United Kingdom - Transport and Logistics: Innovation driven industry (Strategy, Performance and Risk Analysis)
The UK has broad transportation infrastructure involving road, rail, air, water and IT support for the transport system. It ranks higher than its regional counterparts - Italy, Germany, Sweden and Spain. In terms of infrastructure, the country’s rank on the Logistics Performance Index rose from sixth in 2014 to fifth in 2016, ahead of Switzerland, France, Italy and Spain which respectively ranked seventh, 15th, 19th and 25th. Extensive infrastructure is largely supported by government investments that aim to improve road, rail and major airports. These infrastructure developments support increasing freight and passenger traffic in the UK, which drive the performance of the sector. The UK’s future trade, which will be impacted by Brexit, will affect the performance of different sectors, including the aviation industry.
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Growth in transportation to drive GVA
In the UK, total GVA from the transportation and logistics industry recorded a CAGR of 0.9%, rising from US$99.6bn in 2012 to US$104.2bn in 2017. It is projected to post a CAGR of 4.1%, from US$110.2bn in 2018 to US$129.3bn by the end of forecast period. An increase in air, rail and road transport will help to drive the industry’s GVA.
Increase in freight volume to drive air freight traffic
In the UK, total air freight traffic registered a CAGR of -1.5%, falling from 6,243.5 million ton km in 2012 to 5,793.4 million ton km in 2017. However, it is projected to rise at a CAGR of 4.1% over the forecast period, from 5,997.1 million ton km in 2018 to 7,053.8 million ton km by 2022. The growth in freight volume is anticipated to drive air freight volume.
High demand for air travel to drive fleet growth
The active fleet size of aircraft in the UK recorded a CAGR of 9.7%, from 614 units in 2012 to 975 in 2017. It is projected to post a CAGR of 6.6%, rising from 1,049 aircraft in 2018 to 1,357 in 2022. Increasingly, both passengers and freight companies prefer to use air as a medium of transportation, which accounts for the increase in the country’s active fleet size.
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