The Evolution of UK Trade and Transport Infrastructure
Using World Bank data, how does the UK’s logistic performance compare to its peers over the last decade
Executive summary
While the UK’s Logistics Performance Index (LPI) score remains relatively stable, it has decreased in 2010, 2018, and 2022. A key question this article addresses is: how does this compare to other Northwestern European countries? Answering this draws out the unique factors determining the UK’s LPI . The article’s findings underscore the need to improve logistics-based infrastructure in the UK. A greater focus is required on maintaining the quality of trade and transportation of infrastructure and services.
Introduction: The need for high-quality infrastructure in the UK
In the UK, high-quality infrastructure has long been an indicator of the sustained success of supply chain processes, but in a BANI (Brittle, Anxious, Non-linear, Incomprehensible) world that has dealt with recent conflicts such as Brexit and the COVID-19 pandemic, the quality of trade and transport-related infrastructure has been under pressure. As a major regional and global trade hub, the UK has experienced an outsized benefit from its logistics processes and infrastructure. However, trade and transport-related infrastructure require continuous innovation and ongoing quality control. The quality of land-based and maritime trade depends largely on the efficiency of this architecture. Without frequent assessments of the quality of infrastructure and ongoing improvements, especially during economic uncertainty, stagnation can lead to logistical failure and a lower quality of life for residents.
Due to the UK’s exit from the European Union and the aftermath of the COVID-19 pandemic, local supply chain networks experienced several setbacks. The UK landbridge experienced higher rates of congestion and increased customs checks. As a result, usage of the UK landbridge weakened, with alternate direct routes between Ireland and continental Europe becoming an increasingly popular option. Following the pandemic, concerns arose regarding insufficient funding for managing infrastructure strains at UK ports. Ongoing worries about the inability to handle delays and other setbacks could lead to growing disapproval of existing maritime infrastructure within the UK.
Chart
Based on World Bank data, this waterfall chart shows changes in the UK’s Logistics Performance Index (LPI) for trade and transport infrastructure from 2007 to 2022. The LPI, rated from 1 to 5, reflect a composite score of the quality of customs efficiency, infrastructure, and tracking capabilities, with higher scores indicating better performance.
Data: World Bank
Construction of data
The World Bank calculates LPI through two main methods. Firstly, an online survey of international logistics operators compares logistics “friendliness” across trading countries. Secondly, detailed information from data partners on maritime shipping, container tracking, postal freight, and air freight activities is gathered.
Timeline
Following the 2007 recession, logistical performance initially decreased, though it improved briefly before Brexit. In 2016, the logistic performance declined again, particularly leading up to and after the COVID-19 pandemic. Despite some consistency in infrastructure quality, there was a notably lower rating in 2022. Post-Brexit and post-pandemic conditions combined may have been responsible for a lower score in 2022. For example, the rising costs and reduced efficiency of logistics processes and resource allocation placed more strain on existing infrastructure such as roads, ports, and railway systems. Higher levels of uncertainty may have slowed down supply chains and altered efficiency. Furthermore, following Brexit, exporting activity between the UK and Europe experienced a decline during this timeline, and unemployment increased for workers in the transportation industry. These conditions may have affected the quality of existing logistical processes and quality maintenance.
Upon initial viewing, the quality of infrastructure in the UK has generally been consistent, with most of the ratings in the past decade scoring around 4.0. Notably, the UK’s score was lower than that of Switzerland and several other European countries in 2022 and 2023. If logistics aren’t prioritised, this lower ranking may remain, whereas before in 2016 and 2018, for example, the UK’s infrastructure score outranked Switzerland. However, between 2007 and 2016, the UK frequently fell behind Switzerland and Germany. In 2023, the UK was 25 spots below Switzerland, a sharp and sudden decrease relative to the high-performing European countries.
Based on the limited variation in the graph, and how the UK has remained solidly middle of the pack in between Netherlands, Belgium, Switzerland, and Germany on one side, and lower scoring countries such as Spain, Portugal, and Ireland, it may be that the negative impacts from Brexit and the pandemic were limited. However, the UK needs to determine areas where it can start to compete with other high-performing European countries.
Limitations of the data
Following this, a key problem is that it’s not easy to identify a causal relationship between the effects of Brexit and COVID-19 on trading infrastructure. The data is an aggregate measure so some key questions remain. For example, were the improvements in 2014 seen throughout the UK, or only in several metropolitan areas? Did some regions and modes of transport have a higher rating in 2010 and 2022, despite the small quality decrease in UK infrastructure during those years? Is the UK’s LPI score uncorrelated with other European countries? If not, what are the biggest correlates?
Conclusion
Examining LPI ratings helps determine the calibre of a country’s resources for participating in international supply chain activities. Despite the UK’s generally consistent LPI rating, it is clear that the quality of infrastructure can decrease dramatically during crisis years. Steps must be taken to ensure that current infrastructure is maintained and that preparation is made for global recessions. For example, solutions could centre around fixing data lapses in digital systems that monitor the quality of railway systems, ports, and freights. Since 2022, there has been a push for making logistics tracking systems more cloud-based and up-to-date, which is a step towards supporting smart port operations. An example startup in this space is Cargo Stream, a company that focuses on using cloud-based technologies and a digital interface to help freight forwarders and shippers monitor logistics processes.
Ensuring that infrastructure quality is maintained across the UK’s transportation hubs will help keep it at the forefront of logistical innovation, even as the nation seeks new options for international trade growth in the 2020s.