February 9, 2024
Zedify on BBC R4/ The logistics sector needs change and collaboration, not a witch hunt
The logistics sector needs change and collaboration, not a witch hunt
Ex-Yodel Executive Chairman and Chairman of Zedify, John Hughes, was interviewed on Radio 4 this morning to get his take on the high profile headlines speculating about Yodel’s fortunes. You can hear the interview on the clip here, but it turns out John had quite a bit more to say than the time allowed.
“Listen, there are loads of really amazing things happening in the UK logistics sector right now, but we’ve got to start thinking on a grander scale about doing things differently. Why? Because if we keep squeezing margins, doing things using old methods and old infrastructure it’s going to be near impossible to escape an erosion of service levels and to avoid the huge disruptions that come from logistics businesses collapsing. But right at the apex of that need for change is the fact we need new systems to help support the men and women tirelessly working day in and out ferrying parcels to doorsteps, and we need new systems which bring about positive change for the planet.
If we shift back to the pandemic, logistics companies and their workers were heroes! The online and home delivery model was a saviour for so many families and individuals. But perhaps we haven’t managed to crystallise that positive perception into the post-pandemic period and encourage the whole ecosystem that spans retailers, consumers and logistics businesses to really value the service that’s being provided here.
The times we live in are challenging to say the least; high interest rates and a squeeze on cash mean that an industry which has always been cost cutting is having to do so even more. It’s estimated that between 400 and 500 logistics businesses went bust in the UK last year alone. Due to the economic situation volumes are down around 10% which is coupled with a shortage of delivery workers which drives pay up.
Despite all this, peak 2023 went really pretty well. Why then rock the boat? It’s stories like this one with Yodel that makes the case clear. Investment is needed across the board, with input from all the stakeholders: government working to build an integrated transport system that’s fit for the future, retailers demonstrating to their customers the value of good delivery, and logistics businesses themselves harnessing the plethora of new models and technologies to drive efficiency and tackle the triple bottom line.
If you’re going to have a sustainable UK logistics sector in 2024, we need to start taking some of these cold hard facts seriously. Each year, congestion costs the UK economy £8bn, and over 10,000 early deaths in London alone are caused by dirty air. At the current trajectory, van traffic is going to grow 30% in 10 years, with only ⅓ of those vans typically utilised in urban areas. With over 14 million parcels delivered each day in the UK right now and the growth that’s expected, this is a sector that has a huge potential to bring about change.
Whether that’s strengthening the PUDO network and working with retailers and consumers to make the locker and store click and collect models as sustainable as possible. Or, if it’s about collaboration between brands and logistics providers in the middle mile to stop the travesty of under utilised HGVs travelling between DCs, stores and regional distribution hubs. Close to my heart, is the huge opportunity for change when it comes to culling van traffic in city centres by using micro hubs and even using city stores as fulfilment hubs. Plus, the impact that freight consolidation can have in this final part of the delivery journey coupled with light, super low carbon vehicles like cargo bikes to deliver in the last mile.
Essentially, let’s not get distracted here by a perverse desire to see a big company fail and instead, let’s take a pause and gather round the opportunity to put our heads together across the space that spans transport, retail, logistics and consumers. With Yodel, I wish them well, especially for the jobs of the thousands of men and women they employ. But right now, we’ve got an opportunity to talk about the role of logistics in driving positive change in the UK- it’s a big space, there are a lot of players and together we can build something that is sustainable in all the meanings of that word that matter.”
John Hughes, ex-Yodel, current Zedify Chairman
Connect with John on LinkedIn here