Cash flow crisis to hit in June
Breathing space The government has made some changes to the way applications work in an attempt to speed them up.
‘Only time would tell if the process is as easy as the government hopes,’ explains Wells.
The FTA hopes the latest - Bounceback loan, will provide breathing space for both smaller firms and banks.
It was brought in at the beginning of May, allowing businesses with up to £200,000 revenue to get a £50,000 loan interest and repayment free in the first 12 months.
The loan is self-certified with basic fraud and identity checks.
Wells hopes that the loan could be beneficial, especially for the truck market and firms with one or two vehicles. →
FTA is asking the government to look for an extension of the Brexit transition period. The association, the largest representative of the logistics industry in the UK, says the sector will not be able to deal with the impact of Covid-19 and prepare well for any new rules due to Brexit. ‘The capacity to prepare for Brexit is significantly damaged,’ says David Wells, CEO of FTA. ‘We don’t believe the industry will be ready in time.’
The association has been pushing the government to help smaller companies access help faster as many of them are not used to and do not have the capabilities to deal with more complicated applications
Relaxing rules Wells welcomes the changes made to the Corona Business Interruption Loan Scheme (CBILS). He believes making it easier for companies to borrow money would turn out to be a much needed relief for everyone.
‘CBILS should start to flow a lot easier now that restrictions are changed,’ FTA’s CEO adds.
Some banks have already relaxed the rules and do not require a forecast about expected expenditure in order to qualify for CBILS.
Additionally FTA is worried what firms receive might be too low. It is still unclear how much is being given and this stops businesses leaders from properly assessing the success of the schemes.
‘I think these are good schemes, butwe need to see how they areworking,’ Wells explains.
Rail Silk Road The rail Silk Road could benefit because of
the way the world economy is restructuring.
The announcement of the extension of the government’s furloughing scheme will be welcomed by logistics businesses that have been directly impacted by the shutdown of the economy, providing a longer term stability to protect their staff from redundancy. However, it is vital that the option of part-time furloughing is made available to our sector now, to accommodate the gradual return of trade in all sectors, says Wells.
Many industries and modes of transportationwill suffer and struggle to get to theirpre-Covid levels.
It is expected this could lead to using alternative ways of transportation that were not seen as the most effective just a couple of months ago.
Air cargo ‘Air cargo rates could stay at high levels for a significant period of time,’ explains Wells.
This means the demand for waterbornefreight will increase.
Wells however says the seaborne freight will experience some turmoil because different countries went into lockdown at different times.
As China is reopening and starting toproduce and ship goods again, Europe andthe UK are still closed.
Materials and goods are being stockpiled and there isn’t much space to stock more.
‘The UK government is trying to come up with a solution with where the new containers are going to be stored,’ Wells explains. →...
In need of flexibility
Demand will return to different sectors at different rates and it is unlikely to accommodate full time working right across industry – therefore, it is imperative that logistics businesses be given the flexibility to scale up their workforce in increments, to manage the financial risk of bringing staff back gradually. Without this option, the impact on our sector is likely to be significant and that could have a considerable effect on productivity across the entire economy.
Certain parts of the logistics industry will perform better than others because of the way consumers have changed their habits.
Some businesses might not survive the crisis and work will be picked up by others.
This in turn will lead to more revenue but for a smaller number of firms. Small companies can compete with large firms as long as they are provided with enough support.
David Wells is Chief Executive of the Freight Transport Association (FTA) representing industry’s freight interests by road, rail, sea and air. David joined FTA in April 2009 as Finance and IT Director; subsequently taking on additional responsibility for the Association’s Vehicle Inspection Service, Training and Tachograph Analysis Service. David became Chief Executive in early 2015 and since then has seen membership grow by 10%.