies. Including those who work in logistics occupations in other sectors, the actual size of the sector is an estimated 2.3 million people, which equates to 8% of the UK’s workforce.

Employment in the sector is heavily concentrated in the lower skilled occupations. Operatives and elementary positions account for 47% compared to 19% across the whole economy.

40% of the workforce is employed within the wholesale sub-sector, 14% in national post activities, 13% within freight transport by road, and a further 10% in storage and warehousing.

Self-employed and part-time employees are under-represented in the sector when compared to all sectors data. Self-employment accounts for 8% of the workforce, which is less than the national average of 15%. Part-time workers in the sector account for 14%, which is lower than the all sector average of 25%.

22% of the workforce in the national post activities is employed part-time, below the UK average (26%). Wholesale and freight transport by road have the greatest proportions of self-employment, both at 11%. However, self employment in storage and warehousing,

and national post appears to be limited.

Source: Skills for Logistics Sector Skills Assessment 2010 and Skills for Logistics AACS LMI report 2010

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Logistics workplaces

Across the 194,100 companies in the sector, 84% employ 10 or less people, while only 1% employ 200 and over people. However, these large companies account for 24% of those employed in the sector.

In England, 67% of sector workplaces are in wholesale, 18% in freight transport by road and 6% in courier activities.

Source: Skills for Logistics Sector Skills Assessment 2010 and Skills for Logistics Sector Skills Assessment – England 2010

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Future employment

The recession has impacted upon employment patterns within the sector. JobCentre Plus data indicates a drastic decline in the number of vacancies being reported. In June 2008, there were 18,042 HGV driver vacancies and in the same period in 2009 there were only 6,688. The number of claimants from logistics occupations increased during this period.

Employment in the sector has steadily increased since the early 1990s with numbers peaking in 2001 at 2.1 million people employed across the UK. In 2007, employment in the sector was 2,064,000 which is forecast to increase by 45,300 to 2017.

Between 2007 and 2017, managerial positions are expected to see the largest increase in numbers (36,400) followed by personal services (16,300) and associate professionals (15,000). Job losses are expected within skilled trade occupations (29,400) and transport and machine operatives (9,600).

Source: Skills for Logistics Sector Skills Assessment 2010

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Replacement demands

There will be a continuing need to replace workers who leave their jobs due to retirement or other reasons. The replacement demand for the UK logistics sector is forecast to be around 798,200. With an expansion demand of around 45,300, between 2007-2017 the sector will need a total of 843,600 new people. Considerable demand will be seen for

managers, customer service positions and transport and machine operatives.

Source: Skills for Logistics Sector Skills Assessment 2010

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Skills needs

5% of the total logistics workforce is believed to have a skills gap. 15% of companies reported that they employed staff whom they considered not fully proficient. Skills gaps are most likely to be found in the ‘lower level’ occupational groups, particularly machine operatives and elementary positions.

Skills gaps are caused by a number of factors. The most commonly cited cause is lack of experience or staff being recently recruited (69%). The lack of motivation from staff and the inability of the workforce to keep up with change are also factors that contribute to skills gaps.

Skills required by the sector include: generic skills, such as customer handling, oral communication; office administration; and general IT skills.

Management skills are vital within the sector, but competence in terms of ability and attitude are lacking.

Due of the technical nature of many jobs in the logistics sector, and the potential safety issues for employees and the general public, many occupations are subject to licences or other qualifications. In many instances they are based on European Directives. Technical skills in the sector can include:

Source: Skills for Logistics Sector Skills Assessment 2010

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Drivers of future skills and workforce development

Future skills needs in the sector will be influenced by:

  • EU policy – EU initiatives, increased regulation and wishes to establish common rules relating to professional qualifications and working conditions
  • UK policy – strategies adopted by government around skills and reducing carbon emissions, and local planning decisions
  • Globalisation – expansion of EU providing new business and sourcing, migrant workers easing skills gaps
  • Economy – impact of the recession, development of transport infrastructure, complex relationship between transport, economy and society
  • Changing and increasing consumer pressures – affected by market campaigns, increased environmental awareness, public education and fashion
  • Fuel tax differences across the EU – UK costs are high compared to other counties in Europe
  • Congestion, parking and low emission areas – with the number of vehicles on the road increasing congestion will also rise impacting on the capacity and efficiency of the sector
  • Technology – the speed and direction of technological change to improve competitiveness and efficiency suggests the need for higher skilled jobs
  • Environment – there is a continuing need to mitigate the impact of freight transport on the environment
  • Training – availability for funding and investment in training infrastructure
  • Ecological driving – eco-driving will help to improve the technical skills of drivers and has the potential to save significant amounts of carbon.

Source: Skills for Logistics Sector Skills Assessment 2010

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