Any discussion of the UK transport and distribution sector needs to accommodate the growing impact of global warming, an issue of increasing weight to both government transport planners and the country’s logistics specialists and hauliers.

Nationally, the UK is committed to an ambitious cut in carbon dioxide levels – 20 per cent from 1990 levels by 2010, then 60 per cent by 2050. But as car manufacturers develop more efficient models to meet these guidelines, the country’s obsession with the internal combustion engine hampers progress as there are just more engines polluting the environment. Higher taxes and more diverse fuel options (biofuel, for instance) are all being considered.

The government seems tempted to try a technology-based solution to some of these issues – along with such diversions as a reported idea to sanction the use of super lorries weighing up to 60 tons, a 16 ton increase on the biggest vehicles currently grinding down the tarmac. More likely is some form of road charging system, which may employ access to the European Union’s fledgling geographical positioning system network, Galileo. This could be used to pinpoint vehicle positions and underwrite more use of road tolls.

Slow line to recovery

Meanwhile Britain’s railways continue their slow recovery from a botched privatisation, succeeded by an almost equally controversial renationalisation by default. The government set up Network Rail – with a war chest of £22 billion – in response to some of the problems that
had so dogged its predecessor. Of course, the body that operates the national rail network could always expect to be in the spotlight after disasters like Hatfield.

However, the folding back in to the new umbrella organisation of the seven rail maintenance companies – between them losing some £1.2bn a year – has gone surprisingly well.

Joe Van Valkenburgh, Network Rail’s director of information management, managed the impressive task of simultaneously creating a new unified IT structure and complete technology refresh. In the air the UK continues to enjoy success as a major hub, with Heathrow’s Terminal five project likely to hit its opening target of 2007, despite the project being dogged by ongoing industrial action.

"“We are constantly looking to find ways to use our technology resources more creatively and cost-effectively”"

Richard Rundle, group IT director, BAA

The company that runs the UK’s airports, BAA, has made a significant investment in service management. This is helping to guide its recent selective outsourcing of helpdesk work.

Its group IT director Richard Rundle, says: “Our goal is to use IT to improve the passenger experience and support the growth of the industry by helping our partners develop their businesses. We are constantly looking to find ways to use our technology resources more creatively and cost-effectively.”

Finally, the logistics and distribution industry is at something of a crossroads. “From 1970 to 2000 the average length of haul on UK roads doubled but tonnes
moved stayed constant, and the tonnes-kilometres ratio has tracked the growth in GDP,” says Alan Braithwaite, executive chairman of supply chain optimisation consultancy LC.

“Warehousing methods and productivity have substantially improved, especially in areas like storage and cross-docking.”

Further optimisation unlikely

But, he worries, we may have reached a stasis point. “How much further is there to go in this high-volume, low-margin world? What more efficiency really can be created and cost squeezed out? In the 50 years between 1870 and 1920 the cost of distributing goods trebled while production costs went down a fifth. By the end of the 1930s people were saying balance had
been struck where the two were cancelling each other out.”

Radio frequency ID (RFID), for instance, continues to present something of a puzzle to the logistics industry. Should they invest now or wait for their major customers to come on board? Given that a January survey by IT market watchers IDC found only 12 per cent of European companies has rolled out RFID so far, with a further five per cent piloting it, reluctance can be expected.

Many are being held off, says the group, by scepticism about the rate of return on investment – how long it would realistically take for any outlay in RFID to be paid back.