Episode Transcript
[00:00:00] Speaker A: You're listening to the Lodestar, the supply chain and logistics industry's leading source of insight.
[00:00:05] Speaker B: This podcast was created and produced by MK and associates and your host Mike King.
The UK is going to the polls on US Independence Day, but will supply chain stakeholders be celebrating liberation from Brexit's trading straightjacket anytime soon? Well be finding out today what key supply chain stakeholders in Britain want from a new government. And as over 4 billion people are voting in 2024, we look at key elections around the world and what they mean for the trading landscape. Can new leaders help solve our disrupted world or is more turbulent on the way? Today im talking to the Lodestar's Gavin van Marl, Richard Ballantyne, chief executive of the British Ports Association, Europa Worldwide's Dion Redpath and from Logistics UK we have the fantastic Nicola Mallon.
[00:00:56] Speaker C: If you kind of look at the post EU exit trading environment from the UK's perspective, the UK government signed the free trade agreement with the comprehensive and progressive agreements for Trans Pacific partnerships. So essentially with those eleven countries, and the projected increase to GDP in the longer run is 0.08%. If you look at the border target operating model, which is needed controls rating for goods coming across from the EU to the UK, the government's own assessment is that that will contribute 0.2% to food and drink inflation over three years. So essentially the pain from those new controls and its impact on inflation will be greater than the projected GDP increase from that UFTA. And I think that's the strange place that certainly logistics industry finds itself in. So certainly Logistics UK is supportive of getting a better deal with the EU so that we can reduce and remove fiction where possible and those barriers to trade.
[00:01:59] Speaker B: Hello everybody, I'm Mike King. Welcome to the Loud Star podcast.
Greetings one and all. As I'm sure you know by now, you can find this podcast on thelowstar.com and on all podcast platforms, and you can contact me directly about stories you think we should be covering at myking one, two, one. Mail.com as trailed later, I'll be turning the UK elections, which take place on 4 July, to find out what a new government can do to help logistics sector stakeholders help UK industry and consumers. We're talking port, we're talking Brexit, we're talking planning and investment. And I'll be doing all of this with Richard Ballantyne, chief executive of the British Ports Association Nicola Mallon, head of trade and devolved policy at Logistics UK and Dionne Redpath, group chief operating officer at Europa Worldwide Group. But before we turn to the UK, we're going to take a more global look at how important the elections of 2024 are proving to the trading landscape. Because if there's one thing we know about this year, it's that government and politics have never been more important when it comes to shaping the risk and often also the pricing that those running international supply chains must manage. Doing the heavy lifting today on all of this is Loadstar managing editor Gavin van Mole. Welcome back, gav.
[00:03:19] Speaker D: Hi, Mike, nice to see you again, buddy.
[00:03:21] Speaker B: Gav, thanks for coming on. Before we get to elections, let's have a quick look at freight rate from the air cargo side. The picture we've been getting at the Lodestar is a market where, despite these us customs clamp downs on e tailer imports, the market continues to be pretty unseasonably strong, if I can put it that way. We've got e commerce is driving a lot of this, and on many lanes we've got freight rates up double digits or thereabouts compared to last year. Obviously, ocean shipping divisions and higher costs are other factors, especially on Asia Europe route. Big thanks to the excellent Neil van de wow, chief air freight officer at Zenita, for his input here. His latest analysis shows air cargo demand and spot rates from Asia to Europe have both been above their highest levels achieved throughout 2023. That's over the last four months of this year through June. Interestingly, despite rates being up for air freight, the differential in pricing with ocean freight has shrunk to just six times higher. Ten to 16 times higher has been more normal outside pandemics, as a rule of thumb. So it's easy to see why air freight is still comparatively attractive when transit times and spot freight rates are shipping. I've been soaring. If you have cargo that's valuable enough to switch from one to the other, et cetera. Gav, what's the outlook like for ocean shipping right now? And where are those spot rates at the moment?
[00:04:44] Speaker D: Let's start with the spot rates at the moment. According to Zenita's exercise, and this is the last week of June that we're last full week of June. The race at the moment on Asia Europe is just over $6,900 for a 40 foot. That's up 4% week on week and up 45% month on month. So I don't know if we've talked about this before, Mike, but we have noticed that you tend to get, in the last couple of months, the double digit increases, the weekly double digit increases. That is that we've seen have tended to coincide with either the beginning of the month or the middle of the month, which is when peak season surcharges, general rate increases and all the other surcharges, poor congestion, so on and so forth, they tend to be applied either at beginning a month or the midway point. So it's in the weeks following those that you get the double digit increases, and then the week following that we've noticed a much smaller single digit increase. So we seem to be in that latter situation right at the moment, rates on the Trans Pacific to the US west coast were up 3% week on week to $6,950, and that's 42% month on month. And to the US east coast, they were also up 3% to 8750, and that's a 26% rise. Interestingly, if just by comparison, because we talk about all this ex Asia stuff, you go over to Zenita's transatlantic leg and it's just flat. It's sitting at the moment 18 89 44. That's on the head. Haul Europe to North America, that's actually down 2.5% month on month. And in fact, the highest transatlantic rate this year has been just a bit over $2,000. So not all trades are performing the same way. Not all of them seem to be subject to these ever steeper costs for shippersen.
[00:06:42] Speaker B: And I've got a couple of questions from that, Gav. Are we expecting more gris or peak season surcharges into July? And what are carriers doing to boost capacity?
[00:06:53] Speaker D: So kind of an two questions, but some questions. Yes, essentially. Sorry to go with the further rate increases. Yeah, I think as far as I recall, there are further increases set for the 1 July and certainly p 30. And the chief sea freight analyst at Zenitsu, the regular guest on this podcast, is expecting rates to increase further next month. And I don't think there's any doubt that carriers will be seeking to push through further hikes over the next month or so. I mean, this is their time. This is when they're going to earn the big bucks.
[00:07:31] Speaker B: Cash in while you can.
[00:07:32] Speaker D: Exactly, exactly. Make hay while the sunshine, which is quite apt for us at the moment because the sun has started shining in the UK for the first time for about two years, I think. Right.
Feels like it moving away. Sorry. Capacity. I've got some data. We've got an op ed written for us by Maritime Strategies International, which has been published in the next day or so. And the analyst there, Daniel Richards, makes the point that recorded that since November we've had 1.7 million TEU of new ship capacity delivered, right, 1.4 of which has been added to the Asia Europe trades to make up for the extra sailings and so on. There's also been around about just over another half million tu has been added to the fleet through dry docking and maintenance, scheduled maintenance stops being delayed. And, you know, there's been ships coming out of repair yards early. You know, there's been extra sort of activities that the carriers have done to add further capacity. But beyond the new ships that are still to be delivered this year, which amounts to about another 1 million tu, there's not much else the carriers can do. So there is capacity being added. But I think the point when shippers will see capacity much more readily available will be the point when demand starts to slacken off. And this is being reflected in the charter market, right? I mean, earlier last week, we reported that nurse could secure a vessel of $150,000 a day daily. Higher rates. So what happens when you get high demand in the freight market? You start to see that filtering through into the charter market about three months later. And that's very, very much what's happening at the moment.
[00:09:19] Speaker B: Okay, thanks, Gav. Elections. So, dear listeners, did you know that 2024 is the biggest election year in history? The UK votes on the 4 July, but this year we've had or will have elections in, just to name a few, Indonesia, Brazil, Mexico, Turkey, Bangladesh, South Africa and Russia. Obviously, some of those countries being slightly more democratic than others. But overall, that's 4 billion people, more than half the world's population will be voting. Obviously, the big one for our industry is the us presidential election is later this year. But before we come to that, Gav, let's look at Asia first. What for you has been the most significant election there in 2024 in terms of implications for lodestar readers.
[00:10:05] Speaker D: Well, it's got to be India, hasn't it? You know, now the world's most populated country. An election process that is so convoluted that it takes, what, a month to complete the indian elections? Because obviously there's so many votes to be collected. And what was predicted was that incumbent Prime Minister Narendra Modi, there were all these predictions about winning this sort of, they're calling a supermajority, but actually it turned out to be quite the opposite. The final count, Modi's BJP party and its allies won 292 seats, opposition to 234. So it's not a minority government, but it's going to make it a lot more difficult to push through the sort of economic policies that he's been associated with over the last decade or so. So, yeah, it's got pretty profound implications for our industry. I mean, you know, the rise of India over the last five years or so has been, I think, a constant theme in armed stories and indeed the shipping industry. And that has been centered very much on the development of the country's ports, particularly its container ports. I mean, Mike, you and I have talked about this for years, right? In our sort of semi regular comparisons of India and China boasting similar sized workforces. You look at the poor capacity of China. I mean, I think China. What's it. I saw some data this morning that showed the chinese ports handled 100 million teu in the first four months of the year. So, you know, China regularly handles 300 million TEU plus India is what, a 10th of that. So in order for the indian economy to fulfill the potential that Mister Modi sees in it, it has to build up the transport infrastructure to support the manufacturer, to support the export of those goods. And so over the last few years, the boost that India's port sector has seen has largely been due to the actions of one company, the Adani Group. Now, the Adani group, set up by Polymorph's company, Gautam Adani, is an indian tycoon from the state of Gujarat, which is where Mister Modi himself was the state governor for nearly 15 years before he became prime minister. In fact, when he was elected prime minister, the plane he flew to Delhi from Gujarat was owned by Mister Adani. So, I mean, you can sort of see the very close personal relationship between Modi and mister Adani. And also, I should add, not just mister Adani, but Mukesh Ambani, who is the owner of Reliance Industries, which are very broadly parallel to the Adani group in its importance to the indian economy. So what you've had, you've had a whole range of. I mean, Adani group started in Mundra, but it now owns a host of ports, but on both coasts of India. It's responsible for the revitalization of India's new transshipment hub at Visignyam, which is right on the southern tip of Kerala. And that, you know, I visited that project, for want of a better word, it was just a beach when I saw it in 2004. And the project's being completely hampered by red tape and official sort of slowness of getting things through, of winning environmental approvals, of making sure finances.
After several full starts, it really only came to fruition due to the Adani group's involvement. However, right now that these elections are in the rear view mirror, as it were, I thought it was just so interesting to see. Two weeks after the elections were announced, the Port Authority of Mumbai, JNPt Jal Wahalal Nehru Port Trust, announced the formal go ahead of a new $10 billion, 23 million te annual capacity gateway port at a place called Vadhavn, which is about 100 miles north of Mumbai. And it was just very instructive that they announced to go ahead and they said, and these are the operators that, you know, we're talking to about investing in it. And they listed DP worlds, APM terminals, PSA, CMA, CGM. Nowhere was there any mention of the Adani group. And I just wonder whether that might be a sort of forbearance of things to come.
[00:14:31] Speaker B: So what do you mean? He might have to be not so cozy with some of these huge companies and their owners in the future that have helped this rise from the man from Gujarat become so powerful in India.
[00:14:42] Speaker D: Yeah. Let's play a little thought experiment here. If that's what the Vadavn project was announced three years ago, I would bet you that the first name on top of the list would be the Adani group, and then there would be some jostling amongst the international operators for other things. If you look at every port development deal in India since 2016, it's the Adani group wins them, sometimes in cooperation with MSC or CMA, sometimes they have a shipping partner. But it's been the first. It's always been a given. You're going to build a new port in India, Adani will operate it. That's how it has been. But now it just feels like the worm is turning.
[00:15:24] Speaker B: I just want to mention a couple of other things just away from the shipping side a little bit. And we both covered this. The general sales tax came in in 2017. Now, before that, we had all these overlapping state regulations which prevented national distribution strategies. GST got rid of all of that and has really freed up the movement of goods around the country. We've seen a lot of inward investments. I mean, he's really, he's helped a lot. He's removed a lot of red tape in India, which was always one of those big comparisons with China is the red tape. Well, in India, a lot of that's been removed, although you speak to people say, ok, it's not all being removed by any means, but we have seen high end investment. It's not necessarily lending itself to container imports or exports, but it's foxconn, it's Apple. It's high. Valuable cargoes moving in there. We've seen a lot of investment in roads and airport, and I wonder if some of those massive pro business policies will be harder for Mahendra Modi to push through in this next round of his leadership in this next parliament, when he doesn't have quite such a. The majority he was hoping for. So, yeah, lots to watch there, I think. I've been keeping an eye on Indonesia, which I'm sure you know, Gav, third largest democracy, went to the polls in February to try and find a replacement for the departing, immensely popular president, Joko Widodo. But everyone knows him as Jokowi. For my sins. Back in the day, I wrote an analysis of Indonesia's business environment and logistics performance in terms of how it might attract a manufacturing in the future. This is pre Jokowi, and it's got these great demographics. It has a growing domestic market, but even over a decade ago, corruption, terrible infrastructure were big deterrents, lots of bureaucracy, especially when you're looking at comparisons with Vietnam and China. The infrastructure there, and getting that right for logistics and manufacturing is pretty important, even just in that domestic market. When you think this is the world's largest archipelago, you need to connect 17,000 islands, or you need to connect an awful lot of them to make it work as a domestic market. And a lot of the industry and the economic activities all squashed into Java, Indonesia. Container ports were pretty poor. Didn't have mainline calls, roads too busy, no railroads, take your pick. But that was Prejukawi, as I say, and he's managed to spend a lot of money on infrastructure. We've had 16 new airports, 18 ports, 2000 toll roads. There's a few white elephants amongst all of that. And efforts to move the capital to Borneo away from Jakarta, they're going very slowly, to say the least. There's not many investments putting their hands up.
[00:18:02] Speaker D: Isn't it sinking? Jakarta.
[00:18:04] Speaker B: Jakarta is indeed sinking, I said. That's another report that I did, Gav, but I will come to that another day, I think.
Jacawi will be succeeded by President elect Prabowo Subianto. Jokowi defeated Prabow twice in presidential elections, but Prabowo still served in the cabinet as defense minister. Now he's got a bit of a mixed background. Former special forces commander, once married to a daughter of Suharto, Indonesia's late dictator. He's controversially taken on Jokowi's son as vice president. He's been accused of various human rights abuses. He's been a bit vague on policy, but he seems a bit more keen on foreign policy than domestic, where aside from promising free school meals and following to honor the Jokowinomics, as they call it, he's been a bit vague. Some talk about privatization. So he's also said, quite worryingly, that democracy is very, very messy and tiring and very costly and needs to be improved, which doesn't sound like a great commitment when you've just won a democratic vote. There are suggestions that Indonesia might sway towards China rather than us. It has less overlapping claims in the China Sea than the likes of the Philippines and Vietnam. I think with Indonesia, it's very much a case of wait and watch in terms of what happens next and how it affects trade policy and that investment environment. Gav, you've been keeping an eye on the recent South Africa elections, where President Cyril Ramaphosa has won a second term despite his party, the ANC, failing to secure a majority in parliament during May's elections. What's on his plate?
[00:19:38] Speaker D: Well, I mean, basically to stop state capture, which is a very sort of asinine term for theft, which has been going on for the past 20 years. Right. I've written a lot about it, but when it comes to our industry, we're talking Transnet, you know, we're talking the state owned rail freight and port operator in South Africa, which, according to some studies I've seen, the corruption and the inefficiency of that organization has cost the south african economy as much as 5% of its gdp through a lack of being able to get out exports and imports and high charges and all that. So in South Africa, and that is going to be a coalitional thing. Right? So it's called the new government of national unity, and that's currently being established there at the moment. I'm going to give a shout out to Jacob van Rensburg from the Southern African association of Freight Forwarders, who we're in regular correspondence with. And there's a little message that he sent me this morning. Some ongoing developments impacting trade and logistics continue to be the liberalization and systemic reform of the port and rail owner and operator, Transnet. These changes, which include more private sector participation and increased competition between operators, are expected to enhance the efficiency and competitiveness of south african ports. So I think it's fair to say that everyone just needs, in South Africa, that is, just needs the ports to work better. And we're seeing moves through this. ICTSI was awarded the concession to operate Durban's pier two terminal, which accounts for a good 40% to 50% of the country's container trade. There was another one this week where Richard's Bay, Mike, you would remember from your bulk days.
[00:21:26] Speaker B: Oh, I do indeed. What a great place to visit that is.
[00:21:29] Speaker D: Yeah, right.
[00:21:29] Speaker E: I.
[00:21:30] Speaker D: Well, it's actually got a small container terminal there. So Transnet last week named Grinrod, the private sort of stevedore in South Africa. It named it as the preferred bidder to redeveloped the Richards Bay contained terminal, not a great deal, but taking capacity from 50,000 teu to like 200,000 teu, these are promising signs. And so we hope, and I love South Africa. Right. I think it's a marvelous place. We hope that it's finally starting to move in the right direction after a lot of years of real difficulty. Far too. I mean, we could do a whole podcast on stories from South Africa and what's been going on there over the last 20 years.
[00:22:13] Speaker B: I think with all the corruption over there, surely we can get someone to sponsor a podcast where I go over and just spend a week or two near Richards Bay, maybe popping up to, um, chalui for Shiloh, umfalozi up to Kruger. What do you think? I. Grindrod. Anyone there?
Transnet, Cyril, I'm waiting.
[00:22:33] Speaker D: I've long been advocating internally here at the lodestar that we should set up a southern hemisphere office in maybe Cape Town, or preferably franshook, the winegrowing sort of capital for the winter months, you know, because it's just fantastic.
[00:22:48] Speaker B: I am flexible. I just want to say that.
Okay, let's move on to another place that has a bit of corruption as well. At the start of June in Mexico, Claudia Schoenbaum, which apparently, is how you say it, she won the election to become president, taking over from her populist predecessor, President Obrador. There's a number of affairs here. She's jewish, she's a woman, she's a climate scientist, and she has some immense challenges on her desk, not least crime and security. On the plus side, though, inward investment is healthy. Cross border trade with the US is flying. We're also seeing imports into Mexico spiking this year. Which leads me on to the next point, because some say a lot of this traffic eventually ends up in the US, and this is a form of tariff avoidance. So a biggest challenge, of course, is going to be dealing with potentially a new US president when the US is increasingly looking to tariffs as a tool of foreign policy. One of those two runners, former President Donald Trump, has already threatened to put tariffs on some mexican exports, especially from chinese companies investing there. So good luck with us. Claudia Gav, have you any thoughts on Mexico before we move on to the US?
[00:24:01] Speaker D: Do you know what, the really interesting thing that I've been looking at in regards to her election was this inter oceanic rail line. And so that is actually really quite well advanced. Right. And forget the stuff about it being an alternative to the Panama canal because it never will be. I think the really interesting thing about that is that they're basically looking to build like ten to twelve industrial parks along the length of that rail line, effectively trying to replicate the northern, what goes on at the moment at the northern Mexico US border, you know, the sort of macchiato Dora concept that you have there and looking to do a very similar thing but in the south of Mexico and then connect it up to the US through the rail lines. So I dont know. It just seems to me that a lot of that investment is actually going into building up the production capacity of the country.
But as far as the growth in chinese exports into Mexico, yeah, its amazing, right? Weve seen all these carriers launch new services, another one launched by MSC recently, chinese freight forward and launching their own services. So theres clearly, im going back to Pete sand again here. Theres clearly what he calls it. He calls it are chinese merchants building up stocks of manufactured goods in strategic locations around the world. Should these tariffs that Trump is threatening be applied? And then that really begs the question, right, what hell do we mean by nearshoring? Because theres a certain point where you get to like youve got chinese traders bringing in maybe semi finished goods into Mexico. I dont know. They need some packaging, some stickers, whatever, and then getting transported up to the US, is that near shoring or is it tariff avoidance? How much activity has to be done in Mexico for it to be classified as near shoring rather than simply an alternate route for chinese exports into the US? Do you see what I mean?
[00:25:59] Speaker B: I do indeed. And weve had these conversations about how you judge that and how you avoid those tariffs, maybe by using other countries in Southeast Asia, which I've been told off the record a few times, people might do a minimum amount of processing in some of those places before exporting to the US. Most of the work is done in China, very complex supply chains. I just want to explain to our listeners exactly what's at stake in these November presidential elections and what people are talking about. So Donald Trump, if he wins, and he's now favorite, he's promising to put universal tariffs on all us imports of around 10% and 65% on chinese imports. Now, there's people close to Donald Trump who are actually talking about a total decoupling of China. And I'll go back to your point on near shoring. Gav, define what near shoring is, but also define what decoupling is, because how do you possibly decouple two economies that are so interlinked, they're the two biggest economies in the world? You're going to decouple from China. Do you also decouple from everywhere that there's chinese companies? Can you even begin to make that work?
[00:27:02] Speaker D: I don't know.
Yeah, it's a very good point.
[00:27:06] Speaker B: I don't think this is getting enough attention, maybe from us as journalists or maybe in the wider field, because I think if some of these things happen, or there's an attempt to make them happen, then the way that the global logistics and trading landscape is really potentially transformed over a very, very short period. What do you think on that, Gav?
[00:27:25] Speaker D: I wonder. I mean, I'm going to be very interested to hear what your other interviews on this show think about it in terms of Brexit, because it seems to me a fairly similar situation where when you start talking about the rules of origin and the relationship between Britain and Europe and what's considered to be UK made and therefore subject to whatever duties it is, it just seems vastly complicated. I can tell you why journalists haven't been focused on it, because it's really complex and it's very difficult to sort of translate that into straightforward language for people to understand.
[00:28:00] Speaker B: Well, I did interview a couple of people and one retailer said, these tariffs, they're going to be very, very difficult to implement, and they're essentially just attacks on us consumers. And because all of these new tariffs will lead to some sort of reciprocation, they'll kill us exporters. The other point that someone made was a lot of these people who were calling for decoupling are harking back to the Cold War era, where a lot of them have got their ideas from, where things that were very black and white were possible. The world's more complex and interwoven now.
[00:28:30] Speaker D: I mean, it will make. It will make us imports extremely expensive. And I think it's ironic that a lot of this stuff about tariffs and protectionism is designed, it seems to me, anyway, to be designed to appeal to the american working man and woman, and yet the net effect of these sort of policies is going to make everything awfully more expensive for them.
[00:28:51] Speaker B: But one final point, Gav, before you go. We move on to Brexit in the UK. We've got the ILA dock workers threatening action at eastern Gulf coast ports in the run up to the election when their existing contract runs out. That happens at the end of September. Is this going to be an easy win for Biden ahead of that election? Is he maybe an intervention on the way?
[00:29:10] Speaker D: Well, I mean, I think so. I think it's an open goal. I said this recently to someone else. You know, I was at the TPM show earlier this year in Long beach, and the Agricultural Transportation Coalition's chief Washington lobbyist, Peter Friedman, was speaking and he made the point that if you look at every labor sort of negotiation, every labor disagreement, you had the United Autoworkers union last year, didn't you? Every time there's been an issue between labor and employers, Biden has come down on the side of labor. I mean, he calls himself, he says the labour movement will never have a better friend in the White House than me. And his form book proves it. So if you go by the form book, I would imagine that we will see. When does the contract end? Is 30 September, isn't it? So I would. Here's my bet. It's used sometime around the 15 September as everyone's gearing up for the election. It's a really easy way for Biden to come in and say, not only is he protecting 85, was 85,000 jobs, protecting 85,000 jobs, I've secured them better pay, better conditions. I think that Biden's got a great opportunity to sort of win. I don't know what would it be, an extra quarter of a million votes if you think of those workers and the people who are associated, their dependents and so on and so forth.
[00:30:28] Speaker B: So I think you're probably right about what Biden will do. And some of those workers are obviously in swing states and a very small proportion of states and a small proportion of the voters within those states are going to decide this election, according to all the analysts. Same in the UK and many in many constituencies as well. And that's where we're turning next, the UK elections. We've got some heavy hitters joining me shortly, but for now, Gavin van Marl, managing editor of the Lodestar. Thanks for joining me today.
[00:30:55] Speaker D: Thank you very much, Mike. It's been a pleasure.
[00:30:59] Speaker B: Ok, everybody, as you know, the 4 July is just one of those dates that resonates around the world. Of course, its independence day in the US. But some people are saying that something liberating is possibly afoot in the UK too. That is because old blighty is heading to the polls to decide the next government, exactly as our american cousins are partying like its 1776. Who will be having more fun, I wonder? But as we heard earlier, elections really are having a big impact on the global trading environment right now, possibly more than ever before. And the UK election could be just as influential in terms of wider trade, shipping and the logistics significance. Are there any lessons, for example, from Brexit, that might be of relevance to a world of more cross border friction and protectionism? A quick recap for international listeners of who's up and down in this real life Game of Thrones in the UK, we've had five conservative prime ministers in a row dating back to 2007. In order of appearance, they were David Cameron, Theresa Maya, Boris Johnson, the 50 day moon grab of the incomparable Liz Truss and the incumbent prime minister, Rishi Sunak. The latter has seemingly decided that the Iron Throne is not for him. He launched his campaign by getting drenched in the rain outside ten Downing street and has since managed to miss a d day commemoration with world leaders, not a decision that appealed particularly to his right wing base. Labour leader Keir Starmer is odds on favourite to win big Nigel Farage's Reform party. Yes, he of Donald Trump friendship fame. He's hoping to push the Conservatives down into third place and polls are going in his direction. So, to discuss what's at stake for our industry and our island that's been sodden for much of 2024, I'm delighted to first welcome Richard Ballantyne, chief executive of the British Ports association, which represents the interests of operators that handle 86% of all uk port traffic. Richard, welcome to Lodestar podcast.
[00:32:59] Speaker A: Great to be with you, Mike, and really excited to be here.
[00:33:01] Speaker B: Richard is joined today by Nicola Mallon, head of trade and devolved policy at multimodal freight organization Logistics UK. Hello, Nicola.
[00:33:10] Speaker C: Hi Mike, and thank you for inviting Logistics UK on to this discussion today.
[00:33:14] Speaker B: You are both super welcome. Nicola, starting with you, particularly in terms of your members involved in international trade by road and ferry with the EU, or via global container shipping and air freight services, where for you are the five worst current bottlenecks in the UK's international trade environment or international supply chain environment. This could be capacity related, it could be down to regulations. Where are we seeing friction or a trading efficiency, if I can put it that way?
[00:33:45] Speaker C: Well, like, I think it's probably best to start off with UK EU trade and relationship, given that the EU is the UK's biggest trading partner. And 2024 is a big year because we're going to see the rollout of the five times delayed UK border target operating model, which is, as your listeners will know, a new national imports control regime on goods from both the EU and rest of world. So we have had a number of phases to that to date. From the 31 January, there was a requirement for export health certificates on SP's goods. From the 30 April, we've had the introduction of documentary identity and physical checks, and then we'll have safety and security declarations from October this year, the government has been adopting a very light touch approach. So, in essence, that is masking to a significant degree the impact of the new regime. But undoubtedly the added complexity, bureaucracy and costs are going to have a disproportionate impact on smaller UK importers and logistics businesses. And of course, staying in the UK EU space this year, we also are looking towards the introduction of a new entry and exit system by the EU. Essentially, that is replacing the wet stamping process at short streets with the biometric scanning process. And of course, that's due to be rolled out in autumn without any digital app, which means all that process and would have to take place at the juxtaposed border at the port of Dover and the shuttle. And that will cause significant disruption and delayed freight movements, because that is a key UK EU supply chain corridor. If I think, then beyond the EU, I cannot but mention ongoing geopolitical instability and ongoing diversions around the Cape of good hope as a result of attacks in the Red Sea. That's contributing to the container crunch because you have high demand, you've got longer transit times, and of course, you have higher prices as a result, which have to be picked up by UK shippers and ultimately, to some degree, UK consumers as well, I'd say. Thirdly, our members would be concerned about port congestion due to transshipment ports clogging up with vessels and containers due to the longer transit times. And of course, what we're seeing there in Singapore and several mediterranean ports is delayed berthing and departures and the accumulation of containers at the quayside. And I'm sure Richard may want to comment on that as well. And the last two of the list of five that I would cite is the increasing impact of climate change. Mike, we have reduced capacity at the Panama Canal due to low water levels. Of course, this is easing as rainfall increases, but that's affecting East Asia and west coast, South America to North America, east coast trades. And finally, I'll come back to our domestic shores. Our members are concerned about the capacity of rail networks to handle inland container movements. And of course, that is compounded by driver availability issues for the road movements of containers to and from UK ports as well.
[00:36:56] Speaker B: Thanks for that, Nicola. That was quite a lot to digest there. I mean, I think one of the recurring themes that we've had on this podcast, when we've covered geopolitical events or the increase of border complexity, is SME shippers seems to be quite often the ones that are affected. Most SME shippers or SME companies. Some of those things are outside the remit of the uk government to fix. But have you identified anything that a new government could act on? Some low hanging fruits in the early days of a new administration that would benefit immediately the UK economy, or help importers and exporters or SME businesses?
[00:37:31] Speaker C: Yes. Well, if we look at the UK EU trade and relationship, there is an imminent review of the trade and cooperation agreement. So from day one, the next government needs to accelerate its efforts to address some of the friction within that current trade and cooperation agreement. But critically, it needs to look to secure a better deal for UK businesses. And that would involve kind of tackling divergence. It would also look at greater harmonization on SP's checks, so that'd be critical. And that's something that can take place from day one. I mentioned to you about the new entry and exit system at the short straits. Again, that is a EU scheme, so the new UK government is limited on what it can achieve there, but on day one, it should press for a delay so that we can develop an app. Member states can develop and roll out an app, so that you're taking the friction away from the border and allowing passengers to be able to do what they can via apps and digitally upstream before they head to the border. That would have a significant positive impact on freight movements. In the area of ocean freight, we would like to see greater coordination with other national competition authorities to kind of monitor the shipping market, but also ensure that there's transparency in respect of pricing to the benefit of all involved. I'm thinking of the five Eyes initiative, for example, with us, Canada, Australia and New Zealand, and that includes coordination among competition agencies. We think that there's important work that could be done in that space. And then there is something, Mike, that government could do on day two, and that is put logistics at the heart of government. And that's why Logistics UK is calling for the appointment of a Minister for supply chain and Logistics that can work across government, that can recognize and understand the critical role of logistics and driving innovation and productivity, but also securing our critical supply chains and building resilience into that as well.
[00:39:30] Speaker B: And hopefully they'll come on the Lodestar podcast and have a chat about all of those things with me. Absolutely, Richard. The ports industry contributes 1.2 billion pounds a year to the exchequer and handles 95% of the UK's trading goods, which comes to over 450 million tons of cargo each year. In terms of international connectivity, what's on your wish list for port investment or policy from whoever forms the next government? Presumably you would echo some of those points that Nicola made?
[00:39:59] Speaker A: Yeah, absolutely. And Nicola makes the case for a logistics minister very well. We do actually have a supply chain minister already at the Department of Business and Trade, but what we. And, you know, we agree with logistics UK that it needs to be a wider logistics minister. And I think what she said there is critical about it having a pan government role, accessing not just the Department of transport, but all elements, including the treasury, so that we can get some high level influence and decisions. And indeed there are other initiatives, like the DfT Freight Council, where this was the kind of the theme and the overriding and underwriting hope that when we had those councils and those committees, we get together with all parts of government, not just our usual friends and colleagues at the transport. Now, onto your question, Mike, about what our priorities are now. Just as Logistics UK has probably done, the BPA, my association, we have, of course, produced a manifesto document ourselves. We've got it on a website. So were looking at how we communicate that with current prospective parliamentarians, but also the new government when we get into July and later this year, and that identifies our three key interest areas, thats sustainability, net zero connectivity and the offshore energy transition, just to piece out what we want on international trade. Absolutely. I think were looking at those relationships with the EU. Brexit is certainly not done yet, but we want to learn the lessons from that and look at how we can encourage the new single trade window to work for ports, to work for traders and import and exporters, but also look at the Brexit deal itself and see whether theres any room for improvement. I know the Labour party have identified closer relationship with the EU on things like sanitary and phytosanitary controls, which is something wed be interested in, although there would be consequences for ports who have invested in infrastructure, but well be certainly interested in talking about that with government more wider on our shopping list, Mike, and ill try not to spend too long on this because I cant go on for hours on the topics, but we want a government that is prepared to invest. Now you might say, well, Richard, havent you seen the debates, havent you seen the climate at the moment? Theres going to be no money, whichever governments or parties in government, but we do like governments that spend on both big infrastructure projects. In recent years we've had hs two, Crossrail, Hinkley and many other kind of big schemes because that drives a lot of port activity, it drives a lot of investment in the country. We also want to see house building and local investment in roads, et cetera, because ports benefit from not only the trade that increases construction material and other things, but also from the actual improvements to hopefully to local and national road networks themselves. But we want to be able to do that, or them to do that in a timely manner. And while we don't typically ask for directly for funding for ports, although there could be a place for some net zero infrastructure enabling ports to electrify, et cetera, we do want to see a very improved and competitive planning system so that we can get those planning approvals, those consents for those projects, but also imports themselves. So this is very important for us that we get that planning framework correct so that port operators in my case can respond to business opportunities, grow, invest, develop to help our trading environment. So that's a big feature for us, planning. And we think both the conservative party and the Labour party identified planning in their respective manifestos. And I think Labour have certainly highlighted that planning is going to get a big focus now. It will involve tough decisions for central government, but also impressing their core values onto regions and local communities. So there's going to be some difficult conversations for any new government to have on planning. But we're hoping that that's something that's really prioritized, that's a big thing for us.
[00:44:13] Speaker B: I'll just stick with planning, if I may, because the glacial planning process in the UK has been a recurring theme of the last decade or more. Whether we're talking about government investments or private investments, whether it's about energy and green tech, road rails, housing, industry, labor has promised, as you mentioned, to rip through all this. How would this benefit your members?
[00:44:32] Speaker C: Nicola, make plan and reform is essential, so it is good to see it prioritized. In Labour's manifesto, we absolutely need reform at the local level to enable the swift development of logistics sites, and I'm thinking here of warehouses and facilities for drivers, for example, and other logistics workers, but also to speed up modification of existing sites. We also really need within that, local authorities to have a much better understanding of the essential role that logistics plays in their area and in their wider county. And if I could share one stat with you. In 2022, Savile report showed that restrictive plan and processes means that the annual growth in land use by both the industrial and logistics sector is 29% lower than it would otherwise be. That is a serious inhibitor in terms of UK productivity and resilience. And as well as the local level, we also need reform at the national level to really speed up delivery of the significant privately developed infrastructure sites. So I'm thinking now major wheel connected distribution centers and of course, in the whole area of energy transmission, given the need for our industry to really accelerate its efforts in terms of vehicle charging. And then we need to see progress in some of the specific transport investments. If you look at the lower Thames crossing, for example, around 300 million has already been spent on the planning process for the lower Thames crossing, and yet we're still awaiting the decision on whether the essential project will proceed.
[00:46:06] Speaker B: I'll just tell a little story, which I'll probably get some of it wrong, but the gist of it's right, I think I read it in the Economist. It was a council somewhere down south that wanted to put some solar panels on a council building and they applied to their own council for planning permission. The process went on for a number of years and eventually they rejected their own planning proposal at great expense because they wouldn't look very nice and it would ruin someone's view. So that's how. That's the green energy transition in the UK. By my lead into that, though, Richard is labourers pledged 1.8 billion pounds to upgrade port. Is the amount of money really relevant unless you can improve the planning process?
[00:46:47] Speaker A: That's a good point, Ashley. I mean, we're still waiting for the actual details of what this involves, but we understand the focus is likely to be on servicing and growing our offshore wind offer. So floating offshore wind turbines are going to be installed across our seas. And these are very big devices, much bigger than the fixed bottom offshore wind turbines that we have at the moment, which are still continue to be rolled out. And these new installations are going to need huge sites of lay down areas and ports to have much deeper hes and other kind of infrastructure that's going to cost a lot, and so that's probably where the funding is going to go, although they may be a little bit for electrification, although we wait the details of interest planning. Absolutely. And Nicola really summarized it really well, actually. We're in a funny position in the port sector, because we span two planning regimes, the landside terrestrial planning regimes, local planning offices, typically for sort of more modest developments, and sometimes government gets involved for nationally significant projects. But we also have the marine area. So if you want to grow and develop keys, you want to dredge or undertake kind of things that impact the water and marine areas, you have to go through marine licensing and consenting, and in England, that's through the marine management organisation and through the devolved administrations elsewhere. And that process is very complicated and slightly different. And what we found is that consenting bodies have really struggled to make those decisions where there've been complaints, objections, concerns from stakeholders, etcetera. And we do want a more pro development attitude from those bodies. They also have struggled, as the whole of government has, with a lack of resourcing. So we see caseworkers that work on these schemes have come and gone because they've gone off to work in the private sector or there's been issues resourcing, the number of lawyers, overlooking legal applications and other things that we found really frustrating for us as a sector because we've got the money, we want to spend, we want to grow and invest, we want to compete. So getting some of those basic things, right processes, et cetera, I think is very key for whoever's coming in. But as said before, there have to be some tough decisions and it could be solutions, brownfield sites, other things. But we've got to bear in mind that we want these things to go ahead quickly, swiftly, timely, so that we dont slow down the energy transition and our trading opportunities.
[00:49:18] Speaker B: Raoul, that energy transition. Richard, I dont know if this timeframe sounds familiar to you, the source wasnt cited in the article I read, but it was a potential investor in an offshore wind farm in the UK. And they said the planning process would take something like seven years and then another six years to get the electric attached to the national grid. Is that timeframe normal? Something like that, because its impossible to make an investment when the market entirely has changed in 13 years.
[00:49:42] Speaker A: Yeah, well Mike, unfortunately it does not surprise me. I dont know obviously details of that, but if you look at how complicated some of these things are, you can understand why things start to drag on for many years. But the net problem and the net effect is that it puts people off coming to the UK.
Although its not a logistics issue, if you look at offshore energy and offshore wind, a lot of the current offshore wind farms around the UK have been built, facilitated and assembled elsewhere in european ports. And what we want to see, and I would say this, wouldn't I, as a propagandist for the port sector in the UK is we want to see those projects anchored into the UK, we want to see that content secured in Britain so that we get the benefits, the jobs, the investment at the ports, et cetera. But it's a legitimate concern. You can see energy developers and others would say it could be in logistics as well. Well, we're just going to go to sites in Europe or elsewhere where we've got a more pro investment and pro developer attitude.
[00:50:45] Speaker B: One thing that is definitely logistics related, and it's possibly the word that no one dare utter in this build up to this election on the 4 July. And of course, that word is Brexit, which we touched on very briefly earlier, just for our maybe people who don't follow it quite as much as uk citizens. The UK left the EU in 2016. It was an ongoing process. The low star has interviewed hundreds of operators and shippers in the UK and overseas in the period since. Not many have reported that international trade has been made easier, although some have made some decent cash handling the increased complexity that shippers face, or SME's, as we mentioned earlier, I don't want to make too many political points here, and I'm not asking either of you to. I know you have to deal with all parties, but I'll quote the Office of Budget Responsibility. OBR is an executive, non departmental public body which gives independent analysis of the UK's finances. In March this year, completed a report into Brexit and trade outcomes. I won't bore you with all of it, but in short, services are doing well. Growth in UK goods trade has fallen well behind the rest of the G seven. At the end of last year, UK goods trade was around 10% below 2019 levels, compared to around 5% higher on average for the rest of the G seven in the third quarter. The OBR put this down to, and I'll quote this bit post Brexit trade barriers created more significant frictions for goods than services. It's particularly trade with the EU that's been impacted, and efforts to replace this with global trade agreements haven't really borne fruit in terms of volumes or value, it would seem. Labor, as we touched on, has said it's keen to deepen trade ties with Europe and sign more trade agreements further afield. Nicola, where would you suggest it could make the fastest improvements to the regulations governing UK trade with the EU and beyond the EU? If you want to widen this out further, sure.
[00:52:39] Speaker C: I think first of all, there are challenges with trying to isolate the Brexit factor. But what we do know, if we analyze trade data between, say, 2017 and 2023, well, what we have seen is a decline in UK exports to the EU and EU imports to the UK, with the exception of wine, Mike, which grew. I don't know what you want to read into that, but certainly from a trading perspective, there hasn't been any real regulatory divergence in terms of standards of goods. So the experience of our members is one of greater pain than gain or benefit. And I suppose if you kind of look at the post EU exit trading environment from the UK's perspective, the UK government signed the free trade agreement with the comprehensive and progressive agreements for Trans Pacific partnerships. So essentially, with those eleven countries, and the projected increase to GDP in the longer run is 0.08%.
If you look at the border target operating model, which is the new controls regime for goods coming across from the EU to the UK, the government's own assessment is that that will contribute not 0.2% to food and drink inflation over three years. So essentially, the pain from those new controls and its impact on inflation will be greater than the projected GDP increase from that new FTA. And I think that's the strange place it certainly the logistics industry finds itself in. So certainly Logistics UK is supportive of getting a better deal with the EU so that we can reduce and remove fiction where possible, and those barriers to trade. Looking internationally, the UK was ranked 19th on the World Bank's Logistics Performance index in 2023. We used to be, on average, 6th place between 2012 and 2018. So when government is going out to negotiate memorandums of understanding and trade and free trade agreements, it really has to put that connectivity at the core of those negotiations and that planning, rather than have it as an afterthought.
[00:54:46] Speaker B: Nicole, I'd love to come back on some of those points, but running into yours in time, Richard, how has Brexit affected UK ports? And what are those quick fixes to the trading regime from a new government?
[00:54:57] Speaker A: Yeah, it's been quite a journey, Mike. Obviously those in the logistics sector, perhaps listening to this podcast, will have quite wary about the process, but it's dragged on and on and on. And of course, and one thing I would say, we're not political justice, logistics UK isn't. So we're sort of mindful of coming out in favor, or antique, whatever it may be. We were concerned about the implications of a hard Brexit, and we did get a hard Brexit at the end. Yes, we got a tariff free trade deal. But for the most part, all the controls and alignment we separated from, although we kept doing the same things under the same regulations in the UK. So cooperating and trading wasn't as difficult as it might have been, of course, but fair play to the government. They did at least eventually get a customs arrangement that broadly works. Yes, a lot of blood and sweat and effort and financial resources gone into that, particularly from the logistics industry. But on sanitary and phyto sanitary controls, this is where we've had much more negative views for the port sector, because that involves the actual physical stopping, inspecting at our borders. Now, I mentioned the customs points there, that they were predominantly electronic, digital, again, not undermining the costs there, but goods largely kept flowing. Whereas when you bring in the requirement to check things at our borders, you've got to build facilities, of course, you've got to resource those people doing things. And the preparation, that was not being particularly enjoyable or fruitful for our members. And now what we found is the government has kind of understood this over the last few years, that this could be quite an onerous task, a costly process, adding to food inflation, as we mentioned before. And so they've gone back a bit and said, well, perhaps we don't need to do quite as many checks. And this has been very unhelpful for the ports on one level, because we built these facilities, border control posts, vastly over specked, and they've become real sort of white elephants of Brexit. They are now being used in part, but as I said, they're far too big and costly, and it's a real waste of effort, waste of public money, waste of private money. And what they look like moving forward, I think, is a big question. Of course the government will look to improve trade. Well, I would imagine any government look to improve our trading environment with our biggest and closest trading partner, and that could lead to the consequence of not needing those bcps in any scale. So if there is that case, then ports will be out of pocket. We'll be looking for some kind of financial resettlement, which is going to be incredibly difficult in this environment, of course. But that gives you an idea of one of those things, quick wins. Well, there's a few things for Brexit that have helped us, actually. We've got rid of a piece of legislation, the european port services regulation, and there is a possibility of tidying up or getting rid of some of the procurement bureaucracy we have at ports as utilities under EU source legislation. So there are some positives for us. And I would urge the UK government, whoever that may be, when they come in, to look at those points, because that, again, will help ports grow, invest and develop.
[00:58:08] Speaker B: Right, well, I'm hoping I can get you both back on at some point, because I did want to get into free ports, but I suspect that might be a quagmire. Please, everyone, stay with me because next up, I'm joined by Dion Redpath, group chief operating officer at Europa Worldwide Group, to get an operator's perspective on many of these issues. Buffets Nicola Mallon, head of trade and devolved policy at Logistics UK, and Richard Ballantyne, chief executive of the British Ports association. Thanks for joining me today on the Lodgestar podcast.
[00:58:35] Speaker A: Thank you.
[00:58:36] Speaker C: Thank you, Mike.
[00:58:40] Speaker B: Welcome back, one and all. Now, as promised, I'm joined by Dion Redpath, group chief operating officer at Europa at Worldwide Group, which is one of the largest privately owned logistics companies in the UK, offering a range of services to and from the UK, and fourth, further afield, in fact, across all modes. Welcome, Dion.
[00:58:58] Speaker E: Hi. Welcome and thanks for having me, Dion.
[00:59:01] Speaker B: We had some strong views on Brexit earlier in this podcast, and also on the role of government in driving trade policy. Can you explain how Europa has coped with changes we've seen in the rules governing how UK businesses trade overseas since 2016? Please. And has this been a smooth transition for you and your customers, or could it have been managed better?
[00:59:25] Speaker E: I think when we look back over the journey, it's pretty safe to say that it's been quite a turbulent one. The vote happened in 2016, as you've just said. Then we went through a period of, is it going to happen? Is it not going to happen? Three cliff edges. You know, it was all pretty punchy for a while, but I think almost when I consider how we deal with things as a business within Europa, we have this approach, which is kind of, look, we've got to just get on with it and deal with it. So whatever is the prevailing landscape, we have to plan and navigate to the best degree of our ability. And that applies to Brexit. It applied to Covid, it applied to, you know, the sewers thing, the Red Sea, you know, almost on and on and on. We've had such an enormous amount of turbulence. And I think when I think about the Brexit journey from our businesses perspective, we launched a pioneering product, Europa Flow, which you might have heard of completely unique. Nobody else was doing that at the time. And what Europa flow was designed to do was to preserve transport transactions between the UK and Europe. Almost as if Brexit had never happened. And we facilitated that by allowing UK exporters, exporters to ship to their customers on DDP Inca terms, which, in essence, simplified the trade relationship between our customers and their customers. And that's really important because we did some roadshows in 2019. We went into the regions of all, about 13 branches that we had at the time, and we spoke to, I don't know, something like 500 businesses with 700 or so representatives from those businesses. And the prevailing comment that came from those sessions universally, actually, was, how can I ship on DDP so that I make my life easier for my customer? And from that standpoint, from that insight, came the whole Europa flow concept. So what we set about doing was creating customs infrastructure from the ground up in the UK, in France and Belgium, particularly as the two main european points of entry. From a UK perspective, within our network, we got ourselves registered with the customs authorities in both of those locations. We recruited teams from the ground up. We created global VAT infrastructure and duty deferment accounts. I mean, millions and millions of pounds worth of investment went into the creation of this infrastructure. But very simply, what it allowed our customers to do, following a very simplistic, almost roadmap, you do this like this, we'll do this like this, and this process will work very smoothly, but almost saying to customers, you can have access to that facility, and that is going to preserve your trading conditions with your customer pretty much like it was before Brexit. So you make the export, we do the export declaration, you create an anticipated declaration whilst the shipment is crossing Eurotunnel. Predominantly in our instance, when it lands, ultimately we have a VAT regime. We zero rate the VAT under that VAT regime and the duty goes back to the UK exporter. The shipments don't have to stop to take care of duty and VAT payments. And actually, that created a very, very simplistic opportunity for our customers. Yet they needed to make a few tweaks to their invoices, get themselves an EORI number, but actually, we took care of the rest. And although it was pretty complicated as a journey and seriously expensive from an investment perspective, actually the way that we approached that, for me really embodied the kind of the way that we approach these things. You've got to roll with the punches. This thing is happening regardless of what your voting preference was, it's happened. We've got to get on with it. How do we make the best job of that, that we can do? And that really is where that came from. And I can tell you, because I was directly involved in the creation of that, along with my colleagues at the time, it was a mammoth task. So we had got to not only train our own internal operations team, we had got to train our sales and customer service staff, 250 of them by the way, so not a small number. And we got to communicate this new product and the associated process to 6000 customers. But when I tell you that 58% to 60% of all of our shipments into and out of euro now flow using Europa flow, I think that illustrates how successful that has been. And you know, there were plenty of our competitors that were, I'm going to say dismissive. I don't mean it in a disrespectful way, but they were pretty dismissive about the success, the potential success as we were rolling that out to customers. But actually here, four years later, three years later, many of our competitors have got some kind of product that performs in a similar kind of way.
[01:04:28] Speaker B: I understand what you guys have done to overcome increased trade friction, essentially as I would characterize it. But we've heard at the Lodestar that some exporters in the UK, they're SME's, maybe they've stopped exporting. I've heard from other people, they were like, well instead you have to view the logistics landscape differently now. So instead of the UK being a front runner, if you were looking at a european pan european distribution strategy, you would now like maybe look at Rotterdam or Antwerp or somewhere in that area and you would treat the UK as a branch market as opposed to. As a contender as a distribution center for Europe. Is that what Brexit's done then? That sounds like you've invested an awful lot of money to cope with the increased trade friction.
[01:05:10] Speaker E: So for sure, we definitely saw a change to a number of our clients strategies. So when I think particularly about customers that we were, that were serving an e commerce marketplace in Europe from a single DC, for example in the UK, pre Brexit, that was all pretty straightforward goods just floating out freely, no problem. Of course, Brexit then happened import one stop shop, you know, the distance selling rules, all of that landscape changed. And in response to that we absolutely saw a shift to strategy from some of those customers that says I can't now service that european e commerce marketplace from a single source DC. But what I am going to do is I'm going to split. So I'm going to serve my UK base from a UK DC, I'm going to serve my european base from a European DC. But ultimately I would say it like this. Actually at Mike one door closes and another door opens. And absolutely what we saw through our three PL division at Europa warehouse was a huge uptake in demand of those businesses, saying, I now need to have a strategy in a UK three PL to stockpile, to service my UK e commerce business. And we definitely saw that. One of the biggest impacts that we saw as a business, we used to do a lot of the line haul on door to door parcel movements for most of the large sort of parcel distribution companies from the UK into Europe. And absolutely most of that business that we were involved in, that practically dried up overnight because of that landscape change. So, for certain, there were some negative impacts of that. But also it would be remiss, not to mention that there were plenty of positive impacts too. I think for a business such as Europa, we've got our three divisions, you know, the Europa warehouse, three PL, we've got our air and sea division and the road division. For a customer wanting or needing to change their strategy, there is an avenue to pursue within our organisation.
[01:07:15] Speaker B: And finally, is there anything that the UK government, or the next uk government should do to improve the flow of trade for shippers, your customers? Maybe this is to do with improving planning, maybe it's to do with customs. Is there anything that you can think of that you would like them to do from an operator's perspective?
[01:07:36] Speaker E: I think for me, the single biggest thing that I've been really pleased about most recently is our UK trade bodies almost pooling their resources to place a call on whatever government body gets in for the next election, to kind of create a logistics minister role, because I think certainly that will clear. It will harmonize communication, it will make communication between trade and government far simpler, more effective, swifter, etcetera. And when you consider that the, you know, the logistics sector employees, 8% of the UK workforce, that's a massive part of the UK's population, that needs better representation, that our sectors need better representation, and almost for us to be able to have that direct line of contact, to be able to talk more openly about the things that are affecting us and impacting us, that might help us to really drive forward the economy, because we've got the capacity as a sector to really facilitate fantastic things for potential businesses wanting to start to trade in the UK, for example. So, again, thinking about our own business, we can have a container delivered to one of our three PL buildings at 06:00 in the morning. That product can have been devanned and put away to stock me as a consumer, I can go and buy that stock today. It can be pick packed and dispatched and it can be delivered by 10:00 tomorrow morning through any number of parcel distribution operations. For me, that represents a fantastic opportunity for businesses that might have withdrawn from the UK or diminished their trade with the UK. Or actually, better still, for new businesses wanting to come and set up camp on UK shows and take advantage of all of those opportunities. So for me, I think I'm really quite pleased that the trade bodies have kind of collaborated as far as that's concerned, and I think that will help us to talk to government about things that we perceive can be helpful as far as that's concerned.
[01:09:40] Speaker B: It's nice to finish a podcast on some positivity and optimism and apologies for anyone listening. My voice sounds when you have just had a tooth out. Thanks for bearing with me. Dion Redpath, group chief operating officer at Europa Worldwide Group thanks for joining me today. We hope we can get you back on for a longer interview at some point in the future.
[01:09:58] Speaker E: No problem. It was a pleasure. Thanks very much mike.
[01:10:04] Speaker B: Big thanks to my editing team, Karen Ballen, Tom Matthews, and most of all, gratitude to you all for listening. We'll be back soon.
