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Logistics and Retail Updates

This series of updates aims to bring relevant government and industry statistics to life. As part of our assignments, we often help clients source both internal and external data, and then use it to drive logistics modelling, benchmarking, budgeting ...and action plans! To find out how we can help you by ringing 01295 758875 or contact us. If you'd like an alert when a fresh update is posted, ask us to email you or follow on Linkedin: Share On LinkedIn

We’re short of workers in the UK, right?

27 September 2022

We’re short of workers in the UK, right?

Nearly everywhere I go in logistics I hear about it. Nearly every magazine or news email I read talks about it. It seems to have moved from truck drivers to inside the warehouse and at managerial level, but the story is the same - shortage.

Other topics I keep coming across in the news and on Twitter, are things like the current length of NHS waiting lists, the number of people suffering from long Covid, the number of people who can’t stop shielding because vaccines don’t work for everyone – think those undergoing cancer treatments, etc.

I’ve included slides in a presentation and written subsequent posts on the topic of the Silver Exodus – older workers moving into economic inactivity. Economic inactivity is people, aged 16-64, who are neither working nor actively seeking employment.

But it was only on reading an ONS (Office for National Statistics) publication that came out earlier this month that I joined all the dots together.

The single largest reason for economic inactivity back in the ‘90s, and no doubt before that, was ‘Looking after family / home’. And that continued to be the case predominantly until 2013. In 2013 being a student took over and remained the single largest reason for most of the time until 2021.

But in 2021, and it remains the case in the most recent survey for May to July 2022, the single largest cause became ‘Long-term sick’. So, we’re desperately short of workers, in the NHS as well as logistics, but the largest cause of economic inactivity is now …people needing the NHS.

If it hadn’t been for another ONS (Office for National Statistics) publication, fresh out today, piquing my interest (Reasons for workers aged over 50 years leaving employment since the start of the coronavirus pandemic), I wouldn’t have had a look back at that earlier publication and the data that went with it.

Having had my realisation, I find that Faisal Islam wrote a piece, a fortnight ago, where he connects the record numbers of long-term sick with economic impact. But I don’t think this is something that is being shouted loudly enough – the current largest cause of economic inactivity is long-term sickness.

The record NHS waiting lists and Covid are impacting the numbers of workers in our industry as well as the wider economy.

Aricia Update - NHS Waiting lists - Long Covid - long term sick - inactivity - ONS - - Economic & Health Update

Reading the runes

7 September 2022

Anyone who doubts that we are entering recession only needs to listen to trade associations in our industry or statistical organisations talking about transport and storage. In an email about its tracker survey for Q2 sent out mid-August, Logistics UK commented: “As a result of industry difficulties, 35% of respondents reported a decrease in orders.” Logistics UK members include shippers as well as logistics providers, so this is not just about demand for transport, but will impact.

And in its fortnightly report on the impact on UK businesses of various current challenges, the ONS (Office for National Statistics) reported: “More than a third (37%) of businesses in the transportation and storage industry reported their turnover had decreased in July 2022” – although it needs to be said that official statistics do include passenger transport as well as logistics and there have been rail strikes, but I don’t believe that won’t have affected the percent of businesses much.

Or, if anyone still doubts that things are tough, they can look at the graph I’ve prepared for this post...

What this graph shows is the DfT (Department for Transport) Traffic index for heavy goods vehicles (light blue line measured against the left hand axis) which I’ve taken at the Wednesday nearest to the mid-point each month. And also the TEG Road Transport Price Index for hauliers (dotted dark blue, RH axis), which is based on the pence per mile paid for spot haulage organised on the Transport Exchange Group platform.

Although the TEG index started at 100 at the beginning of 2019, and the DfT index commenced in March 2020 based on 100 being the same day of week in the first week of February 2020, I’ve made the graph run from July 2020 as this avoids the very start of the pandemic when traffic volumes fell off a cliff.

You can see that while there is by no means an exact relationship between HGV traffic volumes and the price paid for haulage, they do tend to follow each other, and peaked in the same sort of pattern at the same sort of time (although it needs to be said that the positioning of the height is down to my choice of scales to best show the matching patterns).

What we can see right now is that HGV traffic volumes in mid-August 2022 were at 100, the same level as February 2020, with post-Christmas usually considered the lowest part of the year. But August was also a temporary low in traffic last year, although perhaps for different reasons, and this was a time where there wasn’t good correlation - the TEG haulage index just powered on through.

This year this element of the TEG may have risen a little but is *much* more restrained.

Aricia Update - TEG Road Transport Price Index - Haulage - DfT - Traffic - Logistics Update

The impact of home shopping on warehousing

26 August 2022

When I spoke at Tomorrow’s Warehouse back in June, I put up a similar graph, but this one has been both updated, and changed in a crucial way. I commented that it was really the last time I could be lazy and do the calculation I’d done just based on the value of merchandise – the inevitable happened and, after the event, someone challenged me to show the impact after I’d stripped out inflation!

First of all, what’s the graph below showing. The green elements ARE value – they are measured against the left-hand axis and represent the value in £billions based on my best estimate of non-food retail and etail sales using ONS (Office for National Statistics) data.

The darkest green is retail of non-food carried out in-store, and we can see the squeeze that lockdowns put on that element of business. The mid-green represents non-food etail sales that have been made by companies with stores, but the sales have been made online and delivered to home. The lightest green is pure play – sales made by companies that only operate online - the latter will, unfortunately, include some food (Amazon pantry, Ocado, some specialist online-only food businesses…) which it is impossible for me to remove as there are no separated statistics published. It’s not seasonally adjusted, but it is a moving average, which will smooth out much of the seasonal variance. And we can see the extent to which the light and, particularly, mid-green rose dramatically in value during the first stages of Covid.

Back in 2016, Prologis, the largest industrial real estate company in the world, and very familiar to those of us in logistics, came up with a bit of a formula: “Our research reveals online retailers need approximately 1.2 MSF per billion dollars of online sales on average, which is three times the distribution center space required for traditional brick-and-mortar retailers” - MSF is millions of square feet and at the time, this translated to roughly 1.6m sqft per billion GBP online sales and 0.5m for retail.

Obviously since then there have been price variations, with inflation particularly acute in the past few months, and warehousing is very much influenced by volume not value. For retail sales, the ONS publish both value and volume, but that’s not the case for internet sales – I asked. The advice that came back was a suggestion that I might assume that the relationship between value and volume for internet sales was aligned with retail sales, and so that is what I have done.

So the solid grey line, which refers to the right-hand axis, uses the Prologis rules of thumb converted from dollars to pounds, with the sales data for etail and retail separately converted to volume using the retail value to volume ratio, to calculate an estimate of the warehousing square footage required. And, although convoluted, we can see that that figure rises at a fairly even rate until the start of Covid.

The calculated requirement then does what we know the real warehousing requirement has done, after the very initial impact of the first lockdown, and that is to grow at a vastly increased rate. However, more recently, the volume of goods being bought in total has been quite flat and the proportion being bought online has been dropping off, resulting in a drop in the estimated warehousing requirement. I’ve put in a trend line based for what one might have expected as a warehousing growth requirement pre-pandemic – this has also been updated from the Tomorrow’s Warehouse slide to be based on volume sales rather than value.

If you’re selling online, you may be struggling for space or you may feel you over-estimated, but what the graph most definitely shows is how difficult it is to forecast and plan in logistics at the moment!

Aricia Update - Warehousing - Sales - Inflation - ONS - Prologis - Retail & Logistics Update

Inflation AND deflation

3 August 2022

The SPPI* with its Freight by Road index for 2022 Q2 came out in the latter half of July and earlier today the TEG** Road Transport Price Index was published – a more frequent and timely indicator. What the graph shows is the SPPI, dark blue line, positioned at the middle month of each quarter and brought back to a base of 100 at the start of 2019. The haulage element of the TEG index is shown in light blue.

I chose the start of 2019 for the rebase of the SPPI, so it matched the start of the TEG index and at a point we all considered relatively normal. But deciding when to start a comparison is always a difficult choice, and sometimes controversial - think about headlines like “XYZ the highest since records began” …oh, but by the way, records only started last year!

So not too much should be read into the comparison of any particular month or quarter, but what we can see looking at TEG haulage on the graph is the impact of peak each year and the start of Covid on spot rates. And then, at this time a year ago, the extreme impact of the opening up of the economy with staycations etc, combined with all the difficulties around keeping drivers on the road and finding enough resource.

The SPPI, being both quarterly and including contract work, is a less volatile index. While the TEG has come down in Q1 this year to a similar level to the SPPI again, the SPPI itself is showing increasing inflation with 11.4% year-on-year increase in Q2. Diesel inflation was *only* about 37% at the mid-point of Q2, where it was 46% by mid-July. And then there’s increased driver pay to consider.

Meanwhile, the haulage element of the TEG index is now into its second month of year-on-year deflation - that current drop has to point to substantially reduced demand, which in itself is the result of previous increases in costs and prices. They say that money makes the world go round, but it can also slow it down when it isn’t there!

Aricia Update - TEG Index - SPPI - Haulage - Freight by Road - Costs - Logistics Update

*The SPPI (Services Producer Price Index) is a quarterly index published by the ONS (Office for National Statistics) which is the result of a statutory quarterly survey, which measures changes in the price received for selected services provided by UK businesses. The two most recent points on the graph are provisional figures.

**The TEG index is a monthly index published by the Transport Exchange Group which is based on the pence per mile based on spot rates actually paid. The overall TEG index is made up of both courier and haulage, with the haulage element shown on the graph – the SPPI includes separate figures for Postal & courier and does provide an index which excludes the Royal Mail element, so perhaps I’ll do a post on that in three months’ time!

Silver return?

19 July 2022

When I spoke at Tomorrow’s Warehouse in June, I included a statistic that surprised some people – that the nationwide reduction in Forklift Truck Drivers over the past couple of years has been more than a third - that statistic is from the Office for National Statistics workforce numbers on Nomis.

The graphs I also used in that presentation, about the Silver Exodus, came from an academic paper referred to in a post on the World Economic Forum website. The thrust of that post is that there were c300K more UK workers aged 50-65 “economically inactive” than before Covid – neither working or seeking work. It also gave detail on sectors and occupations most affected:

  • Wholesale & retail (40% rise), Transport & storage (+30%), and Manufacturing (+25%) had the largest proportional rise in inactivity in over-50s
  • Process plant & machine operatives (+50%) and Sales & customer service occupations (+40%) were the occupations with largest percentage rises

Most of this Silver Exodus demographic said they didn’t ever intend to return to work. The piece surmised that it could be that workers had saved more during the pandemic and could now afford to retire earlier than planned.

If you look at the Silver Exodus graphs, the red one is interesting as it represents workers who earned £18-35Kpa in their most recent job and shows the percentage of employed workers in that 50-65 age bracket who became economically inactive one year later. These workers were more and more likely to become economically inactive.

So, logistics has been one of the larger areas of loss and, while I suspect that the process plant & machine operatives are more manufacturing occupations, they sound like some of the sorts of jobs we have in logistics …say forklift truck drivers? £18-35K is the sort of pay for the lower paid half of FLT drivers. And in a recent survey of Forklift Truck Drivers carried out by Talent in Logistics, nearly half (48%) were over 50.

I said in my presentation at Tomorrow’s Warehouse, that my own thoughts were that it could well be that some of this older demographic now look to return to work because of the cost of living crisis. And this does indeed seem to be the case – witness the graph in this tweet, today, from the Resolution Foundation.

Logistics needs to be ready - it’s the opportunity to welcome some FLT drivers and other staff back into the industry.

Aricia Update - Forklift Truck Drivers - World Economic Forum - Silver Exodus - economic inactivity - Resolution Foundation - Talent in Logistic - Logistics Update

2022: the year of courier rates

7 July 2022

If 2021 was the year of haulage running hot, 2022 is the turn of courier rates.

The TEG Road Transport Price Index is out today, and the courier element of the index is now only a fraction off what it was at peak in 2021, and that peak 2021 figure is the record since the start of the index in January 2019.

The current year on year inflation in courier spot rates is 7.4%, on top of 12.9% in June last year. But that’s the thing with inflation – it’s not just a one-off figure in isolation, the inflation you see now is on top of previous inflation.

What this graph is showing is the seasonal profile of courier spot rates. 2019 (green) represents ‘normality’ and 2020 (red) was the first year of the pandemic, not actually that dissimilar. 2021 (lilac) then breaks out of that mould, with fast rising prices, and in 2022 (orange), prices started higher than the start of 2021 and, since February, have just carried on rising. You can see that the June courier index is just short of 125, where December 2021 was just over.

Now, I know that not all courier work is internet related, but now seems to be an interesting time to be able to push rates up so much. Interesting, as the Office for National Statistics reported that internet sales were down 7.9% year on year in May with much larger reduction in, for instance, household goods. It’s important to point out those internet sales are for the month before the latest courier figure you’re seeing on the graph, as one of the great things about the TEG index is the extent to which it’s ahead of the official statistics.

But if you have a look at all the TEG indexes over the past three and a half years, you will see that courier rates didn’t really keep up with haulage rates during peak last year, so you could argue that there might be a bit of catching up with big brother, particularly with the price of fuel continuing to rise and rise.

Aricia Update - TEG Road Transport Price Index - Courier - Spot rates - Logistics Update

Stockpiling on the up

4 July 2022

It won’t come as a surprise to anyone working in the logistics and supply chain sectors, but businesses are stockpiling, and in increasing numbers. Late last week, the ONS (Office for National Statistics) published its fortnightly bulletin on ‘Business insights and impact on the UK economy’, which looks at the impact of the various challenges facing the economy. The bulletin is based on responses from a fortnightly business survey.

What the graph shows is the answers given over time to the question: Is your business stockpiling any goods or materials? It’s for businesses in all sectors which are currently trading and responded to the voluntary survey.

You can see that the answers Yes (Green) and Not Sure (Grey) are clearly trending upwards – I’ve shown the trends as hardlines and the more varying results to each survey as the dotted lines. While the trend for No as an answer (Lilac, measured on the right-hand axis, and so much larger as a proportion) is trending downwards.

Different questions are asked in different surveys, and the responses to this question are only recorded in the accompanying data since the start of 2021. Although some more recent increases in stockpiling might be put down to ‘accidental’ stock increase due to reducing sales and/or buying ahead to beat inflationary price increases, the graph also shows is that over this period, confidence in the supply chain has reduced rather than improved.

Earlier in June, in a previous bulletin, the ONS reported that the top three resources being stockpiled in late May were metals and materials (25%), food (23%) and manufacturing parts (21%).

Aricia Update - Stockpiling - ONS - Logistics Update

The BIG Squeeze

10 June 2022

The latest TEG Road Transport Price Index came out yesterday - May was nearly level against April. The courier element rose a little, but the haulage index went down slightly. Also yesterday, the price of diesel went up yet again, taking the cost of filling up an average car to over £100.

What I’ve done in the graph below is to take the costs from Motor Transport’s 2018 Cost Tables for an artic unit & trailer and update them for January 2019 diesel costs and put profit in at 2% of turnover. Note, profit is already very low, but it’s what the big boys in the road transport industry seem to average according to Motor Transport’s Top 100. So you can see the proportion of turnover companies spent on diesel, driver & vehicle and then what’s left over for overheads and profit. I’ve taken that as a sort of benchmark of normality.

It adds to 100 in January 2019, not only to show the percent each element of costs represented at that time, but also because the haulage element of the TEG Road Transport Price Index was 100 in that month, when it started.

I’ve then left a gap for the intervening years and recalculated costs at the midpoint each month from Jan 2022 to May, reflecting the various cost increases in diesel, driver & vehicle and what’s left over for overheads and profit if income achieved the equivalent of the spot rate of the TEG index, which is what the height of each bar represents.

You can see the real squeeze on what is left after all direct costs have been covered. Yes, I know some companies will have drivers employed for years, potentially at lower cost, and some will be operating vehicles that are not brand new. So there may be a little more in the ‘overheads & potential profit’ pot, but that pot has to cover compliance, planning, yard & office space, power, computers, phones, tolls, parking, PCNs, the accounts team and other management functions, among other costs.

At the end of last year, I predicted 2022 was the year of the 3 ‘i’s – inflation, interest rates & investment. About that last point, I said: I believe there will be a focus and pressure on indirect costs - overheads & HO – automating as many admin activities as possible. However… I don’t believe that has happened that quickly, and (I know I’ve said it before, but I’ll say it again) I do believe that many hauliers will not be making a profit right now, and some will be making a loss.

The current diesel increases will really be impacting hauliers, hauliers who need to operate on an economically sustainable basis if we’re to have food delivered tomorrow as well as yesterday. More worrying is that some may be suffering cashflow problems today because certain customers take for ever to settle invoices, and in the meantime the haulier forks out more & more cash upfront to do the job. And, as I mentioned at the start of this piece, the cost of diesel continues to rise…

Aricia Update - TEG Road Transport Price Index - Motor Transport - Cost Tables - Top 100 - Haulage - Logistics Update

Back to Bricks?

30 May 2022

Friday’s editorial by Adam Leyland in The Grocer was all about the Ocado share price, online food/grocery sales, the rise & fall of rapid delivery, and other web-based companies such as Amazon and Netflix.

I like to be straightforward: this is not my graph! This came straight from the Office for National Statistics website.

What the graph shows is the proportion of total retail sales that internet sales have represented, up to April 2022, the latest figures available. That proportion peaked at 37.8% in January 2021 and was 26.4% in April.

Of course, those internet sales are a complex mix of food and non-food, with implications for both stores and warehousing. I’ll be looking at some of the impacts when I speak at Tomorrow’s Warehouse in Coventry on 9th June – you can register here: Tomorrow's Warehouse.

Aricia Update - Internet Sales - Tomorrow's Warehouse - Retail Update

Do haulage buyers have the upper hand?

11 May 2022

Road haulage spot rates have started rising again and so has driver pay. There’s a seasonal pattern: quiet following the excess of Christmas …and then things start to pick back up in spring.

What you’re seeing on the graph is two indices – the TEG index for haulage (dark blue dotted line) and an index for HGV driver pay that I’ve created from Adzuna data (light blue) – more about that in a minute. Although I’ve not included diesel on the graph, you can’t talk about road transport without talking about diesel. It was actually quite low priced when the TEG was running under the driver pay index before, during 2020, because of lockdowns and low demand due to the pandemic, but that is certainly not the case now.

So, the HGV driver pay index. The data comes from a portal Adzuna is currently developing – it contains all sorts of info related to jobs that have been advertised. I’ve taken the annual salary nearest the middle of each month and only included roles in the logistics sector that required an HGV licence, so excluding engineering and other roles. I also excluded entry level roles to avoid any distortion from the current large number of training ads. I then converted those salaries to an index base of 100 at the start of 2019, so it’s easy to compare.

Continued below the graph...

Aricia Update - Teg index - haulage - Adzuna - HGV pay - inflation - Logistics Update

Haulage rates are considerably higher than they were, we can see that from the TEG index. But with a combination of driver pay remaining high, diesel very high and with the capital cost of kit significantly higher over the past year or so, I can’t believe how comparatively low the TEG haulage index is at the moment. In its latest Business Insights report, the Office for National Statistics noted that 56% of Transport & Storage businesses reported an increase in the price of materials, goods and services bought …but only 35% had passed on all or some of those increases.

Because demand is low. We know that, for example, retail food volumes have been lower recently. We know that current HGV traffic levels aren’t high but, because the DfT traffic index only started in March 2020, we don’t know what normal looks like for this time of year. We know that the ONS report had as its first key point that 20% of businesses reported their turnover decreased in March 2022 compared with February 2022, whereas only 14% reported turnover had increased.

It certainly looks as if buyers have the upper hand at the moment …even if they might not feel that to be the case!

Shopping Basket Shrinkflation

29 April 2022

Last Friday, the ONS (Office for National Statistics) released the latest retail sales figures. This was reported in the press, particularly with respect to the reduction in retail sales and the impact on the cost of living, particularly around food and fuel inflation.

Earlier last week, and before these latest figures were available, Warren Ackerman, Head of European Consumer Staples Research at Barclays, penned a piece for last week’s edition of The Grocer magazine. Commenting on the performance of some of the major brands such as Nestlé, Danone and P&G, given some of the recent price increases, wrote in a longer piece "The interesting point is so far we are not seeing much downtrading. Indeed, to the contrary the evidence is there is more uptrading to premium products, just at a time where disposable income is getting squeezed hard ...growth in out-of-home channels continues to be very strong even as retail sales for in-home food remain elevated ...Normally we would expect to see this growth in out-of-home impacting in-home food sales. This is not happening, and for as long as this continues, sector growth could remain elevated."

What we’re seeing in the graph are indices for Value at current prices (the grey line), so amount spent, and Volume (the purple line) representing quantity bought. Both these indices have a base of 100 for the year 2019, and both are seasonally adjusted. We can see that with some small variations, volume and value followed a not dissimilar path month by month for 2019. In 2020 Covid hit, and both the volume and value rose sharply, and then for the next year or so followed an erratic path, erratic but pretty much in step with each other. For the past year the lines on the graph have started to separate, gradually at first and now very clearly. I’ve been a bit naughty with this graph as the y-axis doesn’t start at anything like zero, but I’ve done this to emphasise the story - the headline is that as food retail sales do start to see a reduction, the amount of product in average shopping baskets is falling dramatically.

Continued below the graph...

Aricia Update - food - value - volume - retail sales - inflation - Retail Update

The combination of these figures and that opinion piece in The Grocer, suggests to me that there are two quite different stories going on here. The Barclays commentary on brands suggests that middle class households which can afford brands are continuing to shop in the same sort of manner as they have been in the recent past. Poorer households, who are more likely to be buying supermarket own ranges or shopping with the discounters, are not deciding whether to stop shopping at Waitrose or between buying the basic rather than premium item (they never were), but deciding not to buy that item at all – which fits with the comment earlier in the year from MD of Iceland, Richard Walker: “We’re starting to lose some customers to food banks or, not being overly dramatic, to hunger”. And Jack Monroe, Bootstrap Cook and campaigner against poverty, more recently: “That's not people deciding not to go to the theatre or not have legs of lamb or bottles of Champagne, that's people deciding 'we won't eat on Tuesday or Thursday this week’...”

The volume of groceries now being bought is lower than 2019. If some people are buying the same sort of amount, then others are buying much less – their shopping basket is costing more but has less items in it. This has absolutely nothing to do with eating out or going back to work in the city, this is about a very real cost of living crisis for some people. And this is before elements of producer input inflation which have yet to feed through to the consumer, and the spring-loaded energy uplift this month, which has yet to make its way into official figures.

Profit erosion?

6 April 2022

This update looks at inflation rather than at prices per se. So, what are we seeing on this graph? We are not seeing prices, but the year-on-year rate of inflation calculated for various indicators – so most recently March 2022 compared with prices in March 2021.

The hard purple line is the inflation rate for forecourt diesel at the middle of the month. The war in Ukraine has pushed all fuel and energy prices even higher than they were already. And the UK duty reduction, Shanghai lockdown and release of supplies in other countries have had little impact – more like one pence than five. So, comparing mid-March this year with mid-March last year, we can see that the annual inflation for this is 32+%. It’s important to note that the diesel price I’ve tracked is as near to mid-month as possible, and that the price continued going up after this point with some horrifying prices being paid by some on particular days. Inflation will be similar for bulk fuel, as the VAT uplift falls out of the inflation calculation.

The dashed grey line is the inflation rate for the overall TEG Road Transport Price Index – so the inflation rate for road freight spot rates. I’ve deliberately put the inflation rates for the haulage and courier elements of the TEG Index in faint colours so that you can see the differences, but so your eye is kept on the main story. But looking at those faint lines, as you can see haulage (light blue) is more reactive to the cost of diesel than courier (light yellow) - it goes up more when the cost of diesel goes up and comes down more when diesel goes down. That’s no surprise because diesel represents a larger proportion of the costs of running an artic versus a van.

I’ve also put in the line for zero inflation – you can see that at the start of 2020, inflation in both road transport and diesel was low. Then, during the first year of the pandemic there were deflationary forces at work. As diesel inflation starts rising and breaks through the zero line into price increase territory as the second year of the pandemic began about a year ago, so did all elements of the TEG. You can then see the extent to which other factors, namely staffing, were an issue in summer 2021 – so road transport inflation increased even as fuel inflation levelled off temporarily, albeit at a high level. But the story right now is about how year on year inflation in spot rates for road freight is reducing while inflation for diesel has done a sudden rise.

Haulage rates have remained *comparatively* low during this quiet part of the year, which points to one of two things: little to no inflation in other key cost inputs, which I find difficult to believe, or erosion of already small profit margins. The last thing anyone in logistics wants to see is UK hauliers go out of business!

Aricia Update - diesel - TEG - road transport - inflation - Logistics Update

Ecommerce, profitability & inflation

28 March 2022

February is a good time to get a feeling of how things are really doing in ecommerce. Because it tends to be the lowest month, it’s the least confusing when looking at trends and it’s also without the hype of Christmas and other holiday-related activity.

What this graph is showing is the average weekly internet sales from February 2015 to last month, split into non-store retailing in red (think Amazon), non-food stores in blue (think John Lewis, Boohoo…) and food stores in green (think Tesco) - these are based on the ONS figures released on Friday.

I’ve then added a trendline for each based on recent Februarys up to and including February 2018, showing where each category might have gone pre-Covid. We can see that 2019 and 2020 were pretty much on the trend line and then, as we all know, the impact of the pandemic has been to raise the game for home shopping.

A straightforward projection of these trend lines would imply that internet sales for both non-store retailing (red) and predominantly non-food stores (blue) have already reached the sorts of levels they might have expected at this time of year in 2025. Predominantly food stores (green), have already reached in February 2022 what might have been expected in about 2031.

Continued below graph...

Aricia Update - ONS - Bain & Co - internet sales - grocery ecommerce - profitability - inflation - Retail Update

However, we can all see from the graph that the more recent trend for food appears to be on a downward trajectory, which certainly fits with my own behaviour - despite subscribing to the delivery service, I’m visiting stores more often and finding online ordering a) a bit uninspiring and b) more difficult to plan around as we all get out & about more and our lives become less routine. Back in 2020, a report from Bain & Co forecast that 35%–45% of the spending surge (not specifically UK) would survive the easing of lockdown measures.

But the big issue for ecommerce/home delivery, particularly for food and grocery, remains profitability, with the Bain report indicating that even with delivery charges, ‘traditional’ methods of grocery home delivery are not profitable.

And now there’s inflation. The figures in the graph are for value not volume and, while we’ve all been able to get away with ignoring inflation while it was low, this needs to be taken into account. Revisiting the profitability equation, baskets will start reducing in both size and quality as the customer becomes squeezed, and the supermarkets will also be impacted on the cost side by increased bills including fuel.

Contrary movement

9 March 2022

The annual inflation in spot rates as shown by the TEG Road Transport Price Index was at its highest in September last year and, while continuing to be high, is reducing. It can be seen from the graph that the rate of increase in December 2021 was lower than in other years and, although still at a completely different level to previous years, the rate of decrease at the start of this year is sharper.

I had been toying with the idea that you could largely account for the changes in spot rates for road transport based on three factors:

  • The price of diesel obviously forms a substantial element of the cost of running a truck and, to a lesser extent, a van
  • The logistics element of the Adzuna job advert index from the Office for National Statistics economic real-time indicators – as a proxy for staff shortages including drivers
  • Traffic levels for both HGV and light commercials, also from the ONS real-time indicators, again as a proxy – this time for demand

Apparently not, as these all moved in one direction, while the TEG index went the opposite way!

Fuel prices went up in February, and mid-month logistics job adverts and commercial traffic levels went up compared with January …while the TEG Road Transport Price Index went down. That movement of the TEG index wasn’t wholly unexpected as that’s what it’s done in the last three years, the period for which the data has been published.

Continued below graph...

Aricia Update - TEG Road Transport Price Index - ONS - Adzuna - Jobs Adverts - Diesel - Demand - February - Logistics Update

However ...I’ve recently had access to a portal that Adzuna is in the process of developing, which allows you to drill down into the data. Job adverts across logistics functions including warehousing may have gone up in February, but vacancies for people with HGV licences working in logistics (as opposed to various other sectors such as engineering and maintenance) went down by about 15% from January levels. So my theory may yet be vindicated but need some refinement!

The Adzuna site also has information on average salaries. Perhaps unsurprisingly, pay for those HGV drivers working in logistics has also gone down a little. Going back to those spot prices, the TEG index for February has another interesting twist, with the Haulage element falling below Courier vehicles. As I’ve sometimes said before, while not wanting to pay over the odds, we also need to be careful that we don’t let the quiet time of year mean that we move backwards with respect to HGV driver numbers.

Logistics will have to fight its corner

9 February 2022

Bear with me as I know that the graph below looks complicated …but it’s interesting!

It shows the extent to which spot rates in road transport are related to capacity as dictated by the availability of staff. This graph tells the story of the past 3 years – from the start of 2019 through to the beginning of the current year.

I’ve taken the ONS/Adzuna Job Ads Index as a proxy for vacancies and plotted it against the main TEG Road Transport Price Index (Jan index just out today), which includes elements of both haulage and courier work. I’ve not plotted it in the ‘normal’ way with the months across the bottom – I did that back in early December. Here I’ve plotted each month as a spot, with its position dictated by the level of the job ads and road transport price indices – so the job ads index (for the value as close as possible to the middle of the month) is on the X-axis and the TEG Index, for the month as a whole, is on the Y-Axis.

I’ve made the spots get darker in colour as time progresses and joined them with a light grey line to help you follow – the trace begins at point A in Jan 2019 with the job ads index at 110 and the TEG Index at 100 – that’s when the TEG Index started. The two indices then stay within a reasonably tight box, indeed it’s difficult to see which links to which. But then there’s a breakout as the pandemic really hit - the spots to bottom left, B, are April to July 2020, with both job ads and road prices rock bottom.

The two indices then return to a reasonably constrained area until the second breakout, coinciding with the end of another lockdown in April 2021 - this time to the right, see point C - job ads exceeded the previous peak and prices were starting to rise, albeit not above the previous two peaks at this point. But then both indices start rising, giving us the surprising summer shortage and then both job ads and prices rising even more (with a bit of criss-crossing) to the peak at the end of 2021, shown by D. Both then fall back quite substantially in January to E.

The real story is how the relationship moves up and down the trend line, which I’ve shown in dotted green, showing the extent to which these two indices are linked, with staff availability driving prices, and possibly vice versa.

We know from various sources including the ONS that the jobs market, as we enter 2022, is fiercely competitive. Logistics is not the sector experiencing the most acute shortages and in the same way that prices (for all sorts of things, including road transport as indicated by the TEG index) have started 2022 in a completely different place, so have vacancy rates. As a sector, we are going to have to fight our corner, which has implications for pay and prices.

Aricia Update - TEG Road Transport Price Index - ONS - Adzuna - Jobs Adverts - Logistics Update

The demographics are against us...

8 February 2022

The headline in this morning's CIPS email was a bit shocking: Logistics sector on 'cliff edge' as it faces 400,000 labour shortfall.

But the demographics are against us - not just in logistics, but in the UK generally. And Covid has made it worse. Back in January the BBC carried an article which asked: Where are Britain's missing million workers? It explained that Covid has meant some older people took earlier retirement than they might previously have planned, and some younger people stayed in education longer than they might have otherwise done.

My picture uses a population pyramid from the ONS also published in January. I've shown it twice and drawn on different green lines demonstrating what two different scenarios for working age might have looked like on the 2020 version (so ignore the frilly line for 2030 and just look at the bars and my green lines).

You can see that for the first one, with the lines drawn at 16 and 64 the number of people joining and leaving the working age population are about the same. But in the second version, with the lines drawn at 20 and 60, not only are there less people in the band, but the number leaving the working age population will be growing, and at the same time the number entering for the next couple of years will be declining.

It's also worth noting that logistics isn't gender-balanced and there are actually two sides to each of the population pyramids!

Aricia Update - Demographics - Working Population - Logistics Update

A game of two halves

19 January 2022

You’ll have seen in the news already today headlines about the CPI, the Consumer Price Index, such as “Inflation: Cost of living rises at fastest pace for 30 years”.

The ONS also publishes the PPI, the Producer Price Index, which reports on changes in the prices of goods bought and sold by UK manufacturers, and once a quarter (earlier today), the SPPI, the Services Producer Price Index, which includes figures for inflation for various elements in the Transport & Storage Sector. The main graph shows how prices for all these elements have changed over the past year.

You can see that there’s the odd area, such as postal services, where prices have apparently gone down over the year, and areas with quite striking levels of inflation, the most striking of which are Other Transportation Support Services and the snappily named Warehousing and Support Services For Transportation.

The detailed description of Other Transportation Support Activities includes a number of lines, starting with “Forwarding of Freight” and including “Activities of Customs Agents”, so hardly surprising (without mentioning the B-word) that element has risen the most over the past year.

Freight Transport Services by Road looks very conservative in the main graph at 3.2% increase over the whole year, and indeed is less than the SPPI as a whole at 3.6%. But have a look at the inset graph which shows this element quarter by quarter since the start of 2019 to see how looking at the whole of 2021 just isn’t telling the whole story. It really is a game of two halves.

Aricia Update - Inflation - Road Freight - ONS - SPPI - Logistics Update

It’s only because of Covid...

18 January 2022

It’s only because of Covid that we can now see the extent to which the passenger element distorted the Transport & Storage vacancy information, for those of us who are only really interested in logistics!

So what can you see in the graph? The green line shows vacancies in Transport & Storage - earlier today, the ONS published its latest info on vacancies, which is divvied up by traditional sector, so Transport & Storage includes things like transport by pipeline, bulk storage of agricultural produce, the national archives… along with passenger transport.

The grey line shows a more recently available measure of job adverts for Transport / Logistics / Warehouse and is more aligned to our interpretation of ‘logistics’. This data is also via the ONS, which has been publishing indices of job adverts using Adzuna data – I’ve used the deduplicated version in the graph, as the same advert can appear on an employer’s website as well as via recruitment agencies. Continued below the graph...

Aricia Update - Vacancies - Job Ads - ONS - Adzuna - Logistics Update

We can see that although these two measures were not aligned during 2019 and at the start of 2020, since the pandemic started, and many passenger transport operations across all modes became affected by reduced trade, the alignment is quite marked. Unsurprisingly, other elements of Transport & Storage seem to have dropped out leaving just logistics.

Couple of other things to note. The Transport & Storage figures are for rolling quarters, which I’ve aligned with the middle month eg the latest figure of 56K vacancies is for Oct-Dec, which I’ve aligned with November. And I’ve taken the job advert index for the date closest to the middle of each month.

However, just because we have that figure of 56K vacancies, doesn’t give us the level of vacancies in logistics as we also need to bear in mind that many logistics jobs are not in the Transport & Storage sector, but in warehouses and transport operations classified as belonging to retailers, manufacturers etc. If you asked me to make a guestimate, I’d probably go for c130K vacancies across logistics operations in November just gone.

When we recover from Covid's impact, and passenger transport operations are back to normal, we will probably be better off using the Adzuna ads as a guide, rather than the traditional Transport & Storage figures, as we can see from 2019 that there is no particular pattern to the uplift. The Adzuna data is also more quickly available, hence being included in the ONS economic real-time indicators.

Hang onto your drivers!

11 January 2022

That road freight pricing is dependent on driver availability might sound obvious, but the TEG Road Transport Price Index emphasises the extent to which that is the case.

The first time I was alerted to there being less truck than van drivers, was when Logistics UK’s Skills & Employment Report 2021 was released in early December. That change started in Q3 2020, but Q2 2021 is where the number of people saying they worked as HGV drivers fell to its lowest AND when van driver numbers exceeded 300K for the first time.

In this post, I’m not so interested in the price movement which is based on prices being paid for freight movements (although I am!), as the recent divergence of the haulage & courier elements of the TEG index. So what are we seeing on the graph below?

  • These price indices both start at 100 in January 2019 and show subsequent movement
  • The blue line is the haulage element and the yellow line is courier
  • The shading is to make it easy to see which is higher

I can’t offer a definite reason why the haulage element was rose more quickly than the courier element in early 2019, but in Q2 2019 fuel prices were rising quickly, although the increase was nothing like we’ve seen in 2021!

There were then 21 months where the prices for courier transport were higher in comparison, starting with substantial divergence as the pandemic got going - suddenly people needed things delivered to their homes, and equally suddenly the bottom dropped out of all sorts of more traditional markets such as high street logistics and food service.

Then, from April 2021 as prices rose, the haulier index started to run at a higher level than the courier index – closing only a small amount in November. I’m surmising that the reason for the divergence in these elements of the TEG Index (coincidentally occurring at the start of Q2 2021) was because of that change in numbers of different types of drivers.

We know that the number of HGV drivers started to pick up in late summer - the Driver Require bulletin in late November, gives the Q3 2021 HGV driver numbers as 261K. But despite that, prices have risen again in December, and the gap between the courier and haulage elements has been maintained.

So what? Well in logistics we can be pretty good at being efficient, being flexible with our resources, sometimes too efficient for our own longer term good. I guess my message is to make sure you hold onto your supply of HGV drivers during the usually quiet months of January and February, although with this year’s Omicron impact, you’re probably using them anyway!

Aricia Update - TEG Road Price Index - Driver numbers - HGV - Van - Haulier - Courier - Logistics Update

Van values

21 December 2021

Unlike most of my posts, this graph hasn’t been created by me, but came from the Commercial Fleet website in the summer. I was really struck by it, so I was interested when Motor Transport’s Cost Tables for 2021 were published last week that while both capital costs and residuals, whether you’re looking at artics or vans, have risen, the residuals for vans have risen nothing like as much as we’re seeing on that graph.

I guess there are a number of potential conclusions you could draw. Five year old vans may not have risen in price to the extent of younger ones. The sort of operators who buy new could be playing it on the safe side, not wanting to count any chickens before they hatch and to cover all costs in the meantime. Perhaps the additional profit is being created by the leasing and auction companies rather than the operators.

What we do know is that there was nothing like the same number of new LCV registrations last year compared with the annual figure for the previous five, only about 80%: And based on the November YTD figures, 2021 is likely to be at the bottom end of those previous five. So perhaps that rise in prices for second-hand vans is a one-off phenomenon?

Solera Cap HPI - used vans - second hand prices - 21 December 2021 - Logistics statistics

What did the Romans do for us?

15 December 2021

A combination of the news of the sale of Stowga and the location of the CILT Fellows Lunch are what has inspired this post.

A few years back, 2018 to be precise, Stowga did an analytical blog about the location of the logistics ‘golden triangles’ (plural) and concluded that it looked more like a partially melted ice carving of the Wolves logo!

OK that explains the Stowga connection, but what about the Fellows Lunch? The lunch this year was held in the Leonardo Royal London City hotel in Cooper’s Row which has an undercroft entrance that leads through to the back where the best bit of Roman wall in London can be found – you could see it out of the back window of the room where we had our event. Continued below picture...

Roman Wall - Coopers Row - Author: Carole Raddato

So, I can hear you ask again, what’s the connection between those two things? Well, the Romans were always there first, or at least before modern day logistics. Regardless of which golden triangle you subscribe to (the big blue one or the original tiny yellow one), right in the middle is High Cross. The significance of High Cross is that it’s where the Fosse Way crosses Watling Street – I’ve marked it on the map created in Maptitude below. Continued below map...

Aricia Update - Golden Triangle - Logistics Update

What is now the wind-swept and lonely-feeling High Cross is/was where a Roman fort was situated – Venonis, mentioned in that early version of SatNav, the Antonine Itinerary. And if you were wearing your Roman Fitbit, or whatever, you’d have known when you were getting close by checking your steps.

So if High Cross / Venonis was the centre of Roman Britain, only 5 miles down the road is the original Magna Park, a centre of (non-ecommerce) logistics ...although, as the manager of TNT Stirling used to tell us, when we got the Highlands & Islands freight to him it was only halfway there. And another 8 or so miles down the A5 is DIRFT, described in a Guardian piece by its architecture critic, as being “...within what, with unexpected romance, is called the “golden triangle”, a land of sheds, roads and marketing gerunds...”. DIRFT is in the larger blue triangle, although outside the tighter yellow one.

And another few miles down the road is Watford Gap – in the Wikipedia intro it says “Watford Gap is a low-lying area between two hills, close to the village of Watford, Northamptonshire, England. Engineers from Roman times onwards have found it to be an ideal route for connecting the Midlands with South East England. The A5 road, the West Coast Main Line railway, the M1 motorway and a branch of the Grand Union Canal traverse in parallel a space about 400 metres (1,300 ft) wide. It has been written and spoken of as marking the divide between Northern England and Southern England.” Continued (briefly!) below map from Streetmap...

Aricia Update - Logistics Update

So we have a couple of major logistics parks between a key Roman road intersection and a geographic pinchpoint that are only 16 miles apart. We think we’ve designed modern logistics, but its destiny was decided by a combination of geography and history.

Rates versus Capacity

3 December 2021

When the TEG Road Transport Price Index was released for the first time last month, I pointed out that this price index, based on price per mile, will be influenced by a number of factors: Underlying cost changes; Availability/capacity of the market; and Demand for the service. I explored the correlation between the index and the price of diesel, a key contributor to costs for both haulage and, to a lesser extent, courier vehicles. I also looked at the relationship between the index and the ONS real-time traffic indices as a proxy for demand, although this may have been constrained by capacity at really busy times.

So, my analysis of this month’s TEG Index focuses on capacity, using job ads as a proxy for vacancies and, in turn, for driver availability as it measures the gap between demand and requirement. The job ad data that the Office for National Statistics includes in its real-time economic indicators is described as “Transport / logistics / warehouse” and so, obviously, includes other roles than just drivers. The ONS sources this data from Adzuna – I’ve used the version that is ‘de-duplicated’, as Adzuna collates it from multiple different sources, and graphed the data point that is closest to the middle of each month.

What the graph below shows is that ONS job ads data (lighter blue, dotted line) on the left hand axis and the combined TEG index (darker blue, solid line) on the right hand axis, with the right hand axis positioned to best show that correlation. This isn’t a fiddle; the correlation is close with an R-squared of 0.84. For those that don’t know what R-squared means, if it was 1 it would mean there was perfect correlation, but if 0 it would mean the relationship was totally random. Cont below graph...

Aricia Update - TEG Road Transport Price Index - ONS - drivers - vacancies - job adverts - 3 December 2021 - Logistics statistics

What about cause and effect? What you can also see from the graph is that job ads seem to lead – for example, job ads rose ahead of the TEG index at peak in 2019 and 2020. But the mechanism is likely to be a complex one with some circular elements - additional drivers could result in lower rates, but higher demand leading to higher rates will attract some drivers back to the industry.

We know that driver availability has improved through a variety of factors including recent industry and government responses: the furlough scheme finished at the end of September, the government sent a letter out to HGV licence holders in October, there has been increased driver testing, DVLA have speeded up processing (40,000 HGV and vocational licence applications in just 4 weeks according to a government press release dated 8 November), the government relaxed cabotage rules for foreign hauliers from the end of October... oh, and driver pay has been improving!

I don’t agree with the relaxation of cabotage going through to end April as I believe that there is a high risk of the logistics industry not retaining drivers when there are lower demand levels in January and February - the very drivers who have been freshly attracted, or attracted back, to the industry in the run up to peak this year.

Taking Stock

29 November 2021

Over the past few months, I’ve been watching the CBI press releases on its Distributive Trades Survey with some interest, as stocks compared with expected sales broke with any previous pattern in an index which has been running since 1983. In the latest release, on Thursday last week, although distribution stocks don’t look particularly healthy overall, retail stocks were looking a lot more healthy prior to Black Friday.

It needs to be logged that this is a qualitative survey asking whether stock levels look ok for expected sales, and distribution is defined as retail + wholesale + motor trades. I’m not surprised that things have improved from what looked like a serious situation back in August - rather than my title of taking stock, it’s more like delivering stock!

Also on Thursday last week, the ONS released its latest real-time indicators publication and data including numbers of ships visiting the UK.

What you can see in the pair of graphs is the number of ships visiting Felixstowe and Dover in 2021 versus 2019. In each case 2021 (the lighter line) is on the RH axis, because the method of collecting data changed in June 2021, but what we can see in both cases is a not dissimilar pattern for the two years …until the sudden rise in the past few weeks. And not just a sudden rise against previous activity this year, but also in comparison with the shape of the graph for 2019. Cont below graph...

Aricia Update - CBI - ONS - Stock - Shipping - 29 November 2021 - Logistics statistics So I wasn’t surprised to see the improvement in the CBI retail stock figure. Reference ‘distribution’, as indicated above, this does include the motor trades, and we know that there are very low stocks of cars in dealers, with waits of up to a year right now.

Kirsten is available for logistics projects at the moment - feel free to make contact!

TEG Road Transport Index

4 November 2021

I love a good graph, so when the new TEG Road Transport Index came along, I had to have a look! The graph is from Transport Exchange Group’s website.

Looking at the graph, you can see the December peak for past 2 years. You can see the impact of the first lockdown reflected in April 2020 when the price of courier vehicles rose, while haulage went down. Haulage then ran below its 2019 rates for the whole of 2020, including over Christmas. In early 2021, the price index was again running low, so no surprise that no-one was recruiting at this point...

And then the tsunami-like increase – breaking out of any previous pattern from March 2021 onwards, with prices just getting higher and higher, and with haulage and courier separating late Spring/summer 2021. And now the dip in October.

As I’ve already commented, although this is a ‘price index’, based on ppm, it is influenced by a number of factors: Underlying cost changes; Availability/capacity of the market; and Demand for the service. And it’s how those elements impact and the result that interests me.

It’s no surprise that the price of diesel is a key influencer – if you compare the TEG Road Transport Index with the pump price of diesel at the midpoint of each month and look at R-squared in Excel, it’s 0.495 for haulage. For those that don’t know what R-squared means, if it was 1 it would mean there was perfect correlation, but if 0 it would mean the relationship was totally random. So, the haulage index is significantly (but by no means completely) impacted by the price of diesel.

The index is also significantly affected by demand. In its real-time economic indicators, the ONS has an index for traffic levels based on DfT camera data. This index started in March 2020. If you ignore the first four months (when we were all adjusting to the pandemic), and in this case compare the ONS index for the Wednesday that’s nearest to the midpoint of the month, the R-squared for the TEG Road Transport Index for courier vehicles compared with ONS light commercial traffic is 0.6012 – so, as with diesel, there is significant, but not complete, correlation.

Crucially, what we can see, if you go about halfway down this page and select HGVs, light commercials etc, is a slight drop off in traffic levels more recently, explaining the lower prices reflected in the TEG Road Transport Index.

Driver pay will also have been an element contributing to the rise from Spring 2021 onwards, but it looks as if potential over-heating of transport rates is now abating, although in the logistics industry we’re all aware of the various supply chain issues that still exist, so there may yet be further pent up demand.

Kirsten was quoted, along with the Governor of the Bank of England in this piece in the Daily Mail, among many others.

Aricia Update - TEG Road Transport Index - haulage - courier - diesel - traffic - 4 November 2021 - Logistics statistics

Money makes the world go round

26 October 2021

From very early in my career I’ve always been very conscious of both supplier payment and cashflow and I’ve been thinking about writing a fresh piece on cashflow for a while, because there must be real pressures on some hauliers right now, with costs like wages and diesel rising, while at the same time the issues with getting money into the business continue.

News of Missguided’s current financial issues draws attention to how changes in money flows, in part down to rising shipping costs and stock shortages, can really impact. In this case, it appears, that there have been pressures from both directions: outgoings have risen, but the ability to get income in has also been reduced. And there must be companies that are getting into difficulty because they have cash tied up in stock.

Meanwhile, in the past week or so, there’s been a news piece on CIPS website about the need to protect small businesses, Terry Corby, chairman of Good Business Pays (GBP) was quoted saying that the law needs to be strengthened after GBP found only four FTSE 350 companies paid suppliers within 30 days.

So, I’ve been thinking about writing a fresh piece, but I realise I’ve said a lot of it before in a Viewpoint in Motor Transport back in 2009, so no point in writing it all again, might as well just let you read that!

Online grocery - up or down?

23 September 2021

On Friday the ONS (Office of National Statistics) released the latest retail sales figures, including those for online, or internet, sales. And you can see what an amazing job the retail, pureplay and logistics sectors have been delivering over the past 18 months. Non-food has gone from its annual, increasing but reasonably predictable spike (predictable if looking at the overall figures), which have stretched the parcels operations every year. Food & groceries went 'vertical' – a real achievement for operations which didn’t peak to anything like the same extent in the early years, when the number of vans and slots effectively dictated capacity, although Click & Collect is now an accepted format.

The graph below shows average weekly internet sales in £millions from the start of 2009, the first point at which the different types of product/source of sales were broken out, up to the latest data for August this year. The green line shows sales from ‘predominantly food stores’, so home deliveries from Tesco, Ocado et al – that’s shown on the left hand axis. And the grey line, which uses the right hand axis, is for everything else that you might by online from Amazon, John Lewis and all sorts of other sources and worth roughly 7x as much. What’s shown on the graph is not seasonally adjusted and is the average weekly sales shown by month – some months have 4 weeks, some 5, and there will be more variation week on week than is shown by the average, which is what is published.

In May, Mintel did that brave thing and made a forecast of where grocery online was going, forecasting a decline of 13% for 2021 when compared to 2020, as the market rebalances following extraordinary demand during the pandemic. I’m not sure that is where things are heading - since that forecast was made, sales have been down but only by about 4% so far. Mintel’s forecast for 2025 is an additional 15% on top of 2021.

Aricia Update - Internet sales - online grocery - ONS - 23 September 2021 - Retail Statistics

Job ads - perfect storm & feeding frenzy!

25 August 2021

Anyone who takes an interest in the economy and looks at the regular ‘real time’ indicators on the Office for National Statistics website (section 6 via link) can’t help but to have been struck by the extent of job adverts in the logistics and transport sector, with ONS having to rescale the graphs back in June to accommodate the enormous increase!

However, anyone who works in logistics can’t have helped being struck by February not being the best base to use as an index for our industry.

So, what is my graph showing? ONS has been accessing job advert numbers via Adzuna, an online job search engine that collates information from thousands of different sources in the UK. I’ve downloaded a data set from ONS that goes back to 2018 and through to about a fortnight ago. I’ve shown the job adverts for our industry (transport, logistics, warehousing), shown by the continuous purple line, and those for the UK as a total, shown by the continuous blue line.

Continued below graph...)

Aricia Update - Adzuna job adverts - vacancies - ONS - 25 August 2021 - Logistics Statistics

The ONS data uses an index in which February 2020 acts as a base line for measuring increases and decreases in activity. February 2020 is roughly when Covid hit the country and ahead of the first lockdown. February 2020 = 100 – the first of my bright pink rings going left to right across the graph, and the blue dotted line drawing attention to that level across the whole time period shown. A value of 90 would mean that there were less job adverts than the base line and a value of 110 would mean that there were 10% more adverts.

You can see that the need to advertise for logistics staff varies a great deal more than UK plc, and that a typical level of adverts for logistics has been 85% higher at peak than it has been in February for both years before Covid got going – this level is shown by the purple dotted line.

In February 2020 the level of adverts was typical for our industry for February, but that’s not a typical level of adverts for our industry across the normal year.

Between February and May 2020, as Covid bit, logistics job ads dropped in line with the rest of the UK – see the second of the pink rings on the graph. For the UK as a whole, job ads were at about a third in May of what they had been in February. For logistics, job ads in May were only a sixth of what they had been the previous peak. So, it’s no surprise that as things relaxed and ‘eat out to help out’ encouraged people to come out of their houses in the summer and spend, the number of job ads started to rise and by the autumn had exceeded the previous peak levels.

But what’s very clear is that few people in logistics saw what was coming post-Brexit, and with IR35 and further relaxation of Covid restrictions thrown into the mix. By mid-January 2021, shown by the third pink ring on the graph, job ads in our industry had dropped back to normal post-peak levels, albeit above the level of ads across the rest of UK plc. Since then, the increases in job ads in logistics have been enormous - I don’t like hyperbole like ‘stratospheric’, but somehow ‘enormous’ doesn’t really do justice to what has happened!

By mid-April 2021 job ads in logistics had beaten the figure for peak 2020, which in itself was higher than both the previous peaks. By late June it was 50% higher than for peak 2020 as a combination of hospitality, staycations, the school holidays and logistics staff's own holidays all started to create a perfect storm.

The ONS uses this data to act as a proxy for vacancies, and has done its best to de-duplicate this data – the Adzuna data is from thousands of different sources, so it includes multiple instances of the same job - it collates direct employers’ websites to recruitment software providers to traditional job boards thus providing a comprehensive view of current online job adverts.

But I’m left wondering whether the job adverts for our industry, which has been so dependent on agencies to fill roles at peak and often at other times, include hidden duplication. How obvious is it if Agency 1 and Agency 2 both advertise generally, knowing that by being first to recruit an extra driver they will get some extra business. While at the same time, the end company may well also be advertising if it is a permanent role. Has the de-duplication managed to address multiple companies essentially advertising the same role and contributing to the feeding frenzy?

While there are plainly many, many vacancies, I guess where my train of thought ends up is that job adverts may not be a good indicator of vacancy levels for an industry so dependent on agencies.

Wow - what a mixed bag!

14 July 2021

Earlier today the ONS (Office for National Statistics) released the latest update for the SPPI, the Services Producer Price Index. The Services Producer Price Index is an index that monitors the changes in prices charged for services provided to UK-based customers for a range of industries. Broadly, it’s a bit like the CPI, but B2A and just for services - there are other indices such as the Producer Price Index that monitors manufacturing inflation. It is a quarterly index, it is not seasonally adjusted and it does include some provisional figures.

The overall Transport & storage index (not shown here) includes public transport as well as logistics-related activities - this showed annual inflation in the overall sector to be 4.8%, but within that one figure (which in itself is very different to much we have seen over a number of years), there is a very mixed bag.

The graph here shows a selection of indices over the past 3 years, which I’ve brought back to a base of 100 in 2018 Q2. The dark blue line is the overall index, the aggregate Services Producer Price Index. Freight Transport Services by Road is shown in bright pink has been running parallel to the overall SPPI for the past couple of years. What is effectively Royal Mail is shown in orange and took a dip at the beginning of the year. Warehousing & Support Services for Transportation is shown in green and demonstrates the impact that a combination of stockpiling and increased ecommerce have had on warehouse rates. And, last but not least, Other Transportation Support Services is shown in grey – I’m assuming that this has a big overlap with what was Freight Forwarding, which is no longer separately detailed in the figures, and is related to Brexit.

Fascinating that despite all the current news about lack of resources, and with an environment in which all sorts of other rates are going up, road transport continues on a fairly flat trajectory.

Aricia Update - Road Transport - Warehousing - Brexit - ONS - SPPI - 14 July 2021 - Logistics Statistics

Transport firms ceasing to trade

9 July 2021

The driver shortage is big news right now, but there are other really ‘interesting’ stats in our industry, and not just drivers.

In one of the ONS updates published just over a week ago, reporting on the impact of Covid and ‘other events’ (I think we all know what that is code for!) on the economy, the Transport & Storage industry had the lowest percentage of businesses currently trading at only 76%, down from 94% in October. That figure will include public transport as well as logistics-type operations.

But the ONS also states that, of businesses classified as freight transport by road, 36% reported that they are temporarily closed, or have paused trading or permanently ceased trading. And that same update also shows that Transport & Storage (again including public transport as well as logistics), has the third highest level of staff still on furlough at 14.4%, and with 12.8% still working from home.

Meanwhile, a different update from the ONS on economic activity published yesterday shows that job adverts online at Adzuna are significantly higher in Transport, Logistics & Storage (a different categorisation to ONS SIC) – 3 times what they were in February 2020 (see graphs below), nearly 50% higher than they were in October last year and much higher than the increase for All Industries.

Aricia Update - Road Transport - Vacancies- ONS - Adzuna - 9 July 2021 - Logistics Statistics

Covid + ecom -> Automation

17 May 2021

Despite or because of Covid, the total revenue of this year's Top 20 Materials Handling Systems Suppliers continued to grow, easily topping the $25Bn mark.

There are two entries ranked as No 10 (and therefore none for No 11), there are new entries and some changes in position, but there's no point in me describing all this, when you can go straight to the oracle and read about it in Modern Materials Handling published just a few days ago!

Aricia Update - Moderns - Material Handling - Top 20 - 17 May 2021 - Logistics Statistics

Those heady days...

22 March 2021

Do you remember those heady days of January 2016? It’s an important date, as that was the last time the nation was feeling vaguely good, and it hadn’t been for very long following the financial crash.

Every month GfK reports on its UK Consumer Confidence Index, with the latest report out at the end of last week. As you can see from the graph, although there has been a massive increase in confidence since November, the barometer is still in negative territory, so I went back through GfK's press releases to find out when the index had last been positive and started the graph from there. The index is based on questions posed to a representative sample of c2000 people – the various areas asked about are detailed in the little box on the graph, along with their relative positions to the previous month. NB The sort of goods that are referred to as major purchases are things such as furniture or electrical goods.

According to the House of Commons Library research briefing on Business & Consumer Confidence Business & Consumer Confidence, this GfK research is carried out on behalf of the European Commission, but I think that’s just sloppy reporting, as I don’t believe that to have been the case since the UK left the EU. Business and consumer confidence surveys are leading indicators and can point to changes to the economic outlook as well as turning points in the economic cycle ahead of official data.

Fingers crossed that things carry on going up!

Aricia Update - GfK - Consumer Confidence - 22 March 2021 - Retail Statistics

Now versus 'normal'

23 February 2021

So which industries have benefited over the past year in terms of the number of people employed? Earlier today the ONS published various employment figures relating to the last quarter of 2020.

And the answer to that question, is that over the past year, the area with the highest proportional growth in jobs was Financial & insurance activities followed by Public admin & defence & social security. The sector which lost the largest percentage of jobs was, unsurprisingly Accommodation & food services, and after that Manufacturing.

What the graph below shows is some significant dates rather than evenly spread - 1997 being the first year these figures are available, 2007 before the financial crash, 2012 the point at which construction hit its low before starting to grow again, 2019 representing 'normal' in our memories, and 2020 being the most recent data. The figures are not seasonally adjusted, but using the same quarter each year should mean that they are comparable.

Continued below graph...

Aricia Update - Jobs  by industry - Transport & storage - 23 February 2021 - Employment Statistics

All the bars are percentages of 2019 = 'normal' for that particular sector. So by definition, all bars for 2019 come up exactly to the 100% line shown in green. The sectors are in order from those that gained the highest percentage of jobs over the past year through to those that lost the most. I've highlighted with a red surround the bars for 'All employed' - a different measure of normal.

Perhaps surprisingly Human health & social work activities is not one of those areas that gains jobs over the past year. Transport & storage is pretty 'normal' in the number of jobs lost. But what the graph also highlights, is the shocking loss of jobs in manufacturing over the past couple of decades.

Where to start?

1 February 2021

So what story shall I tell you about this data? Where to start? And that’s the crucial question!

I did a post a couple of weeks ago on Linkedin about perspective, and that’s a really appropriate word to use with relationship to this update. In December every year, Motor Transport releases its annual cost tables and, in January, the ONS released the latest SPPI data including all of 2020 - the SPPI is like the CPI but for services from businesses.

If I start the graph in 2013, as shown, with all elements starting at an index of 100, then my story is that road freight rates have ended up rising pretty much in line with the inflation rate for business expenditure as a whole, but that road freight costs, while more erratic, are down in 2020 - driven by the price of diesel. See below the graph for a description of all the elements.

Whereas if I had started the same graph in 2015 with all elements at 100, my story would be a very different one: it would be about rates rising faster than general business inflation, but not keeping abreast of costs, and with diesel at a slightly higher rate in 2020 compared with 2015.

Which story should I tell? They do say you can tell any story you like with statistics!

Aricia Update - Motor Transport - Cost Tables - SPPI - Road Freight Costs - 1 February 2021 - Logistics Statistics

This graph shows the overall pence per mile costs of running a 44T unit and triaxle trailer (dark blue, thick line), and the major constituents of diesel as pence per litre (black), driver wages & NI (light grey), and depreciation & financing for the unit & trailer (dark grey) – these are all from the Motor Transport Cost Tables. It also shows the SPPI index for Freight Transport Services by Road (light blue, thick line) and the SPPI as a whole (green). These are all shown as indices brought back to 100 in 2013 and changing up or down with inflation in subsequent years.

More Sitting Bull than Whale!

28 December 2020

The Motor Transport Top 100 for 2020 was published recently and, having written a piece about the Whale graph for SHD Logistics, also published in December, I thought I’d apply the same sort of analysis.

I put the 100 companies in order of percentage pre-tax profitability (on the x-axis) against the cumulative pre-tax profit of the Top 100 on the y-axis - what emerges is not so much whale as sitting bull! What emerges is that 80% of the Top 100 made all the profit, and the remaining 20% eroded it. 80% of those companies made £860m profit, but the remaining 20% then lost over £400m to end up with an overall profit for the Top 100 of just over £450m. Continued below graph...

Aricia Update - Motor Transport - Top 100 - profit - 28 December 2020 - Logistics Statistics

Just one company has been solely responsible for over 50% of the losses, Eddie Stobart, which has since received financing from Dbay. Three of the other four companies that made more than 10% loss, have since collapsed or changed hands.

Eddie Stobart’s annual report emphasises the importance of keeping your eye on the ball: “The warehousing strategy also distracted key management from activities in the core business, including assessing new contracts and the maximisation of the efficiency of our transport network.”

It’s not clear whether rates weren’t in line with market values or whether costs got away from rates – assuming the former, it looks like the company should have been charging about a third more for its services if it wanted to make the average pre-tax profit of the profit-making companies which, incidentally, is less than the 5% profit (that’s pre-tax profit!) suggested by Motor Transport’s cost tables published in the same issue.

Motor Transport makes the point that “The figures for this year’s Top 100 come mainly from companies’ 2019 accounts and so are not affected by the Covid-19 crisis”, but also that “One clear impact of Covid-19 is that fact that a few companies have been slower than normal to file their latest accounts at Companies House.”. I have queried, with Motor Transport, Royal Mail’s UK arm’s pre-tax profit being put in at exactly zero (I’m always suspicious of very round numbers!), but I’d be the first to say that I don’t envy the person who has to create the Top 100 each year, extracting all that data from annual reports.

X marks the spot!

22 December 2020

There are three changes of direction on this graph. The first kink is in May and is when Covid testing moved from targeted to being more widely available. And the one right at the end is just lag between reporting of tests and identification of cases. But what caused the one in the middle? Three out of my last four statistical updates have been on Covid rather than logistics - people will begin to think I've got a bit of a thing about it, but the way my mind works is that if there's data, I have to find the story!

I'd seen this pattern ages ago and thought it was probably about kids and students going back to school and university, and perhaps because young people seem less affected we were suddenly seeing a lot more asymptomatic cases ...perhaps that's what the experts thought. But the change of direction in the middle is now much more comprehensible, because now we know that there was a new Covid variant...

According to New Scientist: "It was first sequenced in the UK on 20 September, but only caught the attention of scientists on 8 December, when they were looking for reasons for the rapid growth of cases in southeast England." See below the graph for how it works...

Aricia Update - Covid - Tests - Cases - New Variant - 22 December 2020 - Statistics

This scatter graph contains data from the UK government website from yesterday's update. It has cumulative tests on the x-axis versus cumulative cases on the y-axis - because it's cumulative, you lose all the daily wobbles and it also means that the graph is sequential as it moves across the page. There is a small ring representing each day from end of March to 20 December, and I've coloured up each ring by month so you can see how things progress - the white space in the centre of the later rings shows the extent to which Covid has been growing more recently. I've also highlighted with a cross the entry that represents 20 September, the day the new variant was discovered.

I'm not a health expert so I'm not going to comment further other than to say that, if this was hours versus orders in a DC, someone would have been all over it from October latest!

Is this why people don't work as HGV drivers?

8 December 2020

Yesterday the Office for National Statistics published some estimates from its Annual Survey of Hours and Earnings (ASHE). I've combined two of the many data sets in the diagram below. What are the boxes in the diagram all about? It's my attempt to show the span of hours and span of pay for most full time employees working in the UK as a whole and for some specific occupations. See below the diagram for a description of how to read it.

Aricia Update Diagram - ASHE - Annual Survey of Hours & Earnings - 8 December 2020 - ONS - Hours - Wages - Logistics Statistics

On the x-axis is paid hours worked per week - the span of each box goes from the figure for the 10th percentile through to the 90th - if we look at the red box for the UK as a whole, it means that 80% of employees work somewhere in that span of hours (so it excludes the extremes at each end). And the y-axis shows gross weekly pay, and again the span runs from the 10th to 90th percentiles, so that 80% of employees get paid somewhere in that span. It's important to note that it will be a different 80% for the x and y elements of each box, but there will be a broad overlap.

Note the red spot which marks both median hours and median pay - so 50% of employees in the UK work less paid hours per week and 50% of employees get less gross weekly pay than indicated by the spot. You can see that FLT drivers are virtually all working more hours than the UK average, and that HGV drivers work considerably more!

NB ASHE covers employee jobs in the United Kingdom - it does not cover the self-employed, nor does it cover employees not paid during the reference period. Hourly and weekly estimates are provided for the pay period that included a specified date in April. They relate to employees on adult rates of pay, whose earnings for the survey pay period were not affected by absence. Estimates for 2020 include employees who have been furloughed under the Coronavirus Job Retention Scheme (CJRS). The forklift truck driver entry is described as an estimate as the ONS has not tried to estimate the 90th percentile for either pay or hours - I have based them on the other storage occupation shown.

Find out a more about the sort of projects we work on: Case Studies.

Wear a mask ...for your own sake!

4 December 2020

I don’t usually do two non-logistics updates running, but having had my interest piqued yesterday (next post down on this page), I did a little more research on hospital admissions for Covid versus mask wearing, or face covering if you prefer. This piece is not about the extent to which wearing a mask prevents or reduces transmission, but about the impact that mask wearing appears to have on the seriousness of Covid cases. And I need to emphasise again that I’m not a health expert, although this is a very good example of the sort of data detective work I can carry out, more usually as part of logistics projects.

I’ve combined two separate data sets in this graph. One data set on admissions and cases is from the government’s Covid data dashboard and the other, the proportion of people wearing masks, is from the ONS (Office of National Statistics). Continued below graph...

Aricia Update - Covid - Cases - Admissions - Masks - Statistics

What the graph shows is the relationship between the proportion of people that need to be admitted to hospital when they have Covid compared to the proportion of the population wearing face coverings. Each spot represents a particular point in time – the ONS data has only been collected since late May and is for working weeks, so some are 4 days and some 5, and not all weeks are included. I’ve matched up the Covid data by taking a 7 day period and doing my best to match the mid points. I’ve continued to use hospital admissions rather than deaths – in yesterday’s analysis I did that because the relationship between admissions and deaths is very close anyway, and there was concern that some deaths were being wrongly attributed to Covid in the early days.

As you can see the relationship on today’s graph of mask wearing versus the seriousness of Covid is remarkably close – the R-squared of the trend line is 0.9648. If you’re not familiar with what R-squared means, 0 would mean no correlation – totally random, but 1 means absolute correlation – all the spots are on a line. R-squared = 0.9648 is pretty good correlation.

This article on University of California San Francisco’s website comments: It’s likely that face masks, by blocking even some of the virus-carrying droplets you inhale, can reduce your risk of falling seriously ill from COVID-19, and quotes Monica Gandhi, MD, an infectious disease specialist at UC San Francisco “The more virus you get into your body, the more sick you are likely to get”, as well as including some comparative examples from cruise ships and stats from some specific industrial settings.

I’m now convinced, from the analysis and small amount of research I’ve carried out, that wearing a mask means that you are much less likely to get admitted to hospital and, in turn, much less likely to die from Covid. And by the way, in case you hadn’t guessed, I’m free for logistics projects at the moment - feel free to contact me!

Kinky Covid Conundrum

3 December 2020

I need to start this piece by saying that I’m no health expert – this analysis was driven purely by my own interest.

I started off wondering about the death rate and, being me, I put some data about cases and deaths from the government’s Covid dashboard onto a scatter graph - I wasn’t necessarily expecting it to be uniform, but I wasn’t expecting such a defined dog leg. The graph I’ve shown here is admissions versus cases, which shares the same kink. Continued below graph...

Aricia Update - Covid - Cases - Admissions - Masks - Statistics

Each spot on the graph represents a day and includes all the cases or admissions for that day and all preceding days. So dates go from left to right, but not in an evenly spaced order - if there is a big increase in cases, there is a big gap left to right, if there is a small increase in cases, there is only a small gap - often so tight that the spots merge into a line.

So either admissions suddenly slowed down compared with the number of cases, or (same thing but in reverse) cases had grown at a faster rate than admissions. I identified 13-19 July as the period where the relationship really changed – you could argue for including a slightly wider period. I started doing all sorts of scatter and time-related graphs examining the relationship between tests and cases, types of test, age of cases… I googled Test & Trace to see when that started, I searched for asymptomatic cases, I wondered about do-not-resuscitate notices and considered care home deaths. Were admissions driving cases in the early days and then cases driving admissions later on? ...the timing didn’t feel right.

But I could see clearly that the admission rate had slowed down, enormously. So I googled for “Is Covid less severe now?” and among other articles found this Bloomberg one which included the following comment and quote:

There is even a hypothesis that public health-measures like mask-wearing and distancing can help decrease the amount of virus people are getting infected with, leading to less severe cases because the body isn’t overwhelmed with a large dose of virus at once. “Even though they’re getting infected with the virus, perhaps they are getting less of a dose of the virus and so they’re just getting less sick from it” commented Leora Horwitz, an associate professor of population health and medicine at New York University’s Grossman School of Medicine who conducted the New York study of Covid-19 hospitalizations.

So I started looking at the timeline in the UK with respect to masks/face coverings. On 11 May, the UK government advises people in England to wear face coverings in enclosed spaces where social distancing is not possible, such as on public transport and in shops. Followed by the British Medical Association urging the UK government on 5 June to extend the rules regarding the wearing of face covering to all situations where social distancing was not possible - reported here in Wikipedia. As with many things, the public was ahead of the government in adopting change and by 6 June I had ordered some masks and I know a close associate in the industry did also, because we could both see which way the wind was blowing and discussed that, even if they didn’t work, we would soon need masks as a passport just to go food shopping etc.

But it wasn’t until 10 July that Johnson was reported as considering making wearing masks compulsory in shops in England, on the day that they become compulsory in Scotland. And 14 July when it was announced that masks would become compulsory in shops and supermarkets in England from 24 July.

Online searches for masks spike in the UK in that week - see screenprint below. 13-19 July was the period that I identified as the point at which the relationship between cases and hospital admissions changed - so, I’m now wearing a mask with considerably increased enthusiasm!

Aricia Update - Google Trends - Covid - Masks - Statistics

Hidden secret: very nearly £100bn online sales pa

20 November 2020

With Lockdown2 in progress in England, Christmas only a month away, ‘Black Friday’ started early and the latest ONS Retail Sales figures out, it’s worth having a look at online / internet / ecommerce sales. Because of the way that ONS report them – as average weekly sales by month, with some months having 4 weeks, others 5, it’s very easy to accidentally hide potentially interesting factoids, and that is the case this month.

If I wanted to manipulate the headlines, I could actually declare that key barrier of £100bn online sales pa in the UK broken, but I’m an honest broker …another confuser is that some years have 52 weeks and some 53 - because the average year (taking leap years into consideration!) is c52.18 weeks, we have to catch up from time to time. NB I’ve brought the figures in the graph back to 52 weeks with a straightforward 52/53 calculation, although you could argue about which week you should be taking off!

You can see the clear impact of Covid on internet sales and also that there is no reason why that record of £100bn shouldn’t be broken when the November figures are out in a month’s time.

Aricia Update - ONS - Retail Sales - Internet Sales Growth - Online - ecommerce - B2C - Retail Statistics

Next day fashion - no such thing as average!

13 November 2020

With Black Friday starting earlier this year because of Lockdown2 and the increased online volumes that Covid has brought, I thought I'd have another look at what five different retailers are charging for next day and when you need to have placed your order. This started as research for a client project back in 2009, looking at the next day offer from different fashion retailers. At that point, next day was at the forefront of offers and, even when I did my first revisit in 2014, only one retailer was offering same day.

The graph below shows the change in order cut-off times and charges to the customer at four points over the past 11 years for next day delivery of fashion in the UK from five retailers: ASOS, Harvey Nichols, House of Fraser, Jigsaw and John Lewis. The various colours indicate the retailer, with the cut-off time on the x-axis and the charge on the y-axis. The width of the trace indicates the year, with the widest being 2020 to draw your attention to the current position (see legend top right). Continued below graph...

So what's going on? Starting at the top of the legend and the bottom of the graph, with ASOS (blue) - the charge has remained the lowest across the whole period and the last order cut-off, having pushed out to midnight, has now pulled back to 10pm.

Harvey Nichols (red) didn't offer a next day service in 2014 hence the stray dot for 2009, and currently has earliest cut-off and the highest charge. That highest current charge is shared with House of Fraser (green), but which offers a later cut-off.

Jigsaw (purple) has most improved offer both in price and timing since I last did a snapshot. And finally John Lewis Partnership (orange) which has had the most consistent offer over the eleven years.

The average cut off this year is 19.00 and the average cost is £6.98. As so often with fashion, there is no such thing as average, but John Lewis is the closest and offers just better than average on both fronts!

No let up!

23 October 2020

Earlier today the ONS released the latest figures for retail sales and there was no let up in the recent internet sales growth. Even after the Covid-driven spike which peaked in June this year, the growth rate has continued to be phenomenal staying above 50% for the past five months. Online sales, ecommerce, B2C ...whatever you want to call it, hasn’t grown this fast for over 12 years. And now that growth is on top of a much larger base.

What the graph below shows is the year on year growth rate of weekly internet sales. Those sales are reported in twelve periods per year, some of which are four weeks and some five – so it’s weekly sales but with twelve data points on the graph for each year. Hope that makes sense. And worth commenting that the little dip below zero in November 2019 is a bit misleading - it resulted from Black Friday being very late (29 November because of when Thanksgiving occurred in the US) and so falling into the figures for ‘December’ rather than November.

Obviously this has an impact on warehousing space, as reported in Logistics Manager earlier this month, with Knight Frank forecasting an additional requirement, just for the growth in 2020, of 30msqft. And that forecast will have been made before today’s figures for September growth.

Aricia Update - ONS - Retail Sales - Internet Sales Growth - Online - ecommerce - B2C - Retail Statistics

Market elasticity?

21 October 2020

Earlier today the ONS released the latest figures for the SPPI, the Service Producers Price Index. NB The SPPI is like the CPI but for expenditure made on B2B services by government and by businesses*.

Ever since I found out about the SPPI from CILT’s Knowledge Centre many moons ago, I always have a look at how road freight prices (shown on the graph below in bright pink) are tracking in the UK in comparison with the overall index (dark blue). And I always have a look at a couple of the other indices – generally freight related. It’s no surprise to see that Freight Forwarding prices (grey) are rising ahead of general business inflation, reflecting the impact of Covid in the past couple of quarters and with Brexit still to come.

You might not believe this but, funnily enough, I’ve never looked at the price index for consultancy (light blue) before. Currently moving in the opposite direction to the overall index, plainly it’s interesting - both from a general perspective (what we hear about in the news is the NHS paying very high consultancy day rates) and from a professional standpoint, as it doesn’t reflect what I’ve been seeing and what I hear from other established logistics consultants.

But what especially interests me in this set of figures, is that I don’t tend to regard logistics providers, and particularly hauliers, as always being the best at negotiation. But while we all know that diesel prices have been relatively low for the past couple of quarters, haulage rates have apparently continued to rise. Perhaps market elasticity is at work?

Aricia Update - SPPI - ONS - Road Freight - Freight Forwarding - Consulting - Logistics Statistics

*The Service Producers Price Index is a bit like the CPI, it shows the increase in prices and rates paid, but for services provided by businesses to other businesses and government - the top level Gross / GSO index as shown on the graph includes the provision of a number of different services to other service businesses as well as to non-service businesses and government departments. So it provides a measure of inflation for the UK service sector with individual price indices, such as Freight Transport by Road, aggregated to create that all-services industry index. It is published by the ONS (Office for National Statistics) and is a quarterly index - it is not seasonally adjusted.

Logistics hangs on in there!

15 October 2020

After a period of growth during 2019, the number of businesses in Transport & Storage has been maintained so far during this Covid crisis period.

Earlier today the ONS* released its latest ‘business demography’ publications and data. The graph below shows the proportion of new businesses being formed as a percentage of businesses that are closing. The pink line is for Transport & Storage businesses and the dark blue line is for businesses across all sectors. The grey line represents equilibrium, with the number of creations equal to the number of closures - if the pink or blue lines dip below this grey line then there were more closures than creations in that quarter, whereas when they are above that line, there are more business births than deaths.

Over the whole period shown, from the start of 2017 through to Q3 2020, there have been an additional 17K Transport & Storage businesses established out of the 145K additional businesses across all sectors.

Aricia Update - Business - Creation - Closure - Transport & Storage - Logistics Statistics

*These figures are from the ONS (Office for National Statistics), and are experimental quarterly statistics on business creations and closures from the IDBR (Inter-Departmental Business Register), which is a comprehensive list of UK businesses used by government for statistical purposes.

Covid again!

29 August 2020

A piece on BBC’s website got me thinking: “Experts suspect a relatively small number of areas in the UK are responsible for an increase in new cases.”. I wondered which is worse – a few places with dense infection, or minor infection distributed in pockets.

The graph below shows a spot for each week (not in date order), with the number of known infected areas on the x-axis and known cases on the y-axis. MSOA stands for Middle Super Output Area - areas the ONS uses. There are 6.7K+ in England. Northampton with its nearly 300 cases was spread over a number of MSOAs, all less than 30 cases. I’ve removed a few zero entries right at the start of the crisis and the unallocated cases, and I’ve picked out the most recent seven days in red.

The thing that really stands out to me is the closeness of the data to the trendline – the R-Squared is 0.9941. If you’re not familiar with what R-squared means, 0 would mean no correlation between cases and areas – totally random, but 1 means absolute correlation – all the spots are on a line. R-squared = 0.9941 is very strong correlation.

It’s as if the figures have been generated with a minor randomiser – if I saw figures like this for warehouse productivity, I’d have trouble believing them.

Aricia Update - Cases - Geography - Covid Statistics

Don't race to the bottom!

12 August 2020

The latest GDP figures were published earlier today along with the ONS ‘Flash productivity’, which does come with a disclaimer – as its name suggests, flash estimates are based on early data and are subject to revision as more accurate data becomes available. But this data is available at industry level, so I thought I’d have a quick look at the impact that the lockdown had had on productivity in Transport & Storage …and ended up going down a rabbit hole!

What you can see on the graph below is productivity for the Whole Economy (blue) and for Transport & Storage (purple). That productivity is £ per hour contribution to GVA - GVA is the value of an industry's outputs less the value of intermediate inputs used in the production process, and is used as a proxy for GDP – it is nothing to do with what individuals are paid.

I’ve also added some trend lines – you can see that things were rising reasonably predictably from 1997 through to the end of 2007, then the recession hit, then things started to pick up again …for the whole economy they picked up and continued to rise reasonably predictably (albeit at a reduced rate of increase – hence economists interest in the productivity puzzle), before the Covid cliff edge. But after its recovery from the Great Recession, Transport & Storage peaked at the end of 2014 and then started a downward course – a long time before the word Covid had been invented. Continued below the graph...

Aricia Update - Transport & Storage - Productivity - Output - Hours worked - GVA - Logistics Statistics

Pretty much as an aside, although it’s why I looked to start with, in 2020 Q2 Transport & Storage’s contribution to GVA was 67% of what it was in 2019 Q2, whereas the economy as a whole was less affected at 78%. One section of the economy improved in that comparison, Manufacturing of Chemicals & Pharmaceutical Products and the worst affected was Hotels & Catering, which only managed 12% of its 2019 Q2 level. In terms of hours worked in 2020 Q2, Transport & Storage worked 77% of the hours of 2019 Q2.

Back to my rabbit hole! Now Transport & Storage has a mix of various modes and includes public transport, transport by pipeline, bulk storage as well as road haulage, post/courier and warehousing. The air and sea elements can be put to one side as they are relatively small. Land transport has been fairly predictable in its productivity rise, but both Post/Courier and Warehousing have been more erratic, and of those warehousing is the larger by about 2.5 times.

Despite all the extra value-added work that’s come along with ecommerce, competition between industry participants is eroding both individual companies' profitability and our sector's contribution to the nation's productivity. Putting Covid to one side (and despite all that ecom), the Transport & Storage sector only represented 4.2% of the whole economy’s GVA in 2019 Q2, compared with 4.9% back in 2007 Q2. Whereas, hours worked in Transport & Storage have *risen* from 5.2% of all hours worked in 2007 Q2 to 5.5% in 2019 Q2.

If we go back to the graph, we have that decline from the end of 2014 in Transport & Storage that is not reflected in the economy as a whole. I recalled the UK Logistics Confidence Index back in 2015 commissioned by Barclays and Moore Stephens: “For the first time …maintaining their existing customer base is now the top focus for logistics companies …for over half (57%) of operators, their main source of new business over the past six months has come from ‘switchers’ from other logistics service providers. Barely one in ten said that their main source of new business came from customers renewing existing contracts.”.

We must stop fighting ourselves and stop that race to the bottom!

Is Johnson right to panic?

4 August 2020

I know that the graph below is a little difficult to understand quickly, so I’m going to take you on a journey and tell you why I was looking at this to start with.

Quite rightly, there’s been lots in the press about the sheer number of deaths attributed to COVID-19. I’ve also seen a lot about excess deaths and deaths as a proportion of the population as a whole, but what I’ve seen little about is deaths as a proportion of cases in the UK - if I catch COVID-19 what is the likelihood of dying?

There is a spread of figures, but only yesterday (=3 August 2020) there was a piece on the BBC’s website with two figures attributed to John Hopkins University “Globally, more than 18 million Covid-19 infections have been recorded. The death toll stands at 689,000…”. I’m going to use those for the purposes of this piece – the death rate globally is 3.8%. Whereas if I look at the UK figures, on the government dashboard*, of 305,623 as at 3 August and 46,210 deaths, that gives a figure of just over 15%.

*Government dashboard: Try or - not sure of link as they are changing the reporting again on the day I write this piece.

Now as someone who works with data, I’m the first to ask the question as to what factors might affect that, and there are some obvious ones:

  • We may genuinely have a much higher death rate – we know the UK didn’t deal with the care homes issue at all well
  • Different reporting of deaths – deaths could be wrongly attributed COVID-19 – people have died WITH and not because of COVID-19
  • There are many more cases than we know about officially – again we know that we weren’t carrying out testing as early or to the same extent as other countries, so that is a strong contender
  • Different countries are at different stages of the pandemic – we are ahead of some other countries in having had a first spike
  • There could be manipulation of the figures, but it’s extremely unlikely that you’d fix things to make the UK look 4x as bad as the rest of the world
  • Or it could be a combination of a number of the above

Thinking about these various reasons, I wondered what the variation in the UK death rate had been during different phases of that first spike and, being me, popped the data on a graph – Cases versus Deaths. I used a 7-day Moving Average for each, to eliminate the weekend effect of low reporting followed by the inevitable catch-up early the following week. That’s the only manipulation of the data that I have carried out - you could argue for an offset of a few days (c3) for the death data, but I haven’t done that.

I did a straightforward scatter graph of all the data from February to now and put in the linear trend line - the R-squared is 0.9362. For those of you that aren’t familiar with what R-squared means, 0 would mean no correlation between cases and deaths – totally random, but 1 means absolute correlation – all the spots are on a line. R-squared = 0.9362 is strong correlation - the correlation was sufficiently strong that with just a scatter graph I couldn’t get my head round what was happening when.

So I created this graph, which does require some explaining! Each spot on this graph is a point in time and joined in sequential order by date. So, starting with the green spot right down in the bottom left hand corner, you can follow the UK course from 6 February (the moving averages for 31 Jan- 6 Feb), quickly rising (green) over c10 weeks to its peak (top right) in mid-April and then follow the journey back down (through yellow and orange) to the start of June, which is when testing started to get real headroom in its capacity**, to 8 July after which the cases started rising again to where they were on 3 August (red). I’ve put in some key dates and added some arrows to try to help you follow the graph. I’ve also included the trend line as the grey dotted line. Continued below graph...

Aricia Update - COVID-19 - Cases - Deaths - Statistics

**The start of June is the point where we might have expected the number of cases to increase with additional testing – not an increase per se, but an increase in the number of cases we were aware of, reducing that death rate, but that doesn’t appear to happen.

The moving average of cases is now just slightly ahead of where they were on 23 March as lockdown was declared. Anyone who thinks that we are now more on top of things than we were then needs to be aware that the area of England with the most cases (out of 6792 areas) is ‘xxxxxxxxx’ (=we don’t know where), with more than 2.5 times the number of cases for the largest known area.

So my original question remains unanswered – why is the UK death rate so high? It’s not entirely down to the care home issue. Based on the latest ONS figures, cumulatively just under 30% deaths up to 24 July were in care homes. Even if you said that all of those deaths hadn’t happened, that still leaves the UK having 2.7 times the global average death rate.

And it looks as if things may take off again as COVID-19 does a U-turn, possibly as a result of the relaxation measures. What seems like an extreme reaction, such as waiting until people have gone on holiday to Spain before announcing reintroduction of quarantine, may not be extreme enough.

When I have no paid project work to do, I still find myself looking at data and investigating the patterns. A great compliment someone in the industry paid me was to describe me as intellectually curious! If I can put that to good use for you, just message me!

Amazon property - where next?

30 July 2020

Amazon's logistics property portfolio in the UK continues to rise and rise.

MWPVL have recently updated its amazing resource - a listing of all the Amazon properties in the world! Most of the Amazon data has been sourced from MWPVL's website, but then I've also done some Googling of my own, updating some figures, adding in new ones... I've made my best efforts with this graph, but I know it will contain errors where it's not quite clear how big a property is you count square footage for different floors for an exercise like this? I've tried not to, but Amazon does love to rentalise its mezzanines!

The impact of Covid has been to increase online sales in the UK to 31.2% of retail sales in June, and if you want an up to date picture of inside one of its mega-sheds, you could do far worse than read this great piece about Tilbury, written just a couple of days ago, on Essex Live.

So far, so boring - the graph looks pretty much like last year, with just another year added. So, where next? Both a geographic and business question - if you currently sell on Amazon using FBA, there is extensive advice on the implications of Brexit and stockholding locations. But what will be the combination of Covid and Brexit be on Amazon's UK property requirements going forward? Will it continue its seemingly inexorable rise, increase the gradient due to Covid or flatten off as stock moves to the mainland?

Aricia Update - Amazon property - Fulfilment centres - Delivery Stations - Fresh - Prime - ecommerce Statistics

From one extreme to the other!

15 July 2020

I usually do an update on the SPPI* when the ONS (Office for National Statistics) publishes its quarterly figures, but I didn’t when the Q1 figures came out in April - I didn’t spot anything that looked that interesting and didn’t know where things were going as we’d only recently entered lockdown ...but when I looked this time, Wow!

Back in February, Which had written about the impact of Royal Mail price rises to consumers, which coincidentally were implemented the day we all went into lockdown. The SPPI is about the rates charged by businesses to other businesses and government departments, and the SPPI element includes Parcelforce, but plainly the steep rise on this element of expenditure has been the same for businesses as well as individual consumers.

What you’re seeing on the graph is the index for All Services (in dark blue on the graph), and the indices for Freight Transport by Road (pink), National Post/Parcelforce (green) and Courier Services (orange). See below the graph for further commentary on road freight...

Aricia Update - SPPI - Road Freight - post & Parcels - Insolvencies - Logistics Statistics

Post and parcels to one side, while road freight rates did do a little dip in Q3 2016, this is the first time for the past four years that it has gone down, albeit again just a little. But it made me think to look at the monthly insolvency figures that came out yesterday and, I’m guessing, as a result of government support for businesses during the Covid-19 crisis, the insolvency rate in England & Wales in June 2020 was only 50% that of a year ago.

Transport & Storage as a whole (so including all modes and passenger transport), while slightly up in March, was down against a year ago in April and May, and in June at 48% - not dissimilar to the general rate. One issue in looking at these figures is that one company counts as one, so if a mega-company goes under, it may not have a large impact on these figures.

Freight transport by road and removal services, which will include a lot of SMEs, had an uplifted figure in May at 120%, but in June was only 36% of the number of insolvencies of the previous year. For the whole of the Mar-June period, there were less insolvencies in this element of the industry this year in England & Wales than for the same period in 2019.

So if there is a hint of the race to the bottom in rates, it’s not coming out in insolvencies yet.

*The Service Producers Price Index is a bit like the CPI, it shows the increase in prices and rates paid, but for services provided by businesses to other businesses and government - the top level Gross / GSO index as shown on the graph includes the provision of a number of different services to other service businesses as well as to non-service businesses and government departments. So it provides a measure of inflation for the UK service sector with individual price indices, such as Freight Transport by Road, aggregated to create that all-services industry index. It is published by the ONS (Office for National Statistics) and is a quarterly index - it is not seasonally adjusted.

Need a job? Think Health or Retail?

16 June 2020

With headlines today like this one on the BBC: "More than 600,000 UK workers lose their jobs amid lockdown", people will be needing to apply for jobs, but at the same time vacancies are down to 2012 levels.

I did an update on this only a month ago, but thought I'd visit the subject again, as the drops that we are seeing now are more extreme. Earlier today the ONS (Office for National Statistics) published fresh figures, with the latest being for Mar-May 2020. All sectors have seen a reduction in vacancies over the past year - anything from about 15% to nearly three quarters.

Human health & social work still has a high level of vacancies, although not as many as a year ago. And despite the state of the high street and the impact of Covid, Retail still has a high number of vacancies at not far off 10% of those available in total - indeed these two sectors combined represent a third of all the vacancies currently available.

There are now about 476K vacancies UK wide, which compares with 841K a year ago - this latter figure not far off the highest number of vacancies in the figures available since 2001. Meanwhile, there are just 18K vacancies in Transport & Storage, down from 41K a year ago, and a max of 42K, and the number of vacancies per 100 employees is only three quarters of the UK average.

Aricia Update - Vacancies - Transport & Storage - Retail - Health - Logistics & Retail Statistics

NB Vacancies are reported by rolling quarter and are seasonally adjusted. The graph above shows how the number of vacancies has changed since the same period in 2007. It’s important to note that you can’t equate the Transport & Storage sector directly to Logistics. The former will include passenger transport, but won’t include logistics staff employed by, for example, retail companies.

Whopping increase!

22 May 2020

While in many ways no surprise, the ONS (Office for National Statistics) figures published earlier today do demonstrate just what an increase some elements of business have had to accommodate, with weekly internet sales up by a third on April last year and representing 30% of total retail sales for the first time. April is the first complete post-lockdown month and, although Easter can be a confuser in analysing Spring, it fell in April in both cases.

Non-store retailing, or Pure Play, still by far the largest proportion, up 19% against 2019 (on my graph below, purple is April 2019 sales in £m with red representing the additional sales for April 2020). Food and household goods combined up a whopping 91% - household goods stores had the larger increase, more than doubling, but 'predominantly food stores' is the larger element, up 84%. I've also combined non-specialised and other stores, both showing healthy increases.

Clothing is the only element on my graph that needs more explaining - the April 2019 sales go right to the top of that bar, including the purple border, with the red hashed area representing the decline, the drop back, to April 2020 sales. Poor old clothing, the only category showing a decline - of more than 20%.

So no real surprise that the news is about Marks & Spencer taking £1bn worth of actions to manage cash.

Aricia Update - Internet Sales - Food - Clothing - ONS - Retail Statistics

Vacancies in Logistics*

19 May 2020

Earlier today the ONS (Office for National Statistics) published various labour market measures including Vacancies by Industry, with the latest figures being for Feb-Apr 2020 – vacancies are reported by rolling quarter and are seasonally adjusted. The graph below shows how the number of vacancies has changed since the same period in 2007. You can see the various lines rise at the start of 2008 before, in most cases, plunging in 2009.

At the more recent end of the graph, the impact of Coronavirus can be seen. Three of the lines - All vacancies (purple line), Transport & Storage (blue) and Accommodation & Food Service (yellow - included as this sector showed the sharpest decline) - all end up with almost exactly the same level of vacancies as in 2007. Where those lines will go next is anybody’s guess because the full impact of lockdown isn't yet reflected in the latest rolling period.

Retail vacancies (orange line at the bottom of the graph) never really rose above pre-recession levels. While, in contrast, Health & Social Work (green) ends up with twice the number of vacancies as 2007, although it can be clearly seen that this isn’t driven by Coronavirus, but over a period of years, presumably by the needs of an increasingly aged population and, possibly, the impact of Brexit on non-UK staff.

*It’s important to note that you can’t equate the Transport & Storage sector directly to Logistics. The former will include passenger transport, but won’t include logistics staff employed by, for example, retail companies. But this will be a good indicator.

Aricia Update - Logistics & Retail Vacancies - Logistics & Retail Statistics

Deciding to reduce lockdown

27 April 2020

Everyone who knows me knows that I like analysis and mapping, so with no paid projects currently, I’ve been monitoring the daily Coronavirus figures. While I don’t want to deride the efforts being put in by the person who is collating this data, I feel for whoever has to make the decision to start stepping back from lockdown. Because the data is crap (a technical term). It’s been widely reported that the figure for deaths only includes about half the real numbers. Cases include only those which are lab-confirmed. And it’s not helped by PHE (Public Health England) keeps changing the ways in which the figures are reported - the last change was on 21 April, so any data declared before a week ago is not directly comparable.

And I’ve seen no information on the geography of testing. Different areas of the country are progressing in different ways. From a selfish point of view, when lockdown is eventually relaxed, will I be at more risk visiting some of the London boroughs with high number of cases, but low growth, or somewhere apparently more benign with a low number of cases, but a higher rate of growth?

I’ve been monitoring cases rather than deaths, mainly because it’s also been possible to map the cases at UTLA (Upper Tier Local Authority) level, whereas the deaths are presented by PHE in a different manner. But, because of the timelag in data becoming stable and all confirmed cases being reported, every day it looks like we’ve nearly got to a position where England has no new cases, and then the next day the same, and then the next day… Meanwhile the data is backfilling as more results come in, meaning that wasn’t 'nearly no new cases' at all (see my description of what the graph is showing in the next couple of paragraphs). The timelag means that it’s like trying to make a decision with your hands tied behind your back. I didn’t see 100K cases in England reported, but that’s probably because the backfilling of data meant that by the time we knew it happened, it had happened three days ago and I’d be the first to recognise that doesn’t make the greatest headline.

Here’s how the graph is compiled:
• Because of the way in which the results are declared, this is for England, not the whole UK
• It is showing the daily rate of change of lab-confirmed cases (shown as %), with the Y-Axis showing that rate of change as a percentage
• Along the X-Axis is the date that the data belongs to – what I’ve referred to as the datestamp
• And the different coloured traces are for the daily announcements – so the lighter blue line is the data as declared on 21 April, orange as declared on 22 April and so on

So, what is the graph actually showing? You can see that on 21 April, it looked as if the daily rate of change of cases on 20 April (the blue square) was nearly zero (0.1% to be more precise). But, follow the orange arrow, by 22 April, it looked as if the daily rate of change of cases on 20 April was 1.2% - we’re now looking at the orange square. By 25 April (darker blue trace) it now looked as if the daily rate of change on April 20 was 3.1% (darker blue square). I’ve not put a square on the green trace, the most recent, as we now seem to have most data for 20 April. And you can see that the next day, one might feel similarly encouraged by a low rate of change, only for it to move up the graph in the same way.

Anyway, waiting for it to get to zero and stay there is not going to happen anytime soon. As testing of essential workers and others increases, so will new cases, which is a good thing as they will be cases no-one was (officially) aware of before. As the testing regime changes, at some point including random testing, that will (hopefully) reduce the proportion of tests turning into cases. And as the tests themselves change, both in type and reliability, that will also change the results.

So, I genuinely feel for whoever has to make the decision to start stepping back from lockdown.

Aricia Update - Coronavirus - lockdown - PHE - 270420

Coronavirus Timeline

24 April 2020

This update is a link through to a document I've put together. It's very much about what the public knew about Coronavirus, when they knew it, how that affected what they did, and how that went on to affect retail and logistics. My objective in putting this together, is to help understand client data going forward – what happened when. I hope you find it useful: Coronavirus Timeline

Watford Observer

Gender Pay Gap 2020

6 April 2020

It feels funny giving an opinion on things like the gender pay gap right now! And while I'd be the last to suggest that this is a high priority with everything else that's going on, I do think it would have been preferable for the government to have extended the submission deadline rather than say that there is no expectation on employers to report their data.

So, at today's date, the first working day after the formal deadline for a process that began a couple of years ago, less than half of all companies and organisations required to make a submission have done. So there's little point in looking at the fine detail and making year on year comparisons. Only 36% of logistics companies which previously made a submission have done so, but you'll probably be surprised to hear me say this - just a personal view, I don't think it matters a huge amount. Do read on!

The calculations required to be reported by the government, while hugely useful in that they create a focus and promote discussion, don’t work particular well for logistics. Our pay gap tends not to look too bad – there are comparatively few women in the sector, but the sheer number of ‘active’ workers that we have means that the median man and the median woman are quite likely to be in similar operational roles with specified hourly rates that are legally not allowed to differ – for example, warehouseman versus warehousewoman.

With all the reading and analysis I’ve done in this area, I’ve become more and more convinced that logistics needs to recognise and rectify its 'leadership diversity deficit' – not because it’s nice, not because it’s fair, but because diversity is provably good for business. I’ve also become more and more convinced that the leadership diversity deficit, more than the gender pay gap per se, is the real issue for our sector.

Looking at the quartile calculations, whereas over 39% of companies have more than 50% females in the top quartile, that only includes one 'logistics' company, a wholesaler - I'm not saying that more than 50% of directors being female is good, I'm just saying that logistics is out of step. One reason is that the quartile calculations required by the government are not nuanced enough for logistics. Our pyramid structures means that there will probably be hourly paid staff, for instance drivers, in the top quartile - not because they are so well paid, but again because of the size of the largely male ‘doing’ bit of the employee base. Have a look at the graphic below, and you'll see what I mean. So, examining what is happening at director level and in senior management would be more useful...

As usual, at the end of last year, the Motor Transport Top 100 came out, revealing an average pre-tax profit of just 2.2% across the top 100 road freight companies. The Knowledge Centre at CILT’s HO in Corby has access to the FAME database and 8% is more of a norm for other sectors. Meanwhile, the FAME database also includes data on the gender of directors - for Transport the proportion of female directors was 20%, while for non-logistics sectors the average was 31%. I'd be the first to say that these figures are not all directly comparable, but we are a low margin sector and have low numbers of female executives - is it possible that the two go together?

Aricia Update - Gender Pay Gap - Leadership Diversity Deficit

No driver shortage at the moment

4 April 2020

Well, this is a different sort of an update for the different sort of time we live in. No stats or graph, more of a blog, but very relevant to the logistics industry.

Coronavirus gets going and everyone is panic buying – the grown-ups make a fuss about people shopping, telling people it’s unnecessary. But the concept of the need to feed the nation is born, with drivers hours regs relaxed to accommodate. My husband who has an up to date CE licence and medical, but let his DCPC expire in September, feels that he ought to be available to help this push to get food to where it needs to be. So he books a DCPC course starting Monday 23 March.

We get up two mornings running at 4.30am for him to be early for a 7.30 start on the other side of the Cotswolds. First day (long story – we’re not stupid and we did our best on Saturday on the web and by phone), he doesn’t find it until c8am and is told that he and another latecomer can’t join the course. So he comes home. That evening Johnson makes an announcement, but no-one from the training rings to say it’s not going ahead, so we have another 4.30am get up – this time there are three of them hanging around in the street – the trainer never appears, doesn’t ring...

At this point we’re £450 down and the company that he booked the course through are refusing to refund his money. After a bit of argy bargy, they do get him booked on the first-ever internet-based driver CPC course, and so we spent the whole of last week with our home office given up to all-day all-week Zoom-based training.

We’d agreed that because of my husband’s age (he’s not 'old', but if he catches Coronavirus, they won’t consider reviving him a high priority on the basis of his birth certificate!), he was only going to drive if it involved foods, pharmaceuticals etc – things that were really necessary.

So what’s the point of telling you this – well, there’s certainly no driver shortage at the moment. There’s certainly no excuse for further relaxation of the drivers hours regs. He rang one of the local agencies during the week – there’s no driving work of any kind. End of.

If you can't monitor it, you can't manage it

28 March 2020

That's what we always say in logistics and it applies to Coronavirus, this 'Padrón pepper' of a disease that hardly affects some while giving others the most severe symptoms.

Lots of provisos because a) the map below is just a snapshot of data at 27 March 2020 with this piece written on 28 March 2020 and b) because the data does have shortcomings: even after today's news about more testing of key workers, there has been no recent targeted testing of potential cases (unless you're a potential king or visit No 10) and no random testing of the population at large (or rather under lockdown).

I've been looking at the data published on the government website for the past few days . It is based on UTLAs (Upper Tier Local Authorities), which have varying population sizes (coming on x40 difference in size), which make the size of the spots difficult to interpret. Also, it's just one day's data, so you can't see how it's changing. So I've been mapping it myself using two measures: number of cases per 100K population (the size of the spots on my map) and the percentage change in the past 48 hours (the colour of the spots - grey for below average through to deep blue for above average) - I've gone for 48 hours to be as up to date as possible, but to smooth any little distracting wobbles. The current average rate of change for England is 53% increase (corrected) in cases in 48 hours.

More provisos. This is just England as this is the PHE (Public Health England) data on the government website. The date of the data is deduced, as the data downloads don't include a date. The data is based on cases reported to PHE. The total for England may not match this regional data as some cases are awaiting geographical information. Cases include people who are recovered, but this is less than 1% at the time of writing. By the way, I've seen discussion about how few people seem to recover, but Hubei, the best indicator because of how long ago it got going and the measures then taken to stop its spread, had a death rate of c5% but with most other cases now declared as recovered.

Now I've fulfilled obligations to existing clients, I'd like to log that I'm available and well-used to carrying out remote projects including non-logistics assignments that share the overlap of location and data analysis - many of the techniques I use for strategic work can be just as useful for tactical replanning.

Keep safe, Kirsten

Aricia Update - Map - Coronavirus Statistics

Coronavirus Dashboard

23 March 2020

I've replaced the dashboard link I included before with this one Public Health England Coronavirus Dashboard - DON'T be put off by the date on the front page as it is kept up to date and DO zoom into the map to make it meaningful.

Aricia - Update

HS2, Northern Powerhouse, Maptitude demographic data & heatmaps

24 January 2020

Among other analytic and visualisation tools, I use Maptitude - mapping/GIS software. I post Maptitude tips on our website and tweet them - always aiming to have three across a variety of features. Today I thought I'd share the tweet from this week with Linkedin. It wasn't a new tip but the result of using a current tip (at the time of writing!): how to turn area census-type data into points, so you can do a heatmap.

The heatmap shows 'overheated' London. But also, given discussion about HS2, population density in Midlands and NorthernPowerhouse - demonstrating the importance of the E-W corridor as well as N-S.

Aricia Update - HS2 - Northern Powerhouse - Maptitude - Mapping - GIS - demographics - heatmap

Haulage operators at risk?

15 January 2020

Earlier today the ONS (Office for National Statistics) released the latest SPPI figures* for Q4 and 2019 as a whole. The graph below shows the SPPI index for Freight Transport by Road (bright pink) and an index for Road Freight Costs (Orange) derived from Motor Transport Cost Tables. The indices are shown from 2015 onwards, with both brought back to a base of 100 in 2015 for easy comparison.

As anyone who has reviewed the recent Motor Transport Top 100 figures will be aware, margins in the industry remain precariously low, having reduced over the past few years. As can be seen from the graph, there is now a wide gap between rates and costs compared with 2015, and I think that many people would accept that the haulage business wasn’t exactly lucrative then!

Just the other day, I heard someone say that everyone wants everything at a backload rate these days - although rates have started to rise over the past few years, they are not rising fast enough, potentially putting more than just Eddie Stobart at risk.

Aricia Update - SPPI - Road Freight - ONS - Cost tables - Motor Transport - Logistics Statistics

*The Service Producers Price Index is a bit like the CPI - it shows the increase in prices and rates paid, but for services provided by businesses to other businesses and government. It provides a measure of inflation for the UK service sector with individual price indices, such as Freight Transport by Road, aggregated to create an all-services industry index.

Is the crisis back to normal?

18 November 2019

So, the news is that the staff shortage in Transport & Storage apparently returns to being no worse than normal, according to the latest figures released by the ONS (Office for National Statistics) last week.

The graph below shows the number of vacancies, in thousands, for the whole economy (blue line, left hand axis) versus the Transport & Storage sector (red line, right hand axis) for the period August to October each year. It can be seen that the general pattern has been very similar since 2009, apart from a sudden increase last year. But it then appears to have returned to normal.

Now you can’t equate the Transport & Storage sector directly to Logistics. The former will include passenger transport, but won’t include logistics staff employed by, for example, retail companies. The T&S figure for employees is 1.6m July-Sept and also for Oct to Dec last year (these figures come from an ONS data set covering a different timeframe for reporting to vacancies). In a report published about a year ago, the FTA (Freight Transport Association) estimated that there are 1.8m people employed in logistics companies and 2.7m logistics employees in total.

But you could argue that Transport & Storage is better off generally than the rest of the economy. The vacancy ratio per 100 employee jobs has actually been the same or less in Transport & Storage than for the rest of the economy for all of this period, and is now 2.2 for Transport & Storage compared with 2.8 for the UK as a whole. The question is, does it feel like that on the ground?

Aricia Update - Vacancies - Transport - Storage - FTA - ONS - Logistics Statistics

Transport as a leading indicator?*

3 October 2019

I've always been interested in relationships ...and, no, before you ask, not the Boris & Jennifer type! Relationships between different data sets. I'm told that this is one of the most interesting updates I've done, but also at the same time, one of the most complicated. Perhaps the two go together?

The first thing you'll be wondering is "Why is there a loop in that graph?". What you're seeing is a spot for each quarter from Q4 1994 through to Q2 2019, with GDP on the X Axis and Light Commercial Vehicle mileage on the Y Axis. The 'loop' is the 2008/9 recession, with the spots rising until Q1 2008, GDP then reducing while van mileage remains pretty constant until Q3 2009 when mileage reduces slightly while GDP begins to increase again, forming that anti-clockwise loop.

This GDP data has been released by the ONS in the last couple of days, and the mileage data is from the latest DfT** release in the latter half of September. I'm not usually interested in old info, but the reason I've gone back to 1994 (the oldest mileage data in that release) is that it demonstrates how straightforward the relationship normally is.

What really attracted my attention is the 'hook' that is forming at the top of the graph (as near to now as this data allows us to get). It's clockwise (so moving in the opposite direction) and obviously has a different driver to the 2008/9 recession.

I'm very interested in what other industry contacts think is causing this, but to me it looks as if there is currently the start of an economic downturn almost being driven by a reduction in van mileage, rather than vice versa. Polish drivers going back to mainland Europe? Stockpiling followed by the start of a bullwhip effect?*** Whatever the reason and, although I know some readers will find the analysis obscure, I believe what it shows to be of national importance.

Aricia Update - GDP - LCV miles - DfT - ONS - recession

The GDP data is seasonally adjusted and the mileage data is rolling annual mileage, so comparable. I've gone for LCV mileage rather than HGV, as a) it's about 3x higher and, crucially, b) it follows GDP more closely (LCV mileage against GDP has an R-Squared in Excel of 0.9708, even with the loop etc - ie near perfect correlation. HGV mileage shows virtually no correlation with GDP, with R-Sq = 0.0032). Although it's worth noting that HGV mileage has also fallen recently after sustained increase since 2013.

NB If you look at £GDP/LCV mile over the whole period there is a general trend down from over £11.50 to less than £10.50.

Three notes added 7 October:

* I'm extremely grateful to Richard Simpson of Transport Operator for his input on this, making me realise I should probably have given the piece a different title!

Aricia Update - LCV - Mileage - DfT

** And here is a link to the actual DfT data (I used table TRA2501), as I realise you couldn't access it from the pdf link.

*** And finally (I think) thank you to Christopher Moir for this contribution - so I was totally wrong with my potential reasons!

Aricia Update - LCV - Mileage - DfT

Commute time versus gender

5 September 2019

The link between the time people are willing to travel to work and whether that affects what they earn, and particularly the impact on women’s earning power, is something that has intrigued me ever since I realised that, whenever I was at Beaconsfield services at c7am, I was the only female, apart from one or two serving staff behind the counters.

Yesterday the ONS (Office for National Statistics) published statistics about the link between age, gender, commute time and pay. The graph below shows the link – how both men’s and women’s willingness to commute and their hourly pay continues to grow with age …and then both diminish. But with the age at which women’s commute time and pay start to contract is much earlier than for men. The ONS is careful not to make assumptions, but the link to having children is clear.

One of the things that I was really struck by in preparing the content for my presentation to CILT’s International Centenary Convention this year was the link between diverse leadership teams, decision-making quality and companies’ financial well-being. And this data shows the importance of companies considering how they retain senior women who have families. This is particularly relevant to the logistics industry which has relatively few senior women and low margins.

Aricia Update - Gender - Commuting - Pay - Leadership - ONS

Amazon & Internet Sales - growing apace

15 August 2019

Earlier today the ONS (Office for National Statistics) published the latest retail sales figures, including internet sales for the UK. I was making a forecast of where internet sales for the whole of the UK might end up for 2019 (no Brexit impact factored in!), and thought I'd put it on a graph including Amazon's logistics property portfolio for the UK as MWPVL have recently updated its amazing resource - a listing of all the Amazon properties in the world!

As before, I've made my best efforts with this graph, but I know it will contain errors where it's not quite clear how big a property is (do you count square footage for different floors for an exercise like this? I've tried not to). And it will already be out of date - partly because the Amazon world moves so fast and partly because there are some locations for which I've just not been able to find the square footage. Most of the Amazon data has been sourced from MWPVL's website, but then I've also done some Googling of my own, updating some figures, adding in new ones... If the graph looks like it's showing a slowdown, don't be fooled - 2020 hasn't happened yet and internet shopping just carries on and up!

Aricia Update - Amazon - MWPVL - Internet Sales - ONS - logistics statistics - retail statistics

NB I need to say that it's my choice as to the scale on the right hand side of the graph, and I have deliberately scaled it to see how closely sales increases for the whole UK have been mirrored by the square footage growth of Amazon's Fulfilment Centres. The ONS only started collecting internet sales from November 2006, so 2007 is the first full year for which we have official figures.

Is the genie out of the bottle?

19 July 2019

The news from the ONS (Office for National Statistics) earlier this week was that the overall Transportation and storage index provided the largest upward contribution to the annual rate for the SPPI* for Q2 2019. The graph below shows the SPPI for All Services at Gross Sector level (Dark Blue - general inflation for business services) and the indices for Freight Transport by Road (bright pink), Storage and Warehousing (green), Cargo Handling (lilac) and Freight Forwarding (grey).

I usually look at a five year period, but the timing of this release of statistics made it seem appropriate to look at the three years immediately before and after the Brexit vote, and so I’ve included six years on this occasion, with the dark grey vertical line representing the timing of the Brexit vote exactly halfway through that period.

Not all the elements that make up the overall transport and storage index follow the patterns shown on the graph – some have been quite flat over the six years, others have gone up and up, and there are also passenger transport elements as well as logistics. What I’ve chosen here are some key logistics indexes that had relatively flat inflation prior to the Brexit vote, followed by increased inflation afterwards. NB Freight forwarding is often said to be countercyclical.

These indices will be affected by all sorts of things including stockpiling and other contingency measures, and increased cost of attracting staff, with the effect of exchange rates on the worth of sterling and people just not feeling like the UK is so appealing as somewhere to work and live, being part of the mix. But is the inflation genie now out of the bottle? Food for thought!

Aricia Update - ONS - SPPI - transport - storage - road freight - brexit - logistics statistics

*The Service Producers Price Index is a bit like the CPI - it shows the increase in prices and rates paid, but for services provided by businesses to other businesses and government. It provides a measure of inflation for the UK service sector with individual price indices, such as Freight Transport by Road, aggregated to create an all-services industry index. The ONS says that the services sector is estimated to account for around 80% of the UK economy based on its weight in gross domestic product (GDP), and that the SPPI is estimated to represent 59% of the total services sector.

More on the Gender Gap Index

25 June 2019

There was interest in a number of areas that I covered in my presentation to CILT’s International Centenary Convention on the gender pay & leadership gaps and the impact of gender & diversity on business financials, but an area where I was asked a specific question was around the World Economic Forum’s Gender Gap Index.

I used a map (see previous update below) in the presentation that I’d created using Maptitude the GIS software I more usually use for UK logistics analysis, which showed the top level index country by country around the world for 2018 – the top level index is a measure of general equality made up from four constituent parts: economic participation, educational attainment, health & survival, and political empowerment. It was about how things looked across the four sub-indices that I was asked about, so I’ve popped them onto these maps. Continued below maps...

Aricia Update - CILT - WEF - Gender Gap - Index - Maptitude - gender statistics

Each of these four constituent parts is itself composed of multiple statistics, and the results are sometimes widely spread, sometimes very closely packed. So each of the maps has its own legend which shows which countries have the highest index (the darker blue), and therefore the most equality, and which have the least (red). I chose the settings in Maptitude for 'equal size intervals' and for a split of five groupings, but Maptitude itself analyses the data and has selected the particular to-from brackets (in three cases with only four groupings because of the profile of the data). I could customise this further if I was looking for specifics.

In the report that I’ve linked to in the first paragraph, there is a page for each country that is included, with the statistics for that country and showing the ranking for the various statistics – remember in looking at these that they are about the different experiences of men and women resulting in the gender gap, not about how the country is performing per se. There is also a data explorer with two additional views as well as a map: listing by rank and ‘radar’ charts of the four sub-indices.

World Economic Forum - Gender Gap Index

12 June 2019

Every year the World Economic Forum (WEF) publishes its Gender Gap Report – the basis of the report is an index is calculated from country statistics in four different areas: economic participation, education attainment, health & survival, and political empowerment. This map represents the overall index as reported in the 2018 report – the most recent at the time of writing.

So why am I writing an update on this now, given that the report was published last year? Because it’s one of the areas I've researched for the presentation I’ve been invited to give to CILT’s International Centenary Convention. The opportunity to participate as a speaker at this event arose from giving a presentation to the Women in Logistics Forum Committee a year ago, which was all about the Gender Pay Gap based on the government’s first ever requirement for employers to submit this data.

I’m keen that my presentation to an international and diverse audience, doesn’t just concentrate on UK data and also doesn’t just focus on pay, as there are many other issues. So I used the data in the WEF report and Maptitude, a GIS package I use for logistics assignments, to produce a global map for one of the slides – here it is! White indicates that there was no data in the WEF report or that it is a territory of a country already included. The red-ish colour represents countries with least equality between the sexes, through to the deeper blue, which represents the most equality.

Aricia Update - CILT - WEF - Gender Gap - Index - Maptitude - gender statistics

Will we see a Grayling effect?

18 April 2019

Yesterday, the ONS (Office for National Statistics) released the SPPI* figures for Q1 2019. The graph below shows the SPPI for All Services at Gross Sector level (dark blue) and the indices for Freight Transport by Road (bright pink), Sea Freight services (dark green) and Ferries for Commercial Vehicles (light green) for the past 5 years.

The graph doesn't show the highest riser in the Transport & Storage grouping over the past five years - that honour goes yet again to Business Airfares. But it shows both the second highest riser, Sea Freight, and the lowest riser, Commercial Vehicle Ferries - this last scarcely managing to get exceed its position five years ago.

The dip in ferry prices in 2016 was ahead of any of us having an inkling that Brexit would be more than a passing phase, but it will be interesting in July, when the next set of SPPI figures is out, to see whether there has been any Grayling effect!

Aricia Update - SPPI - Sea Freight - Vehicle Ferries - Freight Transport by Road - ONS - April 2019 - logistics statistics

*The Service Producers Price Index is a bit like the CPI - it shows the increase in prices and rates paid, but for services provided by businesses to other businesses and government. It provides a measure of inflation for the UK service sector with individual price indices, such as Freight Transport by Road, aggregated to create an all-services industry index.

Pay Gap in Logistics & Transport

5 April 2019

The deadline for submissions for the latest UK government gender pay gap exercise passed at midnight last night and 10,444 companies and organisations have so far submitted, compared with 10,562 for last year – so most companies have complied, although the overlap between the two years is only 9,359 organisations.

This piece is specifically about logistics and transport – see the mainstream press if you want to understand the issues at a national level. In line with the general picture, and looking at all the data, the pay gap in the transport and storage sector has widened, with 79.8% of companies paying men more on both of the main measures.

Looking at the median of the median pay gaps (yes, I realise that statisticians are probably turning in their graves right now, but that’s the best that can be done with the data available), whereas the pay gap in passenger-only transport has gone down slightly, the pay gap in logistics has risen from 5% to 6.05% in favour of men. The real change in our sector has taken place in companies that are involved in both passenger and freight transport (mainly air transport and transport infrastructure) where the massive gap of more than 23% has reduced to just over 17% - but still a challenge for those companies to address. The graph I’ve used splits the data in a different way and shows the pay gap by mode – in all modes the median man is getting paid more than the median woman. Cont below graph...

Aricia Update - Transport & Storage - Gender Pay Gap - April 2019 - logistics and transport statistics

If you think logistics and passenger transport don’t have a problem, though, think again. If you look at companies which have submitted for both years, so you’re comparing like with like, and again looking at the median of all the data points, whereas other types of company and organisation have over 39% of women in the top quartile, for logistics companies that figure is just over 14% and for passenger transport it has actually reduced to just over 9%, when women make up just over half of the population.

You can find descriptions of how the pay gap is calculated and some of the causes of the gap in a presentation I gave to the Women In Logistics Forum Committee last year and I’ll be presenting on this topic at this year’s CILT International Centenary Convention on the final day.

Transport & Storage - an ever-changing business

25 March 2019

Last week the ONS (Office for National Statistics) published its latest figures for job vacancies across the UK, and I was freshly struck at what a changeable business we are.

What these two graphs show is employment of men (blue) and women (pink) – the top graph is all sectors and the lower one Transport & Storage, with numbers in employment measured against the left hand axis. On the right hand axis is the volume of vacancies, which is shown by the grey line.

The overall picture is that our industry is very erratic when compared with the country as a whole, and with our peaks of employment and vacancies rarely coinciding with what we all tend to regard as “peak”. The final vacancy plot on the Transport & Storage graph is my own estimate of what the vacancy figure will be for Jan-Mar based on the two previous rolling quarters …continued below graph.

Aricia Update - Transport & Storage - Employment & Vacancies - ONS - March 2019 - logistics and transport statistics

I’ve written before about the drop in employment in our industry when the most recent recession hit, compared with just a wobble in the plateau of total employment (the bit I’ve highlighted with an oval). Although we only represented 5.5% of the total number of employed, we represented more than a quarter of the lost jobs that dip illustrates. We were very good as an industry at cutting costs, but not so good at looking to the future.

Now I need to say that the periods are different for the two measures with the total in employment reported by conventional quarters that are not seasonally adjusted, whereas vacancies are reported by rolling quarter and are seasonally adjusted – I have selected the rolling quarter that matches the conventional quarter.

All sets of figures are in thousands and I’ve made the relative scales proportionate, so that although you have to have a different scale because of the different numbers, the volume of vacancies when compared with the numbers in employment is the same for both the total and Transport & Storage.

And of course the other thing that strikes you is the relatively small proportion of women employed in our industry compared with the country as a whole - an area where our industry demonstrates little in the way of change.

The Pressure Cooker

20 February 2019

Bit of a different update - a personal story: I'm going to talk about cooking the books.

What do the Tesco accounting scandal and M&S 1Bn profit have in common with my first proper role in logistics? Pressure to improve the figures.

Towards the end of last month, Carl Rogberg was cleared of master-minding fraud. He was cleared along with the two other Tesco directors, but the fact remains that, in what has been described as a culture of pressure back in 2014, payments from suppliers were being manipulated to make the finances look healthier than they were.

I was interested that, in all the reporting, little mention was made of similar situations in other companies. Because I worked for the company, my own mind immediately jumped to M&S in the latter half of the 1990s.

Towards the end of Rick Greenbury's CEOship, when great pressure was put on all departments, and in turn on suppliers including our logistics contractors, necessary expenditure and investment was delayed and supplier profit margins were cut, as we all understood that every spare £ was going to be needed. And then the headlines: M&S made over a billion profit that year.

Now, you can put the squeeze on operations, but only until the pips squeak. When you try to squeeze year after year (at the risk of too many metaphors), you find that the well has run dry. The Wikipedia entry includes the phrase "profit margins were pushed to untenable levels". This non-strategy catches up with you and, yes, the inevitable happened – M&S profit was down dramatically.

So what do these national stories have in common with my first logistics role? I had been a graduate management trainee with NFC (National Freight Corporation – now part of DP DHL), and as part of that training had learned all about how NFC managed its finances, with every contract running its own P&L.

My first role after training was as deputy manager of a DC. The manager was leaving the company and the existing deputy manager was being promoted, but rather than taking on the same activities as the previous senior manager, our roles were in some respects reversed because of my understanding of the company’s administration. So I was responsible for the finances.

The first time it fell to me to do the monthly provisions /accruals, the area general manager, who was based elsewhere, checked my confidence levels. I said I was pretty confident I knew what I was doing, but I was going to take it all home and work on it quietly over the weekend.

I couldn’t wait for Monday to come round! It had gone really badly. The contract had been gently profitable up to now, but my weekend exercise had ended up showing a loss. So I drove over to see the area manager and we pored over my figures. They were right. The contract was making a loss.

There was a big fuss and hoo-hah, and one of the directors became involved: had someone been fraudulent? Well, not for themselves I was able to reply - no-one had actually walked out the door with any cash. This was down to genuine invoice payments being spread over too long a period. So a bit of a shock, and it left the issue of lack of profitability, but all out in the open and all apparently understood …until the following week.

In NFC we had to submit what were called ‘Quicks’ every week – a quick version of the P&L for that week. No PCs in those days – you rang your quicks through to your area manager, and they were consolidated for the area and rung through to head office. I reported a small loss that was commensurate with what had been shown by my previous exercise. The area manager immediately said that was no good and told me what figure he needed me to report (a profit). I wouldn’t. But at that point I could immediately understand why the finances had got into a mess and why the previous manager had left. He’d given in to being bullied and couldn't see a way out.

Now, returning to my reply to the director, I realised that because we were all bonused on the profit that was made, my answer had the potential to be not entirely correct, because if anyone had been paid bonus on those adjusted accounts, that would have been fraud. Money would have gone out the door.

My takeaway from this story is that you need to be extremely careful not to exert undue pressure on those below you. Some people prefer an easy life, and although you may not ever have intended them to be influenced to the extent of doing wrong, that can be the result.

And you need to be extremely careful about how people, including (particularly?) those at senior levels are incentivised.

Could Brexit break the deadlock?

22 January 2019

Part way through last week, the ONS (Office for National Statistics) released the SPPI* figures for Q4 2018. The graph below shows the SPPI for All Services at Gross Sector level (dark blue), the overall index for Transport & Storage (orange) and the index for Freight Transport by Road (bright pink) for the past 5 years.

You can see that the overall index for Transport & Storage (which currently contributes just under one fifth to the All Services index , spans all modes and will include passenger related activities as well as logistics) has risen faster than inflation for businesses generally and indeed is credited with being the largest contributor to business inflation generally over the past year. Whereas Freight Transport by Road, has risen by only just over 4% over the past five years in total - the lowest of all elements in Transport & Storage.

This low rise has been caused by all sorts of factors, but includes the commoditisation of transport and today's purchasing culture which can make it difficult to maintain long term relations with clients. And it has resulted in very low margins - Richard Burnett, CEO of the RHA, was quoted in Logistics Manager late last year as saying that an average SME operator makes around £60 profit per truck per week - haulage is a very low margin business!

While Brexit feels like a disaster, could it in fact be an opportunity for the industry, breaking the deadlock on rates? If no deal goes ahead, things could get very nasty, but in every crisis there is opportunity ...only if you grasp it, though.

Ian, my husband and business partner, was Group Distribution Manager for the country's largest catering butcher in the period spanning the Foot & Mouth crisis. Business associates would say: this must be a terrible time for your company. Not at all. Not one little bit. Fairfax Meadow were on the front foot, sourcing meat from alternative markets, and with the opportunity to take back control of rates, busting the log jam.

Instead of unpredictable and unpaid "demurrage" of trucks, the logistics industry doesn't need to be a victim - it can benefit by helping the country through this hard time, but it does need to ensure that it fully understands its own cost structures and cashflow, and has the right agreements in place. Brexit could be that opportunity.

Aricia Update - SPPI - Transport & Storage - Freight Transport by Road - ONS - January 2019 - logistics statistics

*The Service Producers Price Index is a bit like the CPI - it shows the increase in prices and rates paid, but for services provided by businesses to other businesses and government. It provides a measure of inflation for the UK service sector with individual price indices, such as Freight Transport by Road, aggregated to create an all-services industry index.

A different type of Update!

5 December 2018

Here's a quick video I made for Linkedin telling you a bit about me and what I do:

FCs & Dark Stores

22 November 2018

I originally posted this pair of maps as a Maptitude Tip (which was about how you can import logos to use instead of dots or other symbols), but a few people have been in touch about it, so I thought I'd post a more general update and capitalise on the interest! See below the maps for more description.

Aricia Update - grocery ecommerce - Fulfilment Centres - Dark Stores - home deliveries - Amazon Fresh - Ocado - Tesco - Sainsbury - Asda - WAitrose - Iceland - November 2018 What this shows is various fulfilment centres and dark stores used by retailers and pureplay representing over three quarters of grocery ecommerce in the UK. Things to bear in mind are:

  • The total areas covered by the different companies are quite varied - ranging from selected juicy bits of London and the South East (Amazon Fresh - see update below dated 27 October 2018) to virtually nationwide (Tesco, Sainsbury, Asda)
  • An important aspect when considering these locations is that store-based retailers do also deliver from stores - often that will be the main fulfilment supply
  • How London-centric the UK's demographics are, with the M25 area broken out in the second map to the bottom right, but there's always that key factor to consider...
  • Availability and price of appropriate property - so, for instance, if you started with the postcode districts delivered to by Amazon Fresh, you might conclude that somewhere like Park Lane could be a great place to be, but it's unlikely to be a possibility in the foreseeable future!
  • Some companies are still growing and looking to expand the areas they can cover, for example in the North

Any comments or questions, please do get in touch!

Why don't people want to be HGV drivers?

10 November 2018

There is a driver crisis, but we need to tackle it rather than exaggerate. We need to make the jobs attractive. There are over 940K people with HGV licences and up to date medicals, including over 100K people aged 25-45 with C+E licences who choose not to use them. There is a crisis, not a shortage. If you want to understand the graph fully, then read my four-pager here: Driver Crisis, and you can visit this page if interested in other articles etc on the Driver Shortage.

Aricia Update - Driver Crisis - 10 November 2018 - driver numbers - driver ages - Logistics Statistics

Tomorrow is EU Equal Pay Day

2 November 2018

Let's pretend I’m part of a small export business in the UK called Badly Balanced Limited, with a total staff of 28 people. The nature of the business has changed recently, and although we used to shift a lot of pallets, the requirement now is for a multitude of smaller consignments. My staff breakdown is as follows:

  • 7 pickers – I have one lady called Anna (£8.83 per hr), who joined the business after it had changed to lighter work, and then Andy, Ben, Chris, Dan, Ewan and Fred (all on £9.91) - although they mainly work as pickers now, the men all have fork truck licences and still get paid a premium for that
  • 7 drivers – again, the business has been successful in attracting some ladies recently: Betty, Carol and Dora (£10.65) are all LGV drivers and drive identical trucks to the old-timers: Geoff, Harry, Ivan and John (£11.50). Because the latter group have been with the business a bit longer, they get a long service payment as part of their package, which was introduced to help with driver retention
  • 3 clerks – Edith, Fran and Gina (£12.08) – they are all brilliant at what they do – the business wouldn’t be where it is without them!
  • 4 managers – Karl, Leon, Matt and Nick (£14.22) – between them they run the operation including customer service, look after finance, sales & marketing and IT
  • 7 directors – it’s a family business. There’s four female directors: Helen (Strategy), Iris (HR), Joan (no-one’s quite sure of what Joan does any more, but she’s the eldest, close to retirement and we just let it roll) and Katy (that’s me, in charge of legal and compliance) – we all get the equivalent of £34.96 per hour. And then there’s the three men of the family Owen, Pete and Quinn - CEO, CFO and COO respectively who work out at £50 per hour each

Because I’m in charge of compliance, I got lumbered with filling in our Gender Pay Gap submission back in April. I don’t know what your impression is from reading the above, but I thought it was going to be embarrassing for our firm – the male pickers all get paid more than Anna; the male drivers get paid more than our ladies; no male clerks; no female managers; and then the top dogs paying themselves top dollar!

I had to calculate everyone’s hourly rate regardless of wages versus salaries and then the various statistics to report. I’d heard people say that the measures the government had chosen weren’t great, but didn’t really believe how poor they were until I’d worked it all out.

It’s great for Badly Balanced – lots of our stats look quite positive:

  • Median pay gap of -5% - negative, so in favour of women! You put all your male staff in a line in order of £/hr and pick the middle one, which is one of the drivers, Ivan, on £11.50. Then do the same with the ladies – Fran, one of our wonderful clerks, on £12.08. Then calculate (£11.50-£12.08) as a percent of £11.50
  • Mean pay gap of -7.3% - in favour of women again! The mean is what people would regard as the normal way of working out the average – put all the men’s hourly rates into a pot and divide by the number of males, then do the same with the women and compare in same way as above: (£18.37-£19.71) as percent of £18.37
  • And, although I know that our overall proportion of men to women isn’t even-stevens (it’s actually less than 40% female), when you look at that crucial top quartile (which is what everyone else is looking at!), we come in at 57% …in favour of women once again! What you do here is put all your staff, men and women, in the same row in order of £/hr and split that row into four equal bits – so our top quartile is seven people, ie the directors and there’s more sisters, so to speak

I can hear your brain whirring from here, wondering whether all of this matters. Well it does! Just because Badly Balanced illustrates that it’s possible for a badly balanced company’s stats to give a misleading picture, the fact remains that women in the EU still earn on average 16.2% less than men. EU Equal Pay Day is the day when the average woman stops getting paid compared to her average male colleague and works the rest of the year for free …with 16% of the working year remaining!

Tomorrow, 3 November, is EU Equal Pay Day. Sounds good? It’s not!

Do you live in the Amazon Fresh shadow?

27 October 2018

I was interested in looking at the area where Amazon Fresh was available in the UK – so I did what I always do in these circumstances: bunged it on a map. Fascinating commercial response to demographics! What’s interesting is the way that an area of lower incomes inside the M25 seems to cast a shadow beyond Slough and apparently stop the area being attractive territory. You can access my two-pager here: Amazon Fresh

Aricia Update - Amazon Fresh - 27 October 2018 - delivery area - Grocery Statistics - ecommerce statistics - Retail Statistics - Logistics Statistics

Reduced import pipeline = less food

8 September 2018

If there is a 4 minute additional delay as trucks clear Dover/Folkestone, the UK will have 5% less food. Not just 5% less food from the EU, but 5% less food in total – and that is probably an underestimate. No-deal Brexit will reduce the pipeline into the UK for food and other goods, not just on Day 1, not just in the first couple of weeks, but until we’ve established other sources. Obviously the impact could be much more significant.

Why am I writing this piece? Not because I’m a doom-monger, but because I’m concerned. I’ve not seen anyone else explore in any detail this aspect of a no-deal Brexit. You can read the full piece here: Reduced Pipeline and see the key graphic below showing how delays mean we need more trucks to do the same job or that there's a smaller pipeline:

Aricia Update Graphic - Brexit Impact - 8 September 2018 - Reduced Pipeline - Less Food - Logistics Statistics

Quick to cut, slow to recruit?

5 September 2018

At first glance the data released by the ONS (Office for National Statistics) during the past month on the number of people employed in transport and storage doesn't seem to tell any fresh stories. What it has shown since the financial crisis is that there was a much bigger comparative drop in the number of people employed in our sector than for the economy overall, and not just on a one-off basis.

The purple line (all in employment) on the graph below only really does a bit of a plateau following the collapse of Lehman Brothers et al. Whereas the red line (transport & storage) shows a drop of more than 12%, despite the increasing work content of burgeoning ecommerce. It's worth noting at this point that transport and storage does include passenger transport as well as logistics-related employment. It appears that our efficient and flexible transport & logistics industry was better and/or more able (compelled by cost control or perhaps because of low commitment to agency staff) at reducing personnel in a way that was not typical of the economy as a whole.

What also happened following the financial crash was that vacancies in transport and storage (not shown on graph, but in data released by the ONS at the same time) ran at a lower rate than for the economy in general. As a low margin industry we tend to use overtime as a first resort and hold off on recruitment until it becomes imperative. And the seasonal nature of our industry also means that we're loath to take on people for December who won't be needed come February. But, although we're back to a similar rate of vacancies per 100 employee jobs as the rest of the economy in this latest set of data, at peak last year we did move ahead and continue to have more than 40K vacancies (that's including warehouse staff and passenger transport), albeit still with a lower rate of vacancies than for a number of other sectors.

Aricia Update Graph - Transport & Storage Employment - 5 September 2018 - Vacancies - Logistics Statistics

Amazon - lots of logistics locations!

21 August 2018

With the news earlier this month that Amazon UK Services, which operates the fulfilment centres in the UK, increased its turnover to coming on £2 billion last year, it seemed to be the right time to have another look at Amazon's footprint in the UK.

Along with a lot of people, I'm really grateful for the wonderful work that MWPVL do each year in annotating known locations and pipeline around the world.

My map below, created using Maptitude, shows both Fulfilment Centres and the various other logistics operations. Although many of the headlines report huge sqft, these can include multiple structural mezzanines that have been rentalised - I've tried to bring all the figures back to footprint, to make them more comparable with other operations.

The map shows very good coverage of the UK - more than 92% of the UK's daytime population is within an hour of one sort of Amazon operation or another.

Aricia Update Graph - Amazon UK - 21 August 2018 - SqFt - MWPVL - Fulfilment Centres - Logistics Operations - Map - Logistics Statistics

UK road freight: in a different ballpark

24 May 2018

Having flat-lined for over 5 years, the ONS SPPI* index for Road Freight prices (the bright pink line on the graph below) finally broke that mould when published yesterday and has definitely started to climb ...but by less than 1.25% over the past year.

In contrast, in Europe: "Transport prices in Europe in the first quarter were up 7.1 per cent on a year ago, latest figures from Transporeon reveal." reported Logistics Manager earlier this week. This, prior to the recent rises in diesel prices, with the CPI index for diesel going up by more than 1.25% from March to April.

UK road freight is also out of step with some of the other indices in the SPPI. The index for All Services* (in dark blue on the graph), and the indices for Railfreight (grey), National Post/Parcelforce (green) and Courier Services (orange), while taking different routes, all end up in the same ballpark.

UK road freight is in a completely different ballpark - surely rates must go up further sometime soon?

Aricia Update Graph - Road Freight - SPPI - 24 May 2018 - ONS - Office for National Statistics - Logistics Statistics

*The Service Producers Price Index is a bit like the CPI, it shows the increase in prices and rates paid, but for services provided by businesses to other businesses and government - the top level Gross / GSO index as shown on the graph includes the provision of a number of different services to other service businesses as well as to non-service businesses and government departments. It is published by the ONS (Office for National Statistics) and is a quarterly index, so the most recent figures are for 2018 Q1. This index is not seasonally adjusted, but the reporting of Q1 for each year should remove most, if not all, seasonal impact.

HGV versus van numbers

12 April 2018

Earlier today the statistics for licensed vehicles in Great Britain at the end of each quarter were updated by DfT and DVLA.

While HGVs continue to recover after the impact of the financial crash, it can be see that vans merely did a quick plateau before continuing their relentless rise.

The seasonality of truck replacement can also be seen clearly, maximising the number of vehicles available at peak each year. Interestingly for vans, although there is little seasonality, what there is looks to be weather (and therefore construction) related rather than driven by ecommerce.

Aricia Update Graph - HGV Van Numbers - 12 April 2018 - DfT - DVLA - Logistics Statistics - Transport Statistics