Deep Dive: 07 Logistics

Date: September 2016

FINAL REPORT

September 2016 2

Contents Executive Summary .............................................................................................................. 3

1 Introduction ............................................................................................................... 7

2 Definitions ................................................................................................................. 8

3 Significance ............................................................................................................. 10

4 Business and Employment ...................................................................................... 14

5 Skills ........................................................................................................................ 20

6 Key Assets .............................................................................................................. 23

7 Growth Potential ...................................................................................................... 31

8 Spatial Considerations ............................................................................................. 36

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Executive Summary Context

Logistics is an important part of GM’s economy, as a business sector in its own right and

as an enabler of the success of other businesses of all sizes and sectors – from corner

shops to supermarkets, manufacturers to eBay entrepreneurs, and energy companies to

waste management businesses across the conurbation. Indeed, this report draws from an

independent study focussing on the medium to long-term opportunities for the sector in

GM undertaken by MDS Transmodal1 in 2014.

The Logistics and Distribution industries have changed radically in the last five years in

response to changing consumer behaviours, with next-day and same-day delivery

becoming increasingly commonplace, and significant growth in local distribution jobs. This

has led to the development of Fourth Party Logistics Firms (4PL), businesses that act as a

supply chain manager to deliver a comprehensive supply chain solution from national

down to the local level.

The Northern Powerhouse areas of the North West, North East, Yorkshire and

Humberside form part of a pan-northern road/rail/water freight offer, which include

Manchester Airport, Liverpool 2, Port Salford/Western Gateway, Hull and Humber Super-

port, the UKs largest, multipurpose port complex; and the E20 North European Trade Axis.

GM is at the heart of the region’s logistics sector, comprising 3,335 logistics businesses,

and while many of these are very small, the industry is characterised by global and

national companies such as TNT, Yodel, DHL, Amazon, Tesco and Asda.

Logistics is a major employer in GM. The sector accounts for 5% of total employment

(60,400 jobs) and generates £2.5bn of Gross Value Added (GVA), equivalent to 4.7% of

GM’s economy.2 This accounted for over two-fifths of the sector’s total output in the North

West, and 4% of the sector’s total GVA nationally.

Major employment sub-sectors in GM include land transport (18,500 jobs), warehousing

and support activities (22,500 jobs) and postal and courier activities (14,000 jobs). Whilst

air transport accounts for a smaller number of jobs (5,300), GM has one of the highest

concentration of freight forwarder companies outside Heathrow.

Productivity (as measured by GVA per employee) in the logistics industry is 20.8% below

the national average (£33,600 against £40,600 in the UK), and by way of comparison, is

just above half of the figure of GM manufacturing sector (£65,100). The gap in productivity

between GM and the UK is in part due to many of the UK’s major National Distribution

Centres currently being located outside the region, in particular within the East Midlands.

Supporting businesses to move up the value chain will help to drive productivity going

forward.

1 MDS Transmodal (September 2014): Greater Manchester Logistics Study

2 Oxford Economics (2015): Greater Manchester Forecasting Model

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Taking into account both employment directly captured under the logistics sector and

logistics activities within other sectors, most notably within the wholesale sub-sector of

retail and wholesale, employment is forecast to increase substantially.

This implies a rising demand for employment sites to accommodate the potential for

growth. Historically, the main clusters of logistics employment surround the regional

centre, Manchester Airport and along major transport routes (M62 to the north and

M60/M6 towards the west). Employment is also high in Trafford (in particular Trafford

Park), Rochdale, Wigan, and Bolton.

The Growth Opportunity

Globally, a growing population and increased demand for raw materials, commodities and

manufactured goods will underpin the long-term growth of the Logistics sector.

Domestically, changes in consumer behaviour are leading to more goods being delivered

to pick up points and homes – termed “last mile” deliveries and providing opportunities for

local jobs and growth in technology to reduce environmental impacts.

Capitalising on the significant potential of the Panama Canal widening, Liverpool’s Post-

Panamax Terminal ‘Liverpool 2’ and Salford/Western Gateway provides significant scope

for growth from global trade to be captured in Greater Manchester (GM) and the Northern

Powerhouse area. Currently 91% of freight comes into ports in the South East, although

50% of that cargo is headed for the North. Liverpool SuperPort will allow the world’s

largest container vessels to arrive at a centrally located UK gateway, offering a cost-

effective option for moving goods in and out of the Midlands, the North of England,

Scotland, Ireland and Northern Ireland.

Many National Distribution Centres (NDCs) are located in the golden triangle of

Nottingham, Milton Keynes and Birmingham, offering access to the southern ports and the

national population centres in London, the South East and the Midlands. There is the

potential for GM to accommodate a higher share of the UK’s NDCs based on a concerted

investment and a shift northward in sea-trade movements as a result of the Post Panamax

shipping developments in both Liverpool and Salford.

However, given the typical size of an NDC is over 60,000 sq m, with some examples in the

UK over 100,000 sq m, there are only a small number of sites that could accommodate

this type of development in GM. The opportunity is also limited by the availability of

Strategic Rail Freight Interchanges in the South East which would favour road haulage

from the Midlands rather than rail from GM.

E-commerce represents the latest driver of change in logistics, and retailers and logistics

firms are re-engineering their distribution networks and infrastructure to provide a

complete management of the supply chain, including final mile delivery. This will increase

demand for regional, local and urban distribution centres.

GM and the Northern Powerhouse will benefit also from significant investment in rail

infrastructure, leading to increased capacity for freight services. High Speed 2 and the

September 2016 5

Northern Hub offer a key opportunity to open up freight capacity on the West Coast

Mainline, which is currently close to capacity.

Manchester International Airport and Global Logistics at Airport City also have the

potential to allow GM to capture a greater share of the UK’s and Europe’s air freight

market over the next twenty years, building on a large freight forwarding base, as well as

the strong forecast growth of its passenger numbers and new international connections.

Key Challenges

Key drivers for change in the sector, and future challenges include: the impact of

technology and changing consumer trends on service integration, changes to northern

ports, sustainability and concerns for environmental impact and new regulation.

It is important that locations such as Port Salford/Western Gateway and Trafford Park

have the facilities to take advantage of the Manchester Ship Canal’s connection to

Liverpool SuperPort, and new opportunities for port related freight. Taking advantage of

these opportunities, for both imports and exports, and providing the transport infrastructure

to support growth, will be important to growing the logistics industry in GM.

GM needs to ensure the availability of a sufficient employment land supply, connected to

the strategic road network to take advantage of demand from general logistics growth and

e-retailing. The MDS Transmodal study advises that GM should continue to bring forward

suitable sites for Regional Distribution Centres. In addition, GM should also look to bring

forward rail connectable sites through the planning process, particularly as these sites

may also have the potential to serve, in part, as Urban Distribution Centres – common

user consolidation hubs – with the potential to also incorporate innovative last mile eco

distribution using electric delivery vehicles.

While well connected sites are often viewed as the major challenge in supporting growth in

logistics, the industry is facing a number of skills challenges in supporting its day to day

operations. Research by UKCES3 highlights that the industry is not seen as a particularly

desirable sector for young people and school leavers looking for future careers. There are

also perceptions of unsociable working hours and a lack of understanding of the sector’s

importance to the UK economy and potential career development. It is important to

promote the fact that the sector offers a range of occupations including many high-skill,

well paid technical and professional positions (one-in-five jobs are graduate level), as well

as drivers and semi-skilled jobs.

All areas of work in the sector are facing increasing challenges to ensure technology and

ICT is used to its full potential. Just over a quarter of employers in recent UKCES research

reported recruitment difficulties – and of these over half related to skill shortages. Skills

challenges are particularly acute at middle and junior management, where more than a

third of firms reported difficulties with organisation and planning skills.4

3 UK Commission for Employment and Skills (2014): Understanding Skills and Performance Challenges in the Logistics Sector

4 Ibid.

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Spatial Considerations

The Logistics sector presents strong opportunities for growth, at different scales, across

GM. Local distribution centres will continue to develop close to residential areas and there

is particular demand for larger multi-modal sites to accommodate regional, urban and

potentially national, distribution centres, evident both from the MDS Transmodal study and

MIDAS’ records of lost projects to other parts of the North West. These will build upon

GM’s strategic position along major north and south, and east and west transport

connections.

Sites identified through the Deep Dive analysis that are potentially of GM significance

should they be fully developed (given their scale, their suitability to meet the clear market

demand for logistics sites, and their potential to accommodate housing growth) are:

o Port Salford and Carrington (Western Gateway): Building on growth from the

widening of the Panama Canal and potential growth in container logistics, the only

tri-modal opportunity in GM.

o Logistics North: Potential to develop Regional Distribution Centres which can

serve GM, south east Lancashire, and Liverpool.

o Heywood Industrial Park: Taking advantage of motorway access and links to the

regional centre and northern parts of GM.

o The area around J25/26 of the M6 is attractive from a market perspective for

distribution centres to take advantage of strong north/south and east west

connections from the M6, M62 and East Lancs Road.

Manchester Airport: The airport offers significant bellyhold capacity direct to key

locations worldwide such as to Dubai, now the largest international passenger airport

globally. Global Logistics at Airport City provides additional space with direct access to the

regional motorway network for specialist air freight forwarders and express/courier

operators handling urgent or perishable cargo.

The list of sites above is not definitive and it will also be important to consider smaller sites

that have the potential for logistics use and examples exist of such sites across GM

including, but not limited to: Foxdenton (Oldham), South Lancashire Industrial Estate

(Wigan); and Stakehill Industrial and Distribution Park (Oldham, Rochdale, Middleton)..

September 2016 7

1 Introduction 1.1 This report is one of a series of sector ‘Deep Dive’ reports. It was commissioned by the

Greater Manchester Combined Authority (GMCA) as part of Greater Manchester’s

economic evidence base, and in particular, to inform the development of the Greater

Manchester Spatial Framework (GMSF). The report is part of a wide ranging analysis of

the economic issues and opportunities across GM. The evidence is at a greater degree

of granularity than has ever been done before for any industry sector in GM.

1.2 The Deep Dive research comprises the following reports:

Part 1: Research summary: Providing an overview of the key issues affecting

productivity and participation in GM, including demographic structures and labour market

profiles. It also includes an assessment of the key factors that are expected to drive

economic change in the global, UK and GM economies in the coming decades. It

summarises the key findings from each of the sector chapters.

Part 2: Sector deep dive reports: Covering the following key sectors: Manufacturing;

Business, Finance and Professional Services; Digital & Creative; Health/Social Care and

Health Innovation; Low Carbon and Environmental Goods and Services; Logistics; Retail

and Wholesale Distribution; Hospitality, Tourism and Sport; and Construction.

1.3 For each sector, the analysis covers:

Current make-up of the sector covering the size, scale and relative importance to GM and

geographic footprint, not constrained to administrative boundaries5;

Recent growth rates and growth potential (using forecasts by Oxford Economics);

The location of critical assets and institutions across GM;

Market opportunities and threats for the sector, including long-term trends which will shape

the future scale, needs and location of the sector; and

The spatial considerations of accelerated levels of growth in the sector.

1.4 The Deep Dive research has been produced by New Economy, with Deloitte supporting

at the scoping stage and Ekosgen reviewing the outputs and providing independent

quality assurance. The work has been developed drawing on input from both the public

and the private sectors. Workshops have been held with Chief Executives and local

authority officers in each GM district to check and challenge the evidence presented; to

assess how it fits with local plans and to draw out the GM wide implications of the

research. Consultation has also been undertaken with experts from a wide range of

public and private partners including the Manchester Growth Company, GM’s

universities, TfGM, GM Chamber, pro-Manchester, Manchester Airport, NHS North West

and LEP and Business Leadership Council members to provide further input and

challenge to the evidence presented. The work also draws upon and feeds into the

findings of the Northern Powerhouse Independent Economic Review.

5 The data provided in the sector deep dive series of reports is used to support the understanding of the major trends within the

sector and to set the context of the sector against the wider economy and UK.

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2 Definitions 2.1 It is difficult to provide a standard definition of the Logistics sector. It includes the

integration of a wide range of functions within a range of industries. However, for the

purposes of this report, and defining the sector using National Statistics, the term

Logistics refers to those activities relating to the management of the flow of goods and

other resources between the point of origin and the point of consumption.

2.2 There are a number of different logistics sectors that can be identified, related to broad

types of economic activity, including retail logistics, manufacturing logistics, construction

logistics, waste logistics, and express parcels and couriers. Wholesale, retailing, and

manufacturing are covered in a separate report, but large parts of those sectors include

Logistics operations which are hard to separate in published statistics.

2.3 The analysis presented does include statistics for all relevant transport subsectors,

including: freight/air transport, cargo handling, ports, storage and warehousing, hauliers,

courier businesses and supporting air transport activities. However, it should also be

highlighted that (due to the complexity of the sector and statistics available) the

Logistics industry forms part of, but not necessarily the entirety of, these subsectors.

2.4 The analysis excludes the major repair or alteration of transport equipment,

construction, maintenance and repair of roads, railways, harbours, airfields,

transport/vehicle maintenance, and renting of transport equipment. The specific

Standard Industrial Classification (SIC) codes used in all data analysis are shown

overleaf.

2.5 Examples of firms in the logistics sector include:

TNT – a worldwide delivery and shipping company with a strong presence in GM

Manchester Airport Group – the largest UK owned airport group in the country, owners of

Manchester, Stansted, Bournemouth and East Midlands airports

Amazon – which will be operating from Airport City from Autumn 2016

DB Schenker – a global freight company with cargo handling and freight forwarding

services based at the World Freight Terminal at Manchester Airport

Yodel - a worldwide delivery company with a base at Stakehill Industrial Estate in

Middleton, and national distribution centre at Shaw

ASDA, which has major distribution parks in Wigan and Rochdale

XPO Logistics at Trafford

Yearsley Group at Hareshill, Heywood

DHL has site in Trafford Park and will be operating from the new World Logistics Hub at

Airport City

TIP Trailer Services at Carrington

September 2016 9

Culina, a food Logistics company and a new tenant in Port Salford/Western Gateway.

SIC Code(s) Description

49 Land transport and transport via pipelines

50 Water transport

51 Air transport

52 Warehousing and support activities for transportation

53 Postal and courier activities

September 2016 10

3 Significance 3.1 One of the intrinsic properties of the Logistics market is that it is a service market, where

consumption cannot be decoupled from production and delivery activities. Logistics

operates on a global scale, underpinning all other sectors in the economy.

3.2 The Logistics and Distribution industries have changed radically in the last five years in

response to changing consumer behaviours, with next-day and same-day delivery

becoming increasingly commonplace, and significant growth in local distribution jobs.

3.3 This has led to the development of Fourth Party Logistics Firms (4PL), businesses that

act as a supply chain manager which assembles the resources, capabilities, and

technology of its own organisation (which may also include major national and regional

logistics activity) with those of complementary service/distribution providers to deliver a

comprehensive supply chain solution from national to local level.

3.4 4PL is driving increases in localised customer delivery activity, alongside new local

employment. Equally, the demand for ‘closer coupled supply chains’ where

manufacturing suppliers are increasingly ‘closer’ in terms of travel time means that

business-to-business logistics is also a growth industry.

3.5 Increasing globalisation is driving change in the industry through greater competition,

cost pressure and consolidation. Historically, significant focus has been given to the

cost of products with lesser consideration of the cost and agility of transportation.

3.6 However, as production and materials have become cheaper and lifecycles shorter,

there is evidence of production moving back to the local from the global, where ‘close

coupled’ supply chains use the latest logistics technologies to drive fast and cost

effective solutions to meet new forms of customer demand.

3.7 There are similar trends in both Logistics and related postal markets with online

shopping changing the scale and shape of parcels, heightened demand for real time

information and increasing cost pressure.

3.8 A review of current literature shows the following main drivers of change in the sector.

Consolidation: Demand for integrated service providers, increased competition and

customers requiring a global reach are driving Logistics organisations to consolidate.

Focus on sustainability: Increasing fuel costs, customer attention on environmental

impact and environmental regulation are bringing sustainability to the forefront of Logistics

firms’ strategy.

Use of technology / e-commerce: Track and trace, 2D serialisation and use of mobile

devices are enabling companies and their customers to interact with deliveries in real time.

September 2016 11

3.9 The rapid growth in online retailing means the Logistics sector in GM will benefit from its

central location in the UK and its proximity to other major UK cities. To illustrate, 7

million people live within one hour’s drive-time of the regional centre. Equally, the future

will see an increasing significance placed on distribution sites which can offer easy

access to skilled labour, as well as, road, air, water, and rail interchange opportunities,

particularly where rail provides a link for bulk freight to be brought to site. GM also

benefits from its proximity to the West Coast Mainline for north-south traffic, and Trans

Pennine and Intercity networks serving east-west traffic and links to London.

3.10 The North is home to several major freight and logistics companies, including rail

operators and shipping lines. In addition, itis home to a number of large scale

manufacturing businesses, with extensive local, national and international supply chains

that link them to export markets. There are several growth opportunities located

throughout the Northern Powerhouse area stretching from Liverpool and GM, via

Yorkshire, through to the east coast, which are detailed below. GM is thus competing for

logistics investments in a highly competitive Northern context and must therefore focus

on its unique strengths and complementary offer based on the size of the conurbation.

3.11 Cheshire and Warrington: The main clusters of Logistics outside GM, but close by,

include OMEGA (J8 M62) mixed use development including ASDA regional Distribution

Centre, as well as logistics companies such as Brake Bros, Hermes Parcelnet, Travis

Perkins. Other relevant infrastructure includes the HS2 station planned at Crewe.

3.12 Lancashire: The M6, M61 and the West Coast Mainline provide Lancashire with its

main transport links to the rest of the north. Lancashire’s maritime links are provided by

the Heysham Port, which has ferry services to the Isle of Man and Ireland. On a sectoral

level, the Port is important for servicing offshore gas fields and Irish Sea wind farms.

3.13 Alongside critical infrastructure, the logistics sector is represented across several sites,

including the Lancashire Enterprise Zone where Wincanton Logistics will operate the

new Defence Logistics Centre. Other examples of Logistics companies include Fagan

and Whalley (Burnley), Gem Distribution (Hyndburn) (with a turnover of £345m

employing 260 people), and national operators which include Royal Mail, DHL and DPD.

3.14 Liverpool City Region (LPCR): LPCR’s Growth Deal includes the development of a

logistics SuperPort which is shaped around an interlinked programme of investments

seeking to exploit the global connectivity offered by the Atlantic-facing Port of Liverpool

and an enlarged Post-Panamax container port.

3.15 SuperPort has the potential to transform business models across the Northern

Powerhouse, delivering substantial comparative advantage and productivity gains to

those firms who trade overseas. The Manchester Ship Canal runs from the LPCR into

Salford and Manchester and allows shipping lines to connect deep sea cargo with inland

container hubs, providing a cost efficient route to market.

3.16 Hull and Humber (H&HCR): The sectoral specialisation in H&HCR has been

determined by the geography of the estuary, and its trading and industrial history. Deep-

water port and logistics facilities favour specialisms in deep-sea fishing and the

September 2016 12

imports/exports of bulks, including coal, chemical feedstocks, foodstuffs, and more

recently containers, cars and biomass. 16,000 are employed in the sector within five

main ports, including Immingham, which is the largest port in the UK by tonnage.

3.17 Hull has strong trading links with Scandinavia and the Baltic States, particularly for

timber and paper products, and scheduled freight, car and passenger services to

Rotterdam, Zeebrugge and Finland. Grimsby is a major car import and export gateway

(500,000 vehicles pa). Goole, an inland port, specialises in short North Sea crossings,

but also cargo and Able Humber Port is being developed for cargo/logistics.

3.18 Leeds City Region (LCR): Accounts for just over 64,000 employees in logistics

(excluding wholesale trade to match the sector definition). The Leeds City Region

Economic Plan has not explicitly set out a regional offer as a logistics hub but it does

note the importance of a number of major Logistics and business parks across the City

Region, in particular those well served by the M62 and M1/A1 axis.

3.19 Sheffield City Region (SCR): Logistics is a relatively high employer in the City Region

(28,000 jobs). SCR is seen to have a strong strategic location, with multimodal access

(rail, road, air and links to ports). SCR is also home to international firms such as

Amazon, ASOS and TNT, and has A1/M1 connections, East Coast and Midland

Mainlines, and Robin Hood International Airport. The proposed new Trans-Pennine

tunnel under the Peak District between Sheffield and Manchester (of which a feasibility

study has been commissioned and is due to report in autumn 2016) would also support

further linkages and opportunities for growth.

The UK logistics ‘golden triangle’

3.20 It is also important to note that the UK’s main centre for established National Distribution

Centres (which can be over 100,000 sq m in size) lie in an area known as the ‘golden

triangle’ – generally recognised to be the area enclosed by Milton Keynes, Birmingham

and Nottingham. This is for three main reasons:

Its central location in Great Britain, which minimises average road haulage costs from a

single site;

The release of large competitive sites by local authorities for the development of “large”

distribution centres next to motorway junctions;

Low rental and labour costs as compared to the South East.

3.21 A recent development has been the establishment of large NDCs at rail-linked sites in

the golden triangle. Four sites are currently operational – DIRFT (near Rugby), Hams

Hall (Coleshill), Birch Coppice (Tamworth) and Castle Donnington (near Derby).

3.22 A number of other rail-linked sites in the “golden triangle” are in the early stages of

development, while plans for the extension of DIRFT (Phase 3) were consented by the

secretary of State for Transport in July 2014. This suggests that a significant proportion

of capacity in the future in this area will be rail-connected.

September 2016 13

3.23 In contrast, large-scale Regional Distribution Centres need to be located close to the

main conurbations of Britain, as this is where the main end-delivery points are located

(normally retail outlets). In the North West, this is in GM, Warrington and the Liverpool

City Region (e.g. Haydock and Ditton).

3.24 The East and West Midlands and Yorkshire and the Humber are currently more likely to

have a national distribution role, including serving regions such as London and the

South East, the South West and South Wales. In contrast, the North West’s logistics

space has historically been justified by its own regional population and compared to the

East and West Midlands therefore, the North West is currently more likely to host

Regional Distribution Centres (RDCs),6 However, GM has the potential to house

National Distribution Centres and sites such as Omega show GM is a competitive

location for NDCs.

6 Regional Distribution Centre’s are deployed for transport intensive goods retailing such as grocery and FMCG DCs,

September 2016 14

4 Business and Employment 4.1 Logistics contributed £2.5bn GVA to the GM economy in 2013.7 This accounts for just

over 43% of all output from the sector in the North West and 4% nationally. Total

economic output from the sector contracted in GM by 0.8%pa between 2010 and 2013,

compared to a national increase of 0.4% pa. Critically the sector’s GVA in GM is still

only at 75% of pre-recession levels.8

4.2 There were 3,335 Logistics businesses in GM in 2014, comprising 3.9% of the UK total.9

Employment in the sector stood at 60,400 people 2013, representing over 41.2% of

employment in the North West, and 4.9% of the sector nationally.10 Between 2010 and

2013, employment in GM grew by 1.9%pa (3,300 additional jobs over the whole period).

While this was slower than in the North West (2.5%pa), the sector grew faster than the

national average (0%).

4.3 Productivity in the sector stands at £33,600 per person employed, which is currently

20.8% behind the national average for the sector.11 The gap, in part, is due to a

proliferation of smaller distribution firms serving local markets, and the fact that many of

the UK’s major National Distribution Centres are located outside the region, in particular

within the East Midlands.

Figure 1: Logistics key sector statistics 12

Logistics GVA Employment Businesses

GM Level 2013 (businesses 2014) £2.5bn 60,400 3,335

Change (% per annum, 2010 to 2013/14) -0.8% 1.9% 0.5%

GB/ UK

Level 2013 (businesses 2014) £60.6bn 1,238,200 86,470

Change (% per annum, 2010 to 2013/14) 0.4% -0.05% 1.7%

Source: Greater Manchester Forecasting Model, Inter-Departmental Business Register and Business

Register & Employment Survey. Latest data 2013 for employment and GVA, and 2014 for businesses

Figure 2: GVA per person employed in Logistics, 2013

GM UK

Logistics £33,600 £40,600

Source: GMFM. Please note employment figures in GMFM may differ from Business Register

Employment Survey figures used elsewhere in this report.

Figure 3: Logistics key metrics

Businesses Employment

Comment 2014

Change

2010-2014 2013

Change

2010-2013

Logistics 3,335 70 60,400 3,300 Strong job growth and moderate growth in number of businesses

Source: Inter-Departmental Business Register, and Business Register & Employment Survey

7 Oxford Economics, Greater Manchester Forecasting Model

8 Oxford Economics, Greater Manchester Forecasting Model, comparing with GVA levels at the end of 2006

9 Source: Inter-Departmental Business Register

10 Business Register & Employment Survey

11 New Economy analysis unpublished

12 Latest data 2013 for employment and GVA, and 2014 for the number of businesses

September 2016 15

Figure 4: Logistics employment by business size-band, 2014

Business Size Band by number of employees

Micro

(0- 9)

Small

(10- 49)

Medium- sized

(50- 249) Large (250+)

Comments

Logistics 79.3% 14.8% 4.6% 1.3% Vast majority of businesses in

GM micro firms, along with some small businesses

Source: Inter-Departmental Business Register

4.4 The sector’s location quotient, a measure of employment concentration within the local

economy compared with the national average, suggests Logistics employment is,

overall, similarly concentrated within GM compared to nationally. However, certain

subsectors within Logistics are better represented within GM’s economy, in particular

activities relating to aviation and courier activities. Water transport is underrepresented

within GM which is unsurprising given GM’s geographical position.

Figure 5: Location quotient of Logistics, 2013

SIC Description LQ Employment

49 Land transport and transport via pipelines 0.91 18,500

50 Water transport 0.16 100

51 Air transport 1.75 5,300

52 Warehousing and support activities for transportation 1.22 22,500

53 Postal and courier activities 1.34 14,000

All Location Quotient for all Logistics 1.14 60,400

Source: Business Register & Employment Survey (Data may not sum due to rounding)

September 2016 16

Figure 6: Logistics businesses in Greater Manchester, 2014

Figure 6 is based on the total number of Logistics (and transport) firms within GM and shows the main hotspots for the sector are within Trafford Park, and the area surrounding Manchester Airport, which, given the sector definition used, also includes general aviation support activities.

Other key locations include: Cadishead in Salford, Wigan (Martland Park and M6 corridor), Bolton (Horwich and Wingates), Logistics North when operational (along the M61 corridor), and Rochdale (Kingsway and the M62 corridor).

It is also worthwhile to note GM’s Logistics sector’s key locations are also part of the TEN-T network,

13 that is, the main core

transport network corridors noted and supported by the European Commission because they are critical for growth, and in particular integrating with other major rail freight corridors and integrating urban areas.

Source: Inter-Departmental Business Register

13

European Motorway Network key routes on the TEN-T network: http://ec.europa.eu/transport/themes/infrastructure/ten-t-guidelines/corridors/index_en.htm

September 2016 17

Figure 7: Logistics Employment – Level in Greater Manchester in 2013

Figure 7, which looks at absolute numbers of employees, reveals the presence of Logistics and Transport employment hubs around Manchester Airport and surrounding the city centre (East Manchester / Gorton / Longsight / Ardwick and Cheetham Hill in particular).

Trafford Park remains a key employment location for the sector – including the rail-freight hub, as well as Wigan (Martland Park), Bolton (Horwich and Wingates, and the forthcoming Logistics North in Bolton and Salford); Rochdale (Heywood Distribution Park and Stakehill Industrial Estate); Oldham (Crompton and Shaw); and a number of sites along the M6 corridor in Wigan (including the South Lancs. Industrial Estate).

Comparing the business and employment maps, it is clear that employment is aligned with clusters of businesses around the Airport and Trafford Park.

Source: Business Register & Employment Survey

September 2016 18

4.5 Between 2010 and 2014 the number of businesses in the Logistics sector across Great

Britain increased by 6.8% (5,490) to 86,470. GM created 70 new companies during the

period and by 2014 GM accounted for 37% of Logistics businesses in the North West.

4.6 Within GM, the net increase in businesses was highest in Salford and Wigan. Salford

also had the highest relative growth rate for Logistics businesses at 12.7% (35 new

businesses) compared to the GM average of 2.1%. This is expected to continue to grow

with the addition of early occupiers at Port Salford/Western Gateway, the first tri-modal

short-sea-shipping, road, and rail inland port in the UK. While Wigan saw the highest

absolute increase (40), Manchester still had the highest number of firms (610).

Figure 8: Number of business in Logistics, 2010 to 2014

Business Numbers Change 2010 to 2014

2010 2014 2014 (%) No. %

Bolton 335 305 9.1% -30 -9.0%

Bury 215 215 6.4% 0 0.0%

Manchester 610 610 18.3% 0 0.0%

Oldham 215 210 6.3% -5 -2.3%

Rochdale 275 295 8.8% 20 7.3%

Salford 275 310 9.3% 35 12.7%

Stockport 320 310 9.3% -10 -3.1%

Tameside 250 255 7.6% 5 2.0%

Trafford 340 350 10.5% 10 2.9%

Wigan 435 475 14.2% 40 9.2%

Greater Manchester 3,265 3,335 100.0% 70 2.1%

North West 8,770 9,010 - 240 2.7%

London 9,185 10,505 - 1,320 14.4%

Great Britain 80,980 86,470 - 5,490 6.8%

Source: Inter-Departmental Business Register (Data may not sum due to rounding and note caution in

interpreting change figures as data is for a short time period)

4.7 The main clusters of Logistics employment surround: the regional centre, Airport and

along major transport routes of the M62 to the north and M60 / M6 towards the west.

Manchester (22,500 jobs) makes up 37.3% of total employment. Employment is also

high in Trafford (6,700), Rochdale (5,900), Wigan (5,100), and Bolton (5,100).

4.8 Rochdale and Trafford saw the highest absolute growth in jobs in the sector from 2010

to 2013, whereas Oldham saw the highest relative growth, increasing by 31% compared

with the GM average of 5.8% from 2010 to 2013. While Manchester has over two-fifths

of total employment in the sector within GM, the number of employees fell by 900 (-

3.8%) between 2010 and 2013.

September 2016 19

Figure 9: Employment in Logistics, 2010 to 2013

Employment Change 2010 to 2013 Proportion of district

employment (2013)

2010 2013 2013 (%) No. %

Bolton 4,900 5,100 8.4% 200 4.1% 4.8%

Bury 2,100 2,200 3.6% 100 4.8% 3.3%

Manchester 23,400 22,500 37.3% -900 -3.8% 6.6%

Oldham 2,900 3,800 6.3% 900 31.0% 4.9%

Rochdale 4,600 5,900 9.8% 1,300 28.3% 8.4%

Salford 3,200 3,600 6.0% 400 12.5% 3.0%

Stockport 3,700 3,300 5.5% -400 -10.8% 2.7%

Tameside 1,900 2,200 3.6% 300 15.8% 3.3%

Trafford 5,400 6,700 11.1% 1,300 24.1% 4.9%

Wigan 4,900 5,100 8.4% 200 4.1% 5.1%

Greater Manchester 57,100 60,400 100.0% 3,300 5.8% 5.0%

North West 136,300 146,600 - 10,300 7.6% 4.7%

London 217,000 219,700 - 2,700 1.2% 4.6%

Great Britain 1,240,000 1,238,200 - -1,800 -0.1% 4.4%

Source: Business Register & Employment Survey (Data may not sum due to rounding and note caution

in interpreting change figures as data is for a short time period)

September 2016 20

5 Skills 5.1 There has been a widening of the productivity gap in Logistics between the GM and

national average since the recession of 2009/10. Other reports highlight the most

productive firms are located within the East and South Midlands, where the costs per

pallet are less, reflecting the scale and technology applied by major distribution firms

operating from National Distribution Centres in the region.

5.2 Even in the e-commerce sector, jobs are maturing from basic and labour intensive to

work in more sophisticated installations to handle the growth in throughput but at much

lower unit costs. Investment and skills will continue play an important part in raising

performance however the sector faces several challenges set out in the following

section.

5.3 The analysis below shows the current qualification profile of the resident Logistics

workforce based on survey data for the north west of England and UK. Survey data on

specific sectors, jobs and qualifications is not accurate for smaller areas. The following

section then provides skills forecasts produced by Oxford Economics and indicates the

qualification levels that the sector will need over the next 20 years.

Current trends

Figure 8: Highest qualification held by people working in Logistics, 2015

Notional level of highest qualification Location

NW UK

Level 4+ 19.1% 20.1%

Level 3 14.7% 14.7%

Trade Apprenticeships 6.3% 5.8%

Level 2 15.8% 17.7%

Below Level 2 14.3% 16.7%

Other Qualifications 17.3% 15.4%

No Qualifications 12.5% 9.7%

Source: Quarterly Labour Force Survey, January-March 2015. (Data may not sum due to rounding)

5.4 Figure 8 shows that broadly, the qualification profile in the North West is similar to that of

the UK as a whole. Those qualified to Level 4 and above in the North West

(undergraduate/graduate level) account for 19.1% of resident employees, compared to

20.1% on average in the UK. The Level 4 qualification gap corresponds to 1,000

additional graduate level jobs in the region, and potentially around 400 in GM (given that

GM is 40% of the North West’s employment in the sector).

5.5 The sector plays an important role providing employment across a range of occupations

and skill levels, including lower / semi-skilled occupations. Over 44% of those employed

in the sector are qualified to below Level 2, as opposed to an average 23% across all

industries in GM. However, the North West does have a higher proportion of the

workforce with no formal qualification (12.5%) compared with the national average

(9.7%) which could act as a brake on raising productivity in the sector.14

14

New Economy analysis, using the ONS Labour Force Survey, 2015

September 2016 21

5.6 New Economy has undertaken analysis of the supply and demand relationship for

logistics-related apprenticeships and supply is extremely low given that the sector

encompasses transportation and much of its growth relies on digital innovation. This

suggests that there is significant scope for growth given the opportunities within logistics

identified within this report.

Future trends

5.7 Skills forecasts from Oxford Economics have identified expansion demand (in terms of

new jobs which will be created over the next two decades) and replacement demand

(workforce churn).

5.8 Under the central Accelerated Growth Scenario, the number of new jobs that will be

created in GM in the sector is estimated at 12,600 over the next two decades.15 There

will also be significant demand to replace the existing workforce leaving the sector due

to retirements. Replacement demand forecasts suggest this equates to 8,500

leavers/replacement jobs per annum up to 2035.16

5.9 Oxford Economics has modelled the breakdown of this skills demand and suggests that

by 2035 23% of workers in the sector are forecast to be qualified at Level 4 and above,

and 10% at Level 3, indicating an increasing need for highly skilled workers. However,

the sector is forecast to continue to support jobs at all qualification levels, with 28% of

workers forecast to be qualified to Level 2, and 30% with Level 1/no qualifications.

Figure 9: Qualification breakdown in the Logistics Sector, 2035

Notional level of highest qualification Proportion of sector NVQ 4+ 23%

NVQ 3 10%

NVQ 2 28%

NVQ 1 16%

Other 9%

No Qualifications 14%

Source: Oxford Economics (Data may not sum due to rounding)

Skills Challenges

Figure 10: Skills Challenges in the Logistics Sector

Challenge Explanation

Skills shortages when recruiting

Logistics isn’t seen as a desirable career path by young people and parents.

Employers in the sector report recruitment difficulties due to a shortage of available experience and skills, and challenges retaining staff.

Skills Gaps in the existing workforce and lack of relevant training

A lack of technology and softer skills means that around 67,000 people working in Logistics aren’t proficient in their current role.

Employers don’t feel that current training adequately meets the needs of the industry.

15

Growth forecasts are based on the Greater Manchester Forecasting Model, detailed later in this report 16

See Future Growth section for detailed description of Greater Manchester growth scenarios

September 2016 22

5.10 Skills shortages and poor perception of the industry: Research by UKCES17

highlights the industry is not seen as a particularly desirable sector for young people

and school leavers looking for future careers. When asked about their understanding of

the term Logistics, two-thirds of 14 to 19 year olds were not able to provide an accurate

description of the sector. This is reflected in the fact only one-in-ten of the workforce is

aged under 25, and 45% are aged over 45 years old.

5.11 Perceptions of low pay in the sector relative to others are also a critical factor causing

difficulties attracting new entrants to the sector. However, the sector does offer a range

of occupations including many high-skill, well-paid, technical and professional positions,

and one-in-five jobs are currently at Level 4 or above (undergraduate / graduates).

5.12 Just over a quarter of employers in the UKCES research reported recruitment difficulties

and of these over half (51%) related to skill shortages. The other reasons for recruitment

difficulties included lack of qualifications, and a lack of appropriate work experience.18

5.13 Most of the skill shortages in recruitment are operational, in particular drivers, where a

shortage of skilled drivers is widely recognised. There is also a shortage of warehouse

operatives.19,20 According to the Freight Transport Association, the number of goods

vehicle license operators fell by 4% in 2012. In part, this reflected more stringent Driver

Certificate of Professional Competence legislation and the introduction of the Driver

Qualification Card.21

5.14 Skills Gaps in the workforce: As the industry changes a growing number of

companies are reporting skills gaps among their workforce. This is particularly acute at

middle and junior management level, where more than a third of businesses reported

skills gaps in communication, organisation and planning skills. The rapid implementation

of modern technology in the sector, while helping to drive efficiency, has also had an

impact on skills gaps, in particular for warehouse operatives, transport office staff and

drivers.

5.15 Recent research by the Freight Transport Association found 41% of employers thought

training courses and formal qualifications needed to do more to meet the needs of the

industry. Employers often quote ‘lack of time to train’ as a reason for skills gaps among

junior management staff.22

5.16 However, in the 2013 UKCES Logistics Employer Skills Survey, three-quarters of

businesses reported they had provided training for their staff, but this was mostly in

health and safety. UKCES suggests that while employers are keen to express an

interest in training, there is a fear that trained staff will soon leave a firm and their

investment in workforce development will be lost.23

17

UKCES (2014): Understanding Skills and Performance Challenges in the Logistics Sector 18

Skills for Logistics (2014) Logistics Employer Skills Survey for 2013 19

Freight Transport Association & PwC (2014): The Logistics Report for 2014 20

New Economy (2013): The Logistics Sector in Greater Manchester: Sector Profile 21

UKCES (2014): Understanding Skills and Performance Challenges in the Logistics Sector 22

Skills for Logistics (2014): Logistics Employer Skills Survey for 2013 23

UKCES (2014): Understanding Skills and Performance Challenges in the Logistics Sector

September 2016 23

6 Key Assets 6.1 The following section highlights relevant assets for the Logistics Sector, based on their

role in supporting jobs and/or GVA growth for GM now and in the future, alongside the

connectivity they provide to international markets. Where possible, maps have been

included to capture the main travel to work patterns and the main locations of assets.

The main concentrations of assets are located close to transport hubs/nodes, for

example, motorway junctions, rail-hubs and Manchester Airport, and Airport City

Enterprise Zone.

6.2 The section excludes details of the many sector organisations and subsector

professional support networks that exist across GM, which also have a key role to play

in supporting growth and investment.

6.3 In summary the list of assets detailed in this section (which is not intended to be

definitive) includes the following:

Manchester Airport and Airport City - with Global Logistics at Airport City

Port Salford/Western Gateway and Logistics Hub

Logistics North (Cutacre)

Carrington

Trafford Park

Heywood Distribution Park

Foxdenton Business Park (Broadway Green)

Stakehill Industrial and Distribution Park

6.4 These assets are also important to consider in the context of the wealth of freight assets

located in the North, which underpin a strong multimodal freight capability, including:

Three Strategic Rail Freight Interchanges (distribution centres with intermodal terminals at

Ditton, Wakefield and Selby)

In addition to Trafford Park, four further Intermodal Terminals at, Leeds, Garston,

Doncaster and Wilton

Four key port areas on major estuaries (Humber, Tees, Mersey, Tyne) with generally

excellent rail connections, and several rail connected sub-regional ports

A Strategic Highway Network focused on the M62/M60/M56 and A66/69 East-West

corridors and the M6 and M1/A1 North-South corridors

A strategic rail network principally comprising of the West Coast Main Line, East Coast

Main Line and Midland Main Lines that connect the North of England to the South

A network of inland waterways (including the Manchester Ship Canal).24

24

Transport for the North (2016 – forthcoming): Northern Freight and Logistics Report

September 2016 24

Figure 11: Logistics assets in Greater Manchester

Figure 11 shows the main Logistics assets are key sites located throughout GM, in particular located near to major transport hubs, railways, or the airport.

Source: New Economy

September 2016 25

6.5 Manchester International Airport and Global Logistics at Airport City: In 2014,

Manchester Airport was the third busiest airport in the United Kingdom in terms of

passenger numbers, and the 22nd busiest airport in Europe.25 It is second only to

Heathrow for UK bellyhold freight.

6.6 Airport City is a designated National Enterprise Zone and has 465,000sq m of

development opportunities for office, hotels, manufacturing, logistics, retail and leisure.

With an £800m phased delivery taking place over the next 15 years, the 130,000 sq m

Global Logistics development will offer logistics buildings from 1,394 to 60,387sq m.

6.7 Port Salford/Western Gateway: Port Salford will be the UK’s first tri-modal short-sea-

shipping, road, rail inland port and is part of the wider Western Gateway Infrastructure

Scheme. The Port will allow GM to capitalise on investments made in the Mersey port,

in particular those investments which will capitalise on the Post-Panamax development

allowing round-the-world traffic to come to the north of England.

6.8 Trafford Park: With 9m sq m of business and industrial space, Trafford Park includes

logistics, warehousing and associated service centres.26 There are 1,300 businesses

located at Trafford Park, employing over 35,000 people. Trafford Park is rail-connected

with distribution centres located close to the existing intermodal rail freight terminals.

6.9 Carrington: The former Shell site comprises approximately 126 hectares of former core

petrochemical manufacture and distribution, together with a further 55 hectares outside

the previous Shell secure area. Development at Carrington is aiming to create

sustainable local employment and training opportunities focusing on new business

enterprise, advanced manufacturing, and logistics.

6.10 Logistics North (Cutacre): Part of Bolton’s Economic Development Zone, the retail,

industrial park and Logistics base is to be delivered over the course of the next decade.

Plans include just under 372,000 sq m of employment space, with individual floor plates

of up to 93,000 sq m.27 Ekosgen estimate the potential to add over £335m to the

regional economy and over 7,000 new jobs.28

6.11 Heywood Distribution Park: Heywood Distribution Park currently comprises over 2

million square foot of built space within a secure site of approx. 200 acres. It offers a

range of modern and refurbished units from 2,000 sq ft to over 100,000 sq ft with build

to suit up to 630,000sq ft.29 Current occupiers of the site include Eddie Stobart, Kuehne

and Nagel and Argos. The Pilsworth site next door to Heywood Distribution Park in Bury

offers 25,000 sq m of office floor space and 25,600 sq m of industry and warehousing

floor space.

25

Airport City Manchester: http://www.airportcity.co.uk 26

Trafford Council: https://www.trafford.gov.uk/business/locations-for-business/docs/trafford-park-brochure.pdf 27

Logistics North and Harworth Estates: http://www.bolton.gov.uk/Mipim/Documents/LogisticsNorth.pdf and http://www.logisticsnorth.com/harworth-secures-mbda-second-occupier-north-west-scheme 28

Ibid 29

Heywood Distribution Park, http://www.heywooddistributionpark.co.uk/description.html

September 2016 26

6.12 Kingsway Business Park: The mixed-use site in Rochdale offers 34,900 sq m of office

floor space and 183,000 sq m of industry and warehousing space, as well as motorway

connectivity to Leeds, Liverpool and Manchester and Metrolink connectivity.30 Current

occupants include Asda, JD Sports and Takeuchi Manufacturing.

6.13 Foxdenton Business Park (Broadway Green): Oldham Council entered in to a joint

venture with Grasscroft Property and Seddon to create Foxdenton LLP. The 49 hectare

site and development was granted outline planning in February 2014 for up to 70,000 sq

m of employment uses, 500 houses and 9 hectares of parkland.31

6.14 Stakehill Industrial and Distribution Park: Stakehill Industrial Estate, situated on the

A627(M) between Oldham, Rochdale and Middleton, provides refurbished

warehouse/industrial units, offering a range of sizes, with occupiers including Tesco,

Aldi, Booker, Cert Services, Dunlop GRG Ltd, Comfy Quilts and NFT Logistics.

30

Kingsway Business Park: http://www.kingsway-business-park.com/why-kingsway.aspx 31

Source: Oldham Chronicle http://www.oldham-chronicle.co.uk/news-features/8/news-headlines/84611/100m-foxdenton-scheme-gets-the-big-handsup

September 2016 27

Figure 12: Travel to work map for Manchester Airport and Airport City

Figure 12 shows the reach of Manchester Airport in the surrounding area. This includes all employees working within the Airport super-output-area, not solely logistics employees.

Not only is it a major employer of local

labour – in particular from Manchester,

Trafford and Stockport –it is of

significance on a much larger scale with significant numbers of workers travelling in from Chorley in the north, south down to Northwich and over to north Wales and to High Peak beyond Ashton under Lyme in the east.

Comparing this figure to other sector travel to work maps, only Trafford Park and the regional centre have greater scale and reach of travel-to-work.

Source: ONS Census (2011) Travel to Work – Inflow of Workers to the Mid-Super Output area where the asset is based

September 2016 28

Figure 13: Travel to work map for Trafford Park and the Trafford Centre

Figure 13 shows the travel to work area for Trafford Park and the Trafford Centre. The reach of Trafford Park is evident with workers drawn from the immediate area, and across GM and beyond.

Source: ONS Census (2011) Travel to Work – Inflow of Workers to the Output area where the asset is based

September 2016 29

Figure 14: Travel to work map for Kingsway Business Park

Figure 14 shows most of the workers at Kingsway Business park come from Oldham and Rochdale. However, the catchment also extends outwards to incorporate parts of Rossendale.

Source: ONS Census (2011) Travel to Work – Inflow of Workers to the Mid-Super Output area where the asset is based

September 2016 30

Figure 15: Travel to work map for Heywood Distribution Park

Figure 15 shows most of the workers in this site come from Bury and Rochdale. However, the catchment also extends into Rossendale and further south into Oldham, and West towards Bolton.

Source: ONS Census (2011) Travel to Work – Inflow of Workers to the Mid-Super Output area where the asset is based

September 2016 31

7 Growth Potential Forecasts for growth

7.1 A number of economic scenarios have been developed to assess the growth potential of

the sector in GM over the next twenty years. The baseline forecast for GM sets out the

likely growth pattern based on a continuation of past trends and is derived from the

Greater Manchester Forecasting Model (GMFM).32 It is a ‘policy neutral’ forecast as it

assumes that policy will be as effective in the future as it has been in the past. The latest

GMFM baseline (GMFM 2015) is more pessimistic than the previous iteration of GMFM,

reflecting a weaker UK growth profile even before the result of the EU referendum. It

sees GM grow at a faster rate than the NW economy at 2.3% year on year, which is in

line with the UK average.

7.2 To inform the development of the GMSF, an updated Accelerated Growth Scenario

(AGS-2015) has been developed based upon improved sector growth performance

alongside higher population growth. This scenario is predicated upon GM playing a

leading role in the development of the Northern Powerhouse and achieving the

ambitions laid out by the UK Government within its NW Long Term Economic Plan.33

7.3 In 2015 there were an extra 12,700 jobs in Logistics in comparison to 1995 levels, which

equates to a 0.9% annual growth rate. GVA also increased by £700m, or 1.4% per

annum between 1995 and 2015.

7.4 The baseline forecast for GM suggests an extra 2,900 jobs by 2035, or a growth rate of

0.2% p.a. This equates to an additional £1.3bn in GM’s economy by 2035. The central

Accelerated Growth Scenario (AGS-2015) suggests that the number of additional jobs

could be higher growing by 5,800 employees from 2015 to 2035, this would equal a

further £1.5 bn GVA per annum in GM’s economy by 2035.

7.5 Note that this figure, as outlined in section 2, does represent the full extent of the activity

undertaken within logistics. In particular the retail logistics activity is predicted to grow

substantially over the next two decades. Under baseline employment is forecast to grow

by 12,300 (2015-2035) and under the AGS-2015 this figure rises to 15,100 for the same

period. This is also set in the context of decline over the previous 20 years (1995 –

2015) of 6,300 in employment further demonstrating the scale of opportunity that is

forecast in this sector.

Figure 16: Logistics - Baseline and Accelerated Growth Forecast

Logistics Net increase

1995 to 2015

GMFM Baseline

2015 to 2035

AGS-2015 2015 to 2035

Difference % CAGR Difference % CAGR Difference % CAGR

Jobs 12,700 0.9 2,900 0.2 5,800 0.4

GVA £0.7bn 1.4 £1.3bn 1.8 £1.5bn 2.1%

Source: Oxford Economics

32

Oxford Economics 33

UK Government (2015): Long Term Economic Plan for the North West

September 2016 32

Opportunities

Figure 17: Key opportunities for growth

Opportunity Activity

Post Panamax – Road/ Rail/ Water/ Air links

World’s largest container vessels coming to a centrally-located UK gateway will make it more cost-effective for importers and exporters moving goods in and out of the Midlands, the north of England, Scotland, Ireland and Northern Ireland.

Development of national and regional logistics assets, including shipping on the Manchester Ship Canal and growth of Port Salford, and links to Trafford Park.

National, Regional, Urban and Local Distribution Centres

Increase share of NDC market through the development of rail and/or water connected distribution parks

Due to its large population, regional demand and road network, GM is a strong investment location for Regional Distribution and and Local Distribution Centres.

Opportunity to develop Urban Distribution Centres - common user consolidation hubs - which could exploit the development of any multi-modal distribution centres and potentially also incorporate innovative last mile eco distribution using electric delivery vehicles

7.6 Post Panamax: Capitalising on the significant potential of the Panama Canal widening,

Liverpool’s Post-Panamax Terminal – Liverpool 2 – provides significant scope for growth

from global trade. Currently 91% of UK freight comes into ports in the South East, but

50% of that cargo is headed for the north of England. By capitalising on the opportunity

to get more cargo directly to the north of England, Liverpool 2 should provide demand

and growth opportunities for GM’s Logistics sector, in particular at Port Salford/Western

Gateway and surrounding areas.34 The development of Global Logistics at Airport City,

alongside investment in Port Salford/Western Gateway, Carrington, and Logistics North

provides opportunities for global Logistics trade.

7.7 Across the wider Northern Powerhouse area of North West, North East, Yorkshire and

Humberside, several investments form part of a pan-northern road/rail/water freight offer

which also include Hull and Humber Super-port (the UKs largest, multipurpose port

complex) and the E20 North European Trade Axis, part of the UN International E-road

network.

7.8 High Speed Rail: High Speed 2 will initially link the cities of London and Birmingham,

followed by further extension to North West England and Yorkshire. Construction of the

first phase of HS2 is intended to begin in 2017 with an indicated opening date of 2026,

while completion of the entire network is expected in 2033. HS2 offers a key opportunity

to open up freight capacity on the West Coast Mainline which is currently close to

capacity, combining passenger and freight services.

7.9 The electrification of the North West rail network is part of the Northern Hub programme

currently being undertaken by Network Rail. The Hub will help to increase capacity and

reduce journey times between GM and areas such as Liverpool and Leeds, and

increase freight capacity on the West Coast Mainline.

7.10 National, Regional, Urban and Local Distribution Centres: Research by MDS

Transmodal shows GM has 2.5 million sq m of large warehouse capacity (units of over

34

Financial Times (2012): Liverpool port expansion set to go ahead

September 2016 33

9,000 sq m). This is 6% of the England & Wales total and 38% of the North West total,

which is broadly proportionate to its share of population.35 By contrast, the East

Midlands is home to many of the UK’s National Distribution Centres (NDCs),36 and has

two and a half times more Logistics space than expected given the size of its

population. Although, this highlights the competitive challenge which GM faces, there is

the potential for GM to accommodate a higher share of the UK’s NDCs should there be

a concerted investment and a shift northward in sea-trade movements as a result of the

Post Panamax shipping developments in both Liverpool and Salford.

7.11 The Transmodal research also highlights that, due to its large population, regional

demand and road network, GM is a strong investment location for Regional

Development Centres (RDCs) which store goods for short periods of time before being

delivered to locations.37 Opportunities also exist to develop one or two Urban

Distribution Centres - common user consolidation hubs. These could exploit the

development of any multi-modal distribution centres and potentially also incorporate

innovative last mile eco distribution using electric delivery vehicles.

7.12 The growth in e-commerce fulfilment / home delivery, alongside delivery to local retailers

will provide future demand which could be used to stimulate a low carbon approach to

local distribution. Transmodal predict introducing the developments above (for NDCs,

RDCs and UDCs) would create 13,000 to 17,000 jobs in GM, producing £600m to

£760m GVA.

Threats

Figure 18: Key threats facing the future of the Logistics sector in GM

Threat Activity

Competing Locations

NDCs currently concentrated in ‘Golden Triangle’ in East Midlands, which has a competitive advantage over the north

Easy access to road and rail links and competitive prices for pallets are factors which ensure the advantage of the East Midlands

Availability of Skills

Lack of skills is an issue in GM, with difficulties in hiring drivers and warehouse operatives

Negative perceptions of the industry and lack of suitable training exacerbate this

Future Skills Rapid changes to technology will continue to raise the demand for higher level ICT skills –

within all occupations across the Logistics sector

7.13 Competing locations: The major challenge to overcome is that NDCs are currently

concentrated within the ‘Golden Triangle’ of Nottingham, Milton Keynes and

Birmingham. These cities currently hold a competitive advantage over much of the UK

and GM where costs are up to £4 more per pallet handled than rail-connected sites in

the golden triangle. East Midlands Airport is also the UK's largest dedicated freight

35

MDS Transmodal (2014): Greater Manchester Logistics Study 36

For example Centres with a footprint over 60,000 sqm and some centres over 100,000 sqm 37

Total Logistics (2014): Report for The Peel Group: Logistics Market Review and Advisory Paper, p.83 - RDCs are, for example, 25,000 to 40,000 sq m

September 2016 34

airport. This established regional infrastructure, with easy access to major road

networks, dedicated terminals for air freight, and rail freight located at Daventry

International Rail Freight Terminal (DIRFT) and the Eurohub in Corby, combined with

labour and low property costs makes South East Midlands a competitive location.

7.14 Furthermore, the Leeds and Sheffield City region are developing new Logistics locations

(for example in Wakefield and Doncaster), and South Yorkshire is looking to create a

more northerly national location for a Logistics hub.38

7.15 Availability of skills: Lack of skills is another key challenge for the Logistics sector in

GM. The difficulty in recruiting drivers and warehouse operatives, as well as well-

qualified managers, will only increase as the workforce ages further.

7.16 Tackling the negative perceptions of the industry as a low paying, unsociable industry

for young people and their influencers will be crucial in ensuring the skills gaps are filled

by talented new entrants to the sector. Apprenticeships are currently very rarely taken

up in the sector. The ‘Trailblazer’ frameworks of apprenticeships (which employers

themselves will help to design) may be able to help with this gap between the current

offer and what firms need in practice.

7.17 The sector has a shortage of HGV and LGV drivers. The Government has said 149,000

new drivers will be needed between 2012 and 2020. The issues in this profession are

due to the ageing workforce, as many skilled drivers are retiring, and that a new

younger workforce is not coming through to replace them quickly enough.

7.18 Furthermore, insurance premiums can make hiring a young driver prohibitive. There are

initiatives to counteract this. A pilot in the North West has seen Mantra Learning receive

DWP funding in April 2015 to train 100 Category C drivers and prepare them for full-time

employment.

7.19 Feedback from local education and training providers and employers highlights the

current skills shortages in the following occupations within the Logistics sector within

GM:

Diesel Fitters: There are not enough skilled Diesel Fitters to make required repairs to

HGV and LGV vehicles. However, one of the ways in which this issue is being addressed

is with pilots involving members of the Armed Forces who are returning to civilian life,

whose military skills are being repurposed for the Logistics industry.

Transport Managers: These are professionals working in the office, managing driving

hours and shifts and taking responsibility for vehicle maintenance, and they must have a

CPC qualification. This qualification can be quite difficult to obtain, and although drivers

who obtained their licence before September 2009 have ‘acquired rights’, fewer drivers

have this qualification now.

Warehouse operatives: Although warehouse operatives complete more apprenticeships

than drivers there are still some shortages in this field, particularly when it comes to forklift

38

Sheffield City Region Growth Plan (March 2014): A Focussed 10 Year Plan for Private Sector Growth, 2015-2025

September 2016 35

truck drivers. Forklift drivers must be qualified to a level higher than that of a warehouse

operative, and this qualification is no longer funded by Government. Therefore, some

SMEs are unwilling or unable to provide the extra training to qualify forklift drivers.

7.20 Future skills: As outlined earlier, the sector offers a range of occupations including

many high-skill, well-paid technical and professional positions. One-in-five jobs in the

sector are at Level 4 or above (undergraduate / graduate level occupations).

7.21 While higher level qualifications are increasingly a pre-requisite for management

vacancies, technology is driving productivity improvements and skill needs across all

occupations, from drivers through to distribution centre operatives. E-commerce

represents the latest driver of change in retail logistics, with online retail sales

forecasted to grow by 17% in 2014. Retailers and logistics firms are re-engineering their

distribution networks and infrastructure to provide a complete management of the

supply chain.

7.22 Technologies commonly adopted include Intelligent Transport Systems, warehouse

automation and technologies such as automated data collection and warehouse

management systems. Consumer demand, utilising technologies like social media and

online shopping, will continue to drive change across logistics in the next decade. For

example, Click & Collect and overseas deliveries are expected to develop and increase.

7.23 Key to both of these developments is the integration of processes, information systems

and infrastructure, like warehouses and vehicles, to enable the supplier to meet

consumer demand from whatever their location. The main barrier to adopting

technology is employee buy-in. Well managed, structured planning processes with good

communications and training and development plans can be used to overcome this.39

7.24 There are several examples of relevant areas of learning offered by institutions in GM.

The Alliance Manchester Business School offers Operations, Project and Supply Chain

Management as an MSc qualification. The University of Salford Business School offers

a Procurement, Logistics and Supply Chain Management MSc/PgDip/PgCert Accredited

by the Chartered Institute of Purchasing and Supply (CIPS); and a Logistics and Supply

Chain Management PgDip is delivered at Manchester Metropolitan University that is

accredited by The Chartered Institute of Logistics and Transport (CILT) and The

Chartered Institute of Purchasing and Supply (CIPS).

39

UKCES (2014): Understanding Skills and Performance Challenges in the Logistics Sector – The Role of Technology In the Sector

September 2016 36

8 Spatial Considerations 8.1 The Logistics sector presents strong opportunities for growth, at different scales, across

GM. Local distribution centres will continue to develop close to residential areas and

there is particular demand for larger multi-modal sites to accommodate regional, urban

and potentially national, distribution centres, evident both from the MDS Transmodal

study and MIDAS’ records of lost projects to other parts of the North West. These will

build upon GM’s strategic position along major north and south, and east and west

transport connections.

8.2 Sites identified through the Deep Dive analysis that are potentially of GM significance

should they be fully developed (given their scale, their suitability to meet the clear

market demand for logistics sites, and their potential to accommodate housing growth)

are:

o Port Salford and Carrington (Western Gateway): Building on growth from the

widening of the Panama Canal and potential growth in container logistics, the only

tri-modal opportunity in GM.

o Logistics North: Potential to develop Regional Distribution Centres which can

serve GM, south east Lancashire, and Liverpool.

o Heywood Industrial Park: Taking advantage of motorway access and links to the

regional centre and northern parts of GM.

o The area around J25/26 of the M6 is attractive from a market perspective for

distribution centres to take advantage of strong north/south and east west

connections from the M6, M62 and East Lancs Road.

8.3 Manchester Airport also offers significant bellyhold capacity direct to key locations

worldwide such as to Dubai, now the largest international passenger airport globally.

Global Logistics at Airport City provides additional space with direct access to the

regional motorway network for specialist air freight forwarders and express/courier

operators handling urgent or perishable cargo.

8.4 The list of sites above is not definitive and it will also be important to consider smaller

sites that have the potential for logistics use examples exist of such sites across GM

including, but not limited to: Foxdenton (Oldham), South Lancashire Industrial Estate

(Wigan); and Stakehill Industrial and Distribution Park (Oldham, Rochdale).