Cheap Days are Over

Transport is cheap.  Too cheap, some would say, but that is beginning to change.  This will have a fundamental effect on modern logistics - supply chains are currently constructed in the UK, in Europe, around the world on the basis of permanently low transport costs but the goal posts are moving.

There are several reasons why, within the UK and Europe at least, costs will rise.  One is legislation, such as the increased costs of complying with the Working Time Directive and ever tighter vehicle delivery restrictions.

Another is congestion lowering average speeds.  Add to that rising fuel costs, tolls, vehicle and fuel duty.  Nor is rail able to cope cost effectively as road transport becomes an increasingley expensive option.

Yet many organisations have based their infrastructure on long distance trips, with focus factories and single source supply for many countries.

Transport cost sensitivity needs to be embedded in future plans.  And those plans should be based on more expensive transport.  As a result, these links will be shorter, sourcing more local and distribution will move closer to the point of demand, halting the centralised trend of the last two decades.