The UK is a very open economy. Last year alone, we ran a goods trade deficit of £243 billion. It means we are deeply connected to global markets and highly exposed when disruption hits. After the shocks of Brexit and Covid, many businesses were hoping for a period of relative stability. Instead, fresh geopolitical tensions are once again testing the resilience of our logistics sector.
At the time of writing, the US and Iran have just called a ceasefire and are in negotiations over ending the conflict. The outcome is far from clear, however. Whatever happens, there has already been an impact in terms of higher fuel costs.
Diesel typically accounts for around a third of a haulier’s operating costs, so sustained increases feed quickly and directly into road freight, but oil also affects the cost of shipping and air freight. And these impacts ripple through supply chains, affecting businesses and ultimately consumers.
Warehouses operate most productively when they can rely on the transport networks that bring goods in and take orders out. If disruption continues, the longer-term impact is likely to be a shift in how supply chains are managed. Before the pandemic, efficiency had been the dominant model for many years, with lean inventories and tightly optimised networks. Since 2020, resilience has moved back into focus. And now, more than ever, that means holding more stock, building in contingency, and relying more heavily on warehouses to act as a buffer against uncertainty.
There are also important implications for specific types of goods. There is no immediate concern about shortages of food or medicines. The UK logistics sector is highly sophisticated, and our members are experienced in handling sensitive products safely and reliably. However, the longer disruption persists, the more pressure builds. And with the wider economy still recovering from a relatively weak patch, cost inflation and uncertainty are harder to absorb.
Extended transit times and higher costs can reduce shelf life for fresh products, increasing the risk of waste. Food supply is relatively flexible, with scope to substitute products or adjust sourcing. Medicines are different. They are more tightly regulated, often temperature-controlled, and far less adaptable. That makes robust, well-managed warehouse operations absolutely critical to maintaining continuity and quality.
The lesson here is not that the system is failing. On the contrary, it is holding up remarkably well. But it is being tested again, and we should not take that resilience for granted. Strong warehouse operations, good data, and experienced people remain the foundations that keep goods moving.
As ever, warehouses may dominate the landscape, but the work inside them often goes unseen. Yet it is central to the outcome. When disruption hits, it is our sector that absorbs the shocks and holds the system together.
Clare Bottle
UKWA, CEO
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