Doncaster Logistics Strategy - Maximising the Economic and Social Benefits of the Logistics Sector

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1 Doncaster Logistics Strategy - Maximising the Economic and Social Benefits of the Logistics Sector Prepared for Doncaster Metropolitan Borough Council

2 Contents 1 EXECUTIVE SUMMARY INTRODUCTION CURRENT POLICY REVIEW NATIONAL POLICY REGIONAL POLICIES LOCAL POLICIES LOGISTICS AND THE REGIONAL ECONOMY LOGISTICS MARKET DEFINITION CURRENT ECONOMIC CONTRIBUTION METHODOLOGY ECONOMIC CONTRIBUTION SUMMARY FUTURE ECONOMIC CONTRIBUTION BASELINE FORECAST POLICY ON FORECAST SPATIAL PROVISION ANALYSIS ANALYSIS OF SUPPLY CHAIN TRENDS AFFECTING FUTURE WAREHOUSE DEMAND GLOBALISATION MULTI-TIER DISTRIBUTION HUB & SPOKE TYPE OF WORK PERFORMED MULTI-MODAL TRANSPORT NEAR-SHORING CONCLUSIONS SITE SELECTION CRITERIA PROXIMITY TO MARKET MODAL FLEXIBILITY SITE SIZE AND CONFIGURATION TRUCKSTOPS ANALYSIS OF CURRENT AND FUTURE SUPPLY CURRENT SUPPLY QUALITY, QUANTITY AND LOCATION FUTURE DEMAND QUALITY, QUANTITY AND LOCATION LOCAL MARKET ANALYSIS ATISREAL COMMERCIAL VIEW OF LANDUSE QUANTUMS OCCUPIERS PERSPECTIVE EMPTY RATES LEGISLATION SURVEY OF LOCAL BUSINESSES CONSULTATION EVENT TYPOLOGY OF SIZES SUMMARY Atisreal UK a BNP Paribas Company 2

3 6 ADVANCED LOGISTICS SUSTAINABLE LOGISTICS THE FABRIC THE COMMUNITY THE ECONOMICS SUMMARY LOGISTICS CLUSTERS DEFINED DEVELOPMENT AVIATION AS A LOGISTICS ECONOMIC SPUR LOGISTICS SKILLS CURRENT ENVIRONMENT CURRENT PROVISION THE CHALLENGE EVOLVING OPPORTUNITIES YOUTH CONCLUSIONS PARTNERSHIP DELIVERY SKILLS & REPLACEMENT DEMAND ANALYSIS CONCLUSIONS POLICY RECOMMENDATIONS AND STRATEGY SHORT TERM BRANDING LOGISTICS COORDINATOR PLANNING DESIGN DEVELOPMENT STRUCTURE INFRASTRUCTURE SKILLS MEDIUM TO LONG TERM PARTNERSHIP MULTI-MODAL SKILLS REACH CRITICAL MASS CONCLUSIONS Appendices Appendix Logistics Market Definition & Current Economic Contribution Composition of Doncaster s logistics sector Economic contribution of logistics Recent trends and market baseline forecast for logistics employment 113 Policy on scenario analysis Appendix Atisreal Survey of Local Businesses Appendix Atisreal UK a BNP Paribas Company 3

4 Atisreal & Doncaster Metropolitan Borough Stakeholder Event Appendix Detailed Skills Analysis Appendix Skills for Logistics Development Stairway Appendix Yorkshire & Humber Logistics Academy Appendix Logistics Glossary of terms Atisreal UK a BNP Paribas Company 4

5 1 Executive Summary Doncaster has a clear vision for the future: By 2025 Doncaster will be acknowledged as a city of significance in the country and in Europe. This will be based on the recognised advantage of its strategic location, enhanced by its international transport infrastructure. The opportunity for everybody to enjoy the highest quality of life will have enabled Doncaster to attract and retain a growing population with world-class skills in the high growth industries that drive the regional economy.' The delivery of this vision is set out in Doncaster s key strategic documents (including Doncaster s Economic and Borough Strategy). Doncaster has a great deal of potential and is a city in the making: a new airport, a new college building, new ways of doing things, excellent partnerships, the people, communications and land that businesses need. Over the last 10 years Doncaster has attracted large warehouses along both the A1 and M18 corridors. These developments have taken up Doncaster s strategic land supply set out in the Unitary Development Plan. However, Doncaster is aware that the growth in logistics has not relieved deprivation levels in the borough and wishes that its future approach should maximise its impact on addressing the economic needs of the borough as set out in the Economic Strategy. There are 4 principal objectives that need to be addressed; How the logistics sector will provide a range of jobs that are relevant to the need of the borough population especially to support economic diversity. Can the sector provide higher skilled jobs in the research and development sector and supply chains. Can the sector assist in the removal of the productivity gap both in the borough and region. What should the appropriate level of spatial provision be in Doncaster to maximise the benefits and meet higher level policies e.g. Regional Strategies. Areas of work required to meet the objectives of the wider study, which are covered in this report, are: Identifying what the logistics industry is worth to the Doncaster economy both now and in response to policy interventions. i.e. number of jobs, types of jobs, spending, induced jobs, supply chains and other economic measures such as GVA Analysis of the Annual Business Inquiry (ABI) in conjunction with relevant economic forecasts to identify a coherent logistics sector workforce analysis that will inform the future provision of Doncaster s workforce needs Supply Chain trends both nationally and globally have been analysed as to their effect on the future needs of the logistics market. Regional policy background and other relevant national/regional policies have also been accounted for. To assess the current and future contribution of the logistics sector to the region and to garner what the issues facing the sector today and in future are, a survey was devised by the research team. Via online input, mail-in submission, face-to-face and telephone interviews, property developers, logistics operators, investment funds, educational and training bodies, government representatives and external trade bodies were consulted during the course of the study. Atisreal UK a BNP Paribas Company 5

6 The views expressed in this report are those of the consultants and should not be interpreted as the policies of DMBC or other regional bodies. The following provides a brief summary of the main findings from the study. The main document sections and relevant Appendices should also be consulted as they contain the detailed analysis undertaken and background information. Section 3 Current Policy Review We have examined current National, Regional and Local policies in order to asses the suitability of Doncaster to become a logistics hub of the future. Some key findings are: National policy supports the development of the logistics sector through the Eddington report, Rail Freight Utilisation Strategy, National Ports Policy and National Airports Strategy Regional Policies including the Yorkshire and Humber Plan, the Northern Way Growth Strategy and the Sheffield City Region Programme each recommend and identify Doncaster as a Logistics Hub Local Policies including the Sustainable Community Strategy for Doncaster include logistics as a key sector for Development Section 4 Logistics and the Regional Economy A key element of the study is to identify the current economic worth of the logistics sector to Doncaster. Taking this into account the study then forecasts the potential worth of logistics to Doncaster to 2026 taking into account a number of scenarios. Key findings include: Logistics, as we have defined it, accounts for 21,805 jobs in the area. These are direct, indirect and induced jobs. We estimate that the Logistics sector represents 14.9% of Doncaster s GVA, at 546 million. Baseline forecasts estimate an additional 188 jobs per year totalling 3,571 to 2026 Policy on forecasts estimate an additional 500 jobs per annum totalling 10,937 from Policy on forecasts also estimate an additional 220 million GVA from the sector by 2026 Section 5 Spatial Provision Analysis Taking into account both baseline and policy on forecasts for net job creation in the logistics sector it is necessary to apply these figures to identify how much employment land is required to be assigned in the local development framework: The logistics market has an extremely important site selection criteria taking into account; highway links, modal choice, rail connectivity and site size and configuration. Atisreal recommend allocating a minimum of 230 Hectares of employment land based upon the policy on forecast. This is a market led approach to the land allocation The current economic climate, regional development and empty rates legislation will all have an effect on future demand A range of mixed size and mixed type of sites should be allocated to satisfy the tenant/occupier and investment markets. Note that no single site should be smaller than the requirements defined for modern distribution. Including Atisreal UK a BNP Paribas Company 6

7 Commercially attractive rail linked sites are considered to be an intermodal terminal and contain distribution warehousing, with at least 2,000,000 sq ft of floor space in total, and individual plots allowing very large units. Internal rail reception sidings capable of receiving trains up to 750m trailing length An appropriate estate road layout together with parking facilities to accommodate visiting HGVs Increased long haul and continental lorry traffic will require the provision of welfare facilities to keep drivers off common roads and the residential community Section 6 Advanced Logistics Doncaster has the potential to emulate other key logistics hot spots such as the Midlands and Amsterdam. This section examines the conditions and potential policies which can be implemented to achieve this goal: Logistics is a major growth sector as the reliance on imports continues to increase. Although the sector continues to grow, public perception retains inaccurate and outdated views of the industry. This needs to be altered via successful branding and education. With appropriate planning policy in place and by attracting occupiers with strong Corporate Social Responsibility (CSR) initiatives, the logistics sector in Doncaster can grow in a sustainable manner. Substantial advances in design and construction materials and methods have been made in the industrial sector. Planning policy should require that these be incorporated in new developments. Such growth and development will rely on the area s ability to provide staff with the level of skills to meet industry requirements. The role of a Logistics Coordinator will facilitate this skill provision. As it is a more specific requirement, a schools coordinate would assist in the detailed provision. It is important that this provision encompass both higher education for the upper ends of the skill requirements as well as at the junior stages to ensure a continued stable pipeline of appropriate labour. As the traditional logistics sector grows in Doncaster, inward investment efforts will assist in attracting ancillary services thus creating a cluster which incorporates the logistics industry, education, back office services and technical providers. Aviation strategy will enhance the sector s multi-modal logistics offering and should be pursued in tandem. Doncaster can achieve many of the recommendations through careful collaboration of various stakeholder groups and service providers. This is best accomplished by a logistics coordination role which can facilitate this interaction. Section 7 Policy Recommendations and Strategy Lastly the study draws together all previous sections to make recommendations for a Logistics strategy for Doncaster to implement. The study makes a number of policy recommendations as detailed in the table overleaf. Atisreal UK a BNP Paribas Company 7

8 Table 1: Summary of Logistics Strategy Intervention Aims Timescale Facilitator Outcome Monitoring Indicator (LAA Ref) Branding Logistics Coordinator Planning Design Development Structure Infrastructure To Promote Doncaster as the area for best practice and advanced logistics opportunities Individual role to coordinate logistics stake holders, both existing and future targets. Ensure that new design and construction techniques are utilised. Ensure that appropriate parking and welfare facilities are provided. Improve links to Robin Hood Airport. Improve public transport to key logistics sites. Improve capacity on main arterial roads Short Term Should be appointed as an action in the short term but whose goals relate to the medium/long term Short term implementation, medium to long term benefits. Short term investigation. Implementation, medium to long term benefits. Short term implementation, medium to long term benefits. Short term improvements in public transport DMBC/Logistics Coordinator (see below) DMBC or Doncaster Chamber of Commerce DMBC DMBC DMBC Local bus operators Highways Agency Doncaster seen as a primary logistics area in the UK Increased Logistics Investment in Doncaster Sustainable, environmentally conscious sites that provide community benefit. Alleviate impact of lorry traffic on local communities. Improved transport links for logistics operators and the staff who work in strategic warehouses LAA 2 LAA 4 LAA 2 LAA3 LAA 4 LAA 4 LAA 27 LAA 4 LAA 27 LAA 2 LAA 7 LAA 27 Review timescale Annually after implementation Annually after implementation Annually Annually after implementation Annually Skills Increase training and skills in the logistics sector to provide a highly skilled workforce to logistics operators, both at shop floor level and management positions Short term implementation, benefits realised in the short, medium and long term DMBC Doncaster College Skills for Logistics Train to Gain Higher skilled workforce ensuring more advanced logistics jobs are created in Doncaster LAA 1 LAA 2 LAA 10 Annually Atisreal UK a BNP Paribas Company 8

9 Table 1: Summary of Logistics Strategy Intervention Aims Timescale Facilitator Outcome Monitoring Indicator (LAA Ref) National Logistics Academy Partnership Multi-Modal Development Reach Critical Mass Schools Coordinator Should the proposed National Logistics Academy go ahead Doncaster should aim for this to be located in the area Establish links and programmes with other stake holder such as Wakefield first, Huddersfield University and East Coast ports Improve rail capacity, FARRRS Project Aviation Strategy Growth as an Advanced Logistics Sector Individual role to coordinate logistics stake holders, secondary & higher education. Short Medium term Medium to Long Term Medium to Long Term Medium to Long Term Short Term appointment, medium to long term actions DMBC Yorkshire Forward Skills for Logistics DMBC Logistics Coordinator DMBC Network Rail Highways Agency Robin Hood Airport All local Stakeholders DMBC or Doncaster Chamber of Commerce. Reporting to Logistics Coordinator Doncaster seen as a national centre for Logistics Excellence Collaborative effort, especially in relation to skills and training, will see greater opportunities in both Doncaster and the wider region with the creation of an advanced logistics sector A key factor in future developments will be their ability to link with different transport modes. By linking rail, with port operations and then to air freight and onward road transport Doncaster will become a true multi-modal logistics hub Increased awareness of opportunities LAA 4 LAA 2 LAA 10 LAA 4 LAA 2 LAA 10 LAA3 LAA 7 LAA 27 LAA 1 LAA 10 Review timescale Periodically to monitor funding possibilities Annually By end of Strategy timeframe By end of Strategy timeframe Annually after implementation LAA 1 Reduce Worklessness & Financial Exclusion LAA 2 Stimulate Enterprise & Innovation in new and existing key business sectors LAA3 Maximise the potential growth of Robin Hood Airport LAA 4 Raise Doncaster s profile as a place to visit and invest in LAA 7 Improve Doncasters transport system to meet the needs of residents, businesses and visitors LAA 10 Build a Skilled and Diverse Workforce LAA 27 Reduce Carbon Emissions to protect the local and global environment. Atisreal UK a BNP Paribas Company 9

10 2 Introduction Doncaster has a clear vision for the future: By 2026 Doncaster will be acknowledged as a city of significance in the country and in Europe. This will be based on the recognised advantage of its strategic location, enhanced by its international transport infrastructure. The opportunity for everybody to enjoy the highest quality of life will have enabled Doncaster to attract and retain a growing population with world-class skills in the high growth industries that drive the regional economy.' The delivery of this vision is set out in Doncaster s key strategic documents (including Doncaster s Economic and Borough Strategy). Doncaster has a great deal of potential and is a city in the making: a new airport, a new college building, new ways of doing things, excellent partnerships, the people, communications and land that businesses need. However despite these opportunities Doncaster s economy continues to experience a range of challenges, with an economic output significantly below the national average, typified by relatively low business growth, low skills levels and high levels of worklessness. According to the Index of Multiple Deprivation 2007 Doncaster is ranked 41st (most deprived) of the 354 districts in England. Over the last 10 years Doncaster has attracted large warehouses along both the A1 and M18 corridors. These developments have taken up Doncaster s strategic land supply set out in the Unitary Development Plan. In addition, Robin Hood Airport (Doncaster Sheffield) has opened with considerable potential for airfreight and proposals are being developed for a Strategic Rail Freight Interchange (Inland Port) off Junction 3 of the M18 at Rossington. Through the Local Development Framework (LDF), Doncaster needs to set out policies for the future level of land allocations and what requirements should be made of future developers that meet the objectives of the Economic Strategy, the Regional Spatial Strategy and Regional Freight Strategy. The growth in logistics in Doncaster has largely been road based but new opportunities exist to seek a more integrated and sustainable approach by focussing on intermodality linking into rail connectivity and airfreight and possibly the South Yorkshire Navigation Canal. This approach also is intended to include a more pro-active stance toward more improved design techniques, sustainable qualities and accessibility to provide better links to deprived communities in need of accessible employment and skills development. However, Doncaster is aware that the growth in logistics has not relieved deprivation levels in the borough and wishes that its future approach should maximise its impact on addressing the economic needs of the borough as set out in the Economic Strategy. In order to support economic diversification and sector growth, the sixth intervention designated by the DMBC includes action to support advanced logistics in particular to bring forward a clear strategy for future growth in logistics which could include specifying jobs per site, employer commitments to training and workforce up-skilling, action to link deprived communities to employment sites, expand logistics employment across skill levels, develop airfreight facilities at Robin Hood Airport, and seek research and training provision based on the logistics sector. Atisreal UK a BNP Paribas Company 10

11 There are 4 principal objectives that need to be addressed; How the logistics sector will provide a range of jobs that are relevant to the need of the borough population especially to support economic diversity. Can the sector provide higher skilled jobs in the research and development sector and supply chains. Can the sector assist in the removal of the productivity gap both in the borough and region. What should the appropriate level of spatial provision be in Doncaster to maximise the benefits and meet higher level policies e.g. Regional Strategies. Areas of work required to meet the objectives of the wider study, which are covered in this report, are: Identifying what the logistics industry is worth to the Doncaster economy both now and in response to policy interventions. i.e. number of jobs, types of jobs, spending, induced jobs, supply chains and other economic measures such as GVA Analysis of the Annual Business Inquiry (ABI) in conjunction with relevant economic forecasts to identify a coherent logistics sector workforce analysis that will inform the future provision of Doncaster s workforce needs Supply Chain trends both nationally and globally have been analysed as to their effect on the future needs of the logistics market. Regional policy background and other relevant national/regional policies have also been accounted for. To assess the current and future contribution of the logistics sector to the region and to garner what the issues facing the sector today and in future are, a survey was devised by the research team. Via online input, mail-in submission, face-to-face and telephone interviews, property developers, logistics operators, investment funds, educational and training bodies, government representatives and external trade bodies were consulted during the course of the study. The views expressed in this report are those of the consultants and should not be interpreted as the policies of DMBC or other regional bodies. Atisreal UK a BNP Paribas Company 11

12 3 Current Policy Review In order for any future interventions to be included within the draft logistics strategy they must align and support the policy objectives of, in turn, the country, the region and the local area. In this chapter the policies from major published documents are summarised and documented in order to collate the salient points from the various documents. 3.1 National Policy The current Government s transport policy was initially set out in Transport 2010: A 10 Year Plan. More recently, in response to increasing concern over the implications of climate change, Government has reviewed the emphasis of national transport policy, particularly in response to the Eddington study to improve transport s contribution to economic growth and productivity and the Stern Review of the Economics of Climate Change. Eddington Report The Eddington Report was commissioned by the Government to examine the impact of transport decisions on the environment and economy, along with recommendations on how to improve the existing transport network. The report found that: A high-performing transport system is an important enabler of sustained economic prosperity. Emissions from the transport sector are a significant and growing contributor (around a quarter in 2004) to the UK s overall greenhouse gas emissions, although the growth in emissions is forecast to plateau in Delays and unreliability on the network have direct costs to people and businesses. Eliminating existing congestion on the road network would be worth some 7-8 billion of GDP per annum. The UK transport system provides the right connections in the right places to support the journeys that matter to economic performance. The key economic challenge is to improve the performance of the existing network. The main recommendations of the report were that: The Government should focus policy and sustained investment on improving the performance of existing transport networks, in those places that are important for the UK s economic success The three strategic economic priorities for transport policy should be: congested and growing city catchments; and the key interurban corridors and the key international gateways that are showing signs of increasing congestion and unreliability. The Government should adopt a policy mix to meet their goals. Policy should get the prices right and make best use of existing networks. The Government should deliver sustained and targeted infrastructure investment, in those schemes which demonstrate high returns, including smaller schemes tackling pinch points. The policy process needs to be rigorous and systematic: start with the three strategic economic priorities, define the problems, consider the full range of modal options using appraisal techniques that include full environmental and social costs and benefits, and ensure that spending is focused on the best policies; and The Government needs to ensure the delivery system is ready to meet future challenges Atisreal UK a BNP Paribas Company 12

13 Towards a Sustainable Transport System supporting economic growth in a low carbon world This consultation document confirms the Government's commitment to a transport policy which delivers economic growth and lower carbon emissions. It summarises the policy and investment plans over the period to 2014; and describes how the Government will implement a new approach to strategic transport planning for the period and beyond. Goal 1 is to maximise the competitiveness and productivity of the economy by: Making best use of existing networks Targeted new infrastructure investment, with smaller projects to unlock pinch points potentially offering very high returns. Adapting the delivery chain to meet changing demands Goal 2 is to address climate change by cutting emissions of greenhouse gases by: Putting a price on carbon. Developing and using of a wide range of low-carbon technologies Removing barriers which prevent people from making informed decisions. Goal 3 is to protect people s safety, security and health. Goal 4 is to improve quality of life through a healthy natural environment. Goal 5 has particular relevance to Doncaster s aims for the logistics sector, being to promote greater equality of opportunity. Ensuring that our transport systems provide effective access for everyone, including disadvantaged groups and disabled people, to jobs, services and social networks is a core aim of transport policy. Towards a Sustainable Transport System The Logistics Perspective Published in December 2008, this consultation document seeks to build on the initial DfT effort by focusing on logistics and looking at how government and this substantial sector can work together to achieve the goals listed above. Though it looks at commodity more specifically than mode, as a transport document it fails to look at the impacts of the supply chain as a whole. There are several key conclusions for Doncaster and logistics in addition to that noted above. It notes that there must be specific targeting for support to the logistics sector. In this, Doncaster s inclusion of this vital industry sector in their LDF structure conforms to this goal. The document proposes the need for a long term planning framework and assumes the future need for National Policy Statements to guide the planning policy. Though it refers to transport here, there are existing corollaries to associated property as well. The emphasis on promoting a healthy natural environment and quality of life must be taken into account when assessing planning applications. The detailed considerations for Doncaster are detailed in the subsequent Sustainability sections but should be noted here that Doncaster would be in line with these proposals in pursuing higher quality design. The report insists that government must ensure that routes and modes are used in the most effective and efficient manner. Further it contends that it is imperative to promote and fund a behavioural change from road to rail. This is a key point for Doncaster as well. Throughout this document, reference is made to the need to provide a range of options for logistics providers. A joined up transport system must rest on a multi-modal basis. Doncaster therefore must Atisreal UK a BNP Paribas Company 13

14 continue to pursue initiatives to support and grow aviation and rail capability in addition to its excellent road capability. Importantly, it must create ease of access to the multiple modes by investing in the interlinking infrastructure. The report merely touches on the future need to look at where goods are coming from and to in relation to carbon management. With the appropriate multimodal capabilities and links in place, Doncaster would be ahead of this process providing links to the ports and markets. Additionally, the report discusses carbon management and skills as separate entities. Doncaster can combine these initiatives. Increased skill capabilities and advice from industry bodies can draw on freight best practice to create the operational tools to produce improved carbon management. The initiatives currently in place in Doncaster, combined with strategy proposals contained in this document, pursue the goals as set out in this whitepaper. Rail The White Paper Delivering a Sustainable Railway (July 2007) fulfils the remit the Government set itself in 2005 to provide strategic direction for the rail industry. The Railways Act 2005 places a statutory duty on the Government to set out every five years how much public expenditure it wishes to devote to rail and specify what it wants the railway to deliver, notably in relation to safety, reliability and capacity. The formal statement, including the High Level Output Specification and Statement of funds available, is contained within the White Paper. It covers the period 1 April 2009 to 31 March The White Paper looks at the potential future challenges for the railway over a 30-year horizon. It identifies three long-term agendas for Government and the rail industry working in partnership: increasing the capacity of the railway, delivering a quality service for passengers, and fulfilling rail's environmental potential. The Strategic Railway Authority (SRA) published their freight strategy in 2001 designed to deliver growth, specifically the 80% growth over the period of the Government s 10 Year Plan, by encouraging modal shift from road to rail. Achievement of this objective will increase rail s market share from its current 7% to 10%. The Strategy also looks to provide for sustainable growth beyond the 10-year horizon. For industry, the aim of the Strategy is to secure rail freight services which are more competitive, more reliable and meet its needs. The Strategy is set out in four elements covering the Network, Interchanges, Funding and Service Delivery. Of particular relevance to Doncaster is the section in interchanges which states: Growth from traditional rail markets will require additional and replacement facilities at quarries, steel stockholding points, open cast sites, major manufacturing and production plants etc; Capturing a greater market share of imports and exports will require expanded port facilities and inland terminals; Growth in use of rail for the general freight market will require a substantial increase in the proportion of warehousing that is rail connected and some increase in intermodal handling capacity to serve the major centres of economic activity. Atisreal UK a BNP Paribas Company 14

15 East Coast Main Line Route Utilisation Strategy (RUS) This document looks at the short to medium term future of the East Coast Main Line (ECML), the document details where there are constraints and offers a strategy which encourages consolidation and a more efficient use of the existing railways. The study states that it is catering for medium-term freight growth through investment in infrastructure capacity between Peterborough and Doncaster. Other relevant objectives from the ECML RUS include: Upgrading the line from Peterborough via Spalding to Doncaster for increased freight use to relieve the East Coast; Gauge enhancements on key freight arteries to allow for larger trains; Improvements to the Peterborough Doncaster route via Spalding and Lincoln will create effectively four tracks over this section; and Additional freight paths will be provided south of Doncaster to support the level of demand forecast in the Freight RUS. Freight Route Utilisation Strategy The Freight RUS was developed in order to ensure that sufficient capacity is available to meet expected growth in freight traffic up to 2014/5. There are forecasts for an average increase of 5-10 trains per day (current level is approximately 30) through Doncaster. The lines through Doncaster form part of the core east coast ports supply route. Railway lines are assigned one of a series of loading gauges, indicating what size loads are permitted on the line. In the UK, they are denoted by the letter W followed by a number (e.g. W6) - the higher the number, the larger the load that may be conveyed. Many goods transported by rail are carried in ISO shipping containers. These may be 8 6 high or 9 6 high. The trend is for shipping companies to use the taller containers where possible. The relationship between loading gauge and shipping container size is as follows: W8 gauge permits 8 6 high ISO containers to be carried on standard flat wagons. W8 gauge also permits 9 6 high ISO containers to be carried on special well wagons. However, this reduces capacity per train by one third. W9 gauge permits the full range of intermodal units on standard platform wagons 9'6" tall 'high cube' maritime containers and 45' length intra- European intermodal containers. W10 gauge permits 9 6 high ISO containers to be carried on standard flat wagons W12 gauge permits 9 6 high containers wider than ISO standards (such as those used within Europe, which are up to 2.6m in width) to be carried on standard flat wagons. The ECML is rated as W9 through Doncaster; while surrounding lines are mostly W8 gauge (including to Hull and Immingham). There is an existing commitment to provide W10 gauge clearance from Felixstowe to Doncaster via the ECML, and there are plans to provide W10 gauge clearance from Doncaster to Manchester, Birmingham, and Glasgow via Edinburgh. The rail freight industry has aspirations to upgrade the major routes through Doncaster to W12 clearance. Atisreal UK a BNP Paribas Company 15

16 National Ports Policy The maritime industry is vital to the UK economy. Ninety-five per cent of the UK's international trade in goods travels by sea and the combined net overseas earnings of maritime services and shipping is worth about 2.5 billion a year. The Department for Transport has a range of responsibilities covering the maritime industry. In relation to ports, the Government s overall objectives are to: Put together policy that ensures the UK balances commercial interests with safety, security and environmental considerations; Promote a successful, safe and sustainable UK ports sector that meets the needs of its customers; Encourage shipping companies to be British registered; Implement and influence European Union legislation; Ensure efficient delivery and modernisation of marine aids to navigation. Ports The nation's ports are vital gateways for UK trade and it is central government s role to ensure they operate efficiently, safely and sustainably. The aim is to ensure a successful ports industry whether in private, trust or local authority ownership. The private sector continues to invest in ports and particularly in the growth sectors of container and roll-on/roll-off (ro-ro) ferry capacity. The National Ports Council was disbanded in The NPC was the last example of direct government involvement in port strategic planning. The Ports Bill of 1991 led to the privatisation of some ports. About 95% of goods consumed or produced in the UK come and go by sea. Immingham and Grimsby was the busiest port in the UK in 2006 (DfT) and 2007 (ABP) in terms of tonnage of goods. In 2000 the Government published the Modern Ports policy framework followed by a reassessment of policy in a major review. Modern Ports: A UK Policy (2000) The DfT publication Modern Ports in 2000 stressed the need for better rail links to port facilities. We want to see more freight moved by rail. Transport 2010: 10 Year Plan set out plans for a spending of 180 billion over the next ten years on land transport in England, including improvements in surface access to ports and airports. As identified by the report, the main challenge faced by the Humber ports is the need to accommodate competing development pressures while safeguarding the internationally important environment of the estuary. Ports Policy Review (2007) The DfT Ports Policy Review (July, 2007) suggested that the demand for port capacity would grow. In the container and ro-ro sector, an average annual growth of around 3-4% was expected. The review envisaged no additional benefits from a locally or regionally determinative ports policy. Atisreal UK a BNP Paribas Company 16

17 The report recommended the use of Master Plans by major ports to improve planning in order to meet the anticipated growth in demand. The review acknowledged that a crucial aspect of ports policy is inland connections to ports, but the inland access policy should be established in the context of DfT s wider consideration of the Eddington study recommendations. National Airports Policy Aviation is a major UK industry, carrying over 180 million passengers a year and over 2.1 million tonnes of freight. Demand for air travel is growing. The Government s stated aim is to develop a long-term framework that will maximise the beneficial aspects of aviation and minimise the negative ones. In December 2003, the Government set out a sustainable long-term strategy for the development of air travel out to The Air Transport White Paper (ATWP) argued that the aviation sector must fully meet its environmental costs. The Civil Aviation Act of 2006 was a progeny of this strategy. The White Paper stressed the need to continue the air services from Scotland, Northern Ireland and North England to the major London airports. It was mentioned that London slots for essential regional services would be protected by imposing public service obligations where necessary. The ATWP conceived the idea of including an emission-related element in airport charges. The White Paper provided a strategic framework which recognised the importance of air travel to the national and regional economic prosperity and also stressed upon the need to make best use of existing airports where possible. 3.2 Regional Policies At a regional level policy is set out in The Yorkshire and Humber plan (Regional Spatial Strategy to 2026), which was published in May 2008 of which the Yorkshire and the Humber Regional Transport Strategy is part. Other regional documents relevant to Doncaster include the Northern Way Growth Strategy and the Sheffield City Region Programme. The Yorkshire and Humber Plan In formulating the Logistics Strategy consideration should be had for the Yorkshire and Humber (to 2026) Regional Spatial Strategy (Adopted May 2008). The Regional Spatial Strategy (RSS) for Yorkshire and Humber provides a framework for development and investment in the region over the next fifteen to twenty years. It establishes a broad vision for the region and its sub-regions, priorities for growth and regeneration, and policies to achieve sustainable development across a wide range of topics from jobs, housing and transport to climate change, waste and energy. Within the RSS there are a number of policies that the Logistic Strategy has sought to adhere to. Of particular relevance are the following policies: POLICY E1: Creating a successful and competitive regional economy Atisreal UK a BNP Paribas Company 17

18 Policy E1 states that a number of initiatives are required including a modern manufacturing sector and the modernisation of manufacturing industries, which in turn requires a modern logistics sector. The policy also states the importance of ports and airports along with development in line with specific sectors and clusters, of which logistics in Doncaster covers both. POLICY E4: Regional priority sectors and clusters Policy E4 states that plans, strategies, investment decisions and programmes should support key sectors including logistics. Policy YH2 - CLIMATE CHANGE AND RESOURCE USE Policy YH2 emphasises the need to reduce greenhouse gas emissions. The Logistics Strategy echoes this common goal and emphasis the need for more sustainable patterns of development. The need to reduce traffic growth and encourage the use of previously developed land (where practical) is therefore a key objective. POLICY SY1 SOUTH YORKSHIRE SUB AREA POLICY The Logistic strategy reflects a number of the objectives set out in Policy SY1 of the RSS. Of particular importance are the following objectives: The need to make Doncaster a vibrant, healthy and attractive place to live and work, To enhance the quality of retail and commercial variety and convenience, and facilitate the growth of storage/distribution uses elsewhere in the borough maximising the use of rail and water transport. Support initiative to improve skill and capability of the workforce. Build upon the importance of Robin Hood Airport, To improve air quality, particularly along the M1, A1 and M18 corridors, and To improve transport links both within the region and the UK as a whole. Yorkshire and the Humber Regional Transport Strategy Yorkshire and the Humber have a Regional Transport Strategy. This was developed in 2006 and forms Chapter 16 of the Yorkshire and the Humber Plan. There are 9 major Policy objectives within this plan which are listed below; Reduce the need to travel wherever possible by both positive interventions such as improved public transport or by demand restraint and promote modal shift from the car; Seek a consistent approach to parking strategies; Promote improved public transport; Promote the movement of goods by water and rail whilst recognising the key role road has to play in moving freight; Encourage access to tourist locations by public transport and promote the journey component to be considered as part of the tourism offer; Seek to improve access to its airports; Support expansion of its ports and waterways and improve surface access to them; Seek to improve access to services in rural areas by improving transport provision but also by innovative means; and Atisreal UK a BNP Paribas Company 18

19 Support a range of transport and investment priorities that underpin the wider spatial strategy. Regional Economic Strategy: The 10 year ( ) Regional Economic Strategy has 5 main objectives which it is felt are essential in the continuing growth and success of the region. These are. More businesses that last; Competitive businesses; Skilled people benefiting business; Connecting people to good jobs; Transport infrastructure and environment; and Stronger cities, towns and rural communities. Within the transport objective, there are a number of smaller tasks which when completed will assist in the achievement of this objective, these are listed below. Ensure Government commitment to the region s long term transport priorities; Deliver initial transport schemes of economic priority; Ensure effective energy, utilities and broadband investment; and Protect enhance and utilise the environment and natural resources. Northern Way Growth Strategy Moving Forward: The Northern Way Growth Strategy was published in September 2004 and set out the 20 year strategy for the growth of the Northern Regions of England. The Strategy has four key aims: Developing new City Region plans to work across administrative boundaries in the eight major conurbations of the North Key investment priorities that could exploit economic activity across all three regions. Working together differently and collaborating to make the most of 100 million public sector investment in the North and equivalent private sector investment Influencing local, regional and national decision-makers to ensure their policies and programmes support Northern Way goals. In relation to transport and in particular logistics a number of the investment goals are relevant: bring more people into employment strengthen the North s knowledge base: drive innovation capture a larger share of global trade: key clusters meet employer skills needs the North s connectivity Market the North to the world. Regional Freight Strategy (RFS) The objectives of the Regional Freight Strategy are; To understand the opportunities and problems facing sustainable distribution; To offer a better understanding of the freight industry; To provide the basis for maximum economic and social benefit to the region; Atisreal UK a BNP Paribas Company 19

20 To reconcile the need for access for goods with both environmental and social concerns; and To provide an action plan that will deliver these objectives. Currently over a hundred million tonnes of freight was moved in 2003 from the Yorkshire and Humber region to other regions, the majority of which moved by roads, which highlights the importance for improvements. Congestion in the region is considered a constraint to growth and the following objectives have been set by RFS to improve transportation of freight via road: Currently a significant number of lorry drivers are not provided routing information, which leads to drivers getting lost and often causing disruption, and drivers covering extra miles. Therefore an RFS objective is to derive a routing strategy for the region that uses the highest available category for road. Local authorities should implement lorry restrictions on various routes to force lorries to reroute to a specific route. A research study should be carried out to analyse usage of driver rest areas and lorry parking facilities to see what areas require more of such facilities in order to provide more efficient freight transportation. Have real-time traffic information more readily available, so that congestion areas can be avoided. Action to reduce crime against HGV vehicles should be taken. Investigate areas where accidents involving heavy good vehicles are particular likely and analyse any road safety improvements that can be made, as well as providing more driver training courses. Where there are routes causing delays to goods vehicles and no other alternative route is practical, no car lanes should be introduced, so that these good vehicles have property and aren t unnecessary delayed. Almost a quarter of ocean going UK freight is handled by Yorkshire and Humber ports, and this is likely to increase during the next few years. In order to handle the increased demands, the following objectives have been set by the RFS: The road and rail network capacities around the ports need to be increased, to support the increase in demand. Promote the use of shipping for short distances and provide grants for investigating multimodal approach to a better transport network. Develop port facilities and encourage the use of shipping, by offering them planning support. Locate and reserve possible sites for future developments. Improve the access to the ports via road and railways. Yorkshire and Humber has some important pipelines, for instance the pipeline that transports aircraft fuel from Immingham to London airports from oil refineries. RFS objectives for goods lifted by pipeline are: Investigate multi-modal pipelines that can transport several different types of products. Make the best use of pipelines already in place and encourage the development of further pipelines. Almost a third of rail freight in UK is lifted in the region, the majority of which is generated from the ports. Therefore certain improvements are needed so that future demand can be handled: Reduce congestion on the rail route between Immingham and Doncaster and other key congestion areas to support the increased demands at the ports. Atisreal UK a BNP Paribas Company 20

21 Improve the capacity of the South Humber line by removing line speed restrictions on certain parts of the line. Further investigate ways of improving rail line capacity so that it s not a limiting factor for growth on the Humber ports. Find bottlenecks and capacity constraints likely to affect future growth of rail freight. Invest in new or improve current rail freight terminals, especially ones with good rail connections. Need to gain funding for rail gauge and capacity improvements. Identify areas where bridge strikes and accidents relating to level crossings are particularly high, investigate the reasons and address this. Majority of freight lifted by air is moved by airports outside the region. A major objective is to improve new and developing freight services at airports in the region. Yorkshire & Humber Rail Regional Planning Assessment The objective of the Rail Regional Planning Assessments (Rail RPAs) is to develop an understanding of the challenges and options for the development of the railway in each region over the next twenty years in the context of forecast changes in population, the economy and travel behaviour, and associated regional spatial policy and strategy. For the Yorkshire and Humber region, the following objectives were developed and agreed with stakeholders as a basis for considering the future development of the rail network: To improve links in and between the city regions; To increase the labour catchment areas of the city regions to provide agglomeration benefits; To promote regional cohesion and connectivity; To link areas of deprivation to areas of opportunity; and To provide opportunities for modal shift towards more sustainable modes. The issues facing the railway system over the next 20 years which must be addressed in order to meet these regional objectives have been identified as: connectivity how the railway provides effective links in and between the city regions; meeting the demand for rail services the capacity required to meet current and forecast demand; access to the network how the railway integrates with other transport systems and with patterns of urban and rural development; and Freight how the railway meets the needs of the freight distribution sector. In the short-term, the focus for the railway will be on making better use of existing resources and the current network. 3.3 Local Policies Sustainable Community Strategy for Doncaster Doncaster Metropolitan Borough Council has recently published the Sustainable Community Strategy which replaces the 2005 document Shaping Our Future: A Strategy for the Borough of Doncaster By 2025 Doncaster will be acknowledged as a city of significance in the country and in Europe. This will be based on the recognised advantage of its strategic location, enhanced by its international transport infrastructure. The opportunity for everybody to enjoy the highest quality of life will have enabled Atisreal UK a BNP Paribas Company 21

22 Doncaster to attract and retain a growing population with world class skills in the high growth industries that drive the regional economy The Sustainable Community Strategy is intended to provide an overview of the main challenges the Borough faces, and where activity should be focussed. With regards to transport, the Strategy states that the majority of the Borough has relatively good access to the town centre by car. In comparison, access to the town centre by public transport is less effective. The main transport-related outcomes sought by the Strategy are to provide a Doncaster Transport system that: Ensures the town centre is an attractive, vital and accessible location; Provides improved access to major developments, particularly for those most in need; and is safe and sustainable, helping to protect and enhance local communities and the environment. South Yorkshire Local Transport Plan (LTP) The LTP has been put together by the four local authorities (Barnsley, Doncaster and Rotherham Metropolitan Borough Councils and Sheffield City Council) in order to address the transport needs for the region. It has been developed for the period and attempts to demonstrate how the local area was going to meet the transport needs of the different sections of the community. It has four main strategic objectives which are; Tackling congestion Addressing accessibility Better road safety Improving air quality and respecting other quality of life issues The LTP sets out our longer term vision of what local transport will look like in the future and identifies how local transport plays a key role in supporting the transformation of South Yorkshire. The LTP states that public transport in South Yorkshire should provide: a realistic alternative to the car, to support modal shift; provide quality transport for those without use of a car, to support social inclusion; and provide good public transport services, linking businesses with employees and customers, to support sustainable access The main challenges that the South Yorkshire authorities consider they face are: To address the way in which transport affects our communities quality of life in terms of how they get access to the opportunities they need and the environmental and social effects of car growth; and To secure the strategic and local transport infrastructure and services that will sustain and develop our long term economic transformation. In order to meet these and other non transport related objectives the Councils consider that they must deliver in the following areas: Strategic initiatives to support and sustain a high growth economy and ensure excellent road, rail and air links to South Yorkshire that build on the county s relatively strong position on the motorway network, and on crucial north-south and Trans-Pennine rail routes; High quality public transport connections that support the economies of the South Yorkshire districts by linking the 4 main urban centres and the new international Robin Hood Airport Doncaster-Sheffield (RHADS); Atisreal UK a BNP Paribas Company 22

23 High quality, car competitive public transport, especially bus, giving good access to all jobs and services and feeding into the 4 main urban centres. This would be based primarily, on improved bus networks and operations but could include the extension to Super-Tram and all other appropriate technologies; A road network in good condition managed and enhanced in conjunction with car parking policies and other appropriate demand management measures to maximise the use of existing road space, minimise congestion and facilitate the free movement of goods. New links would be needed in the network to support local economic drivers; and A safe and well maintained transport system, improved air quality and reduced energy consumption through improved use of public transport, reduced congestion and encouragement of cycling and walking. South Yorkshire has determined that the strategy should be a public transportled strategy; have quantified targets for traffic growth, PT use, cycling use, road safety, air quality, and access to work; and assume that no extra funding available for new major schemes. Doncaster Economic Strategy In 2007, following several years of growth, Doncaster Borough Council produced its Economic Strategy, this is designed in order to ensure the city builds on this growth and meets the regional objectives of the future. The following points highlight areas in which the Council feels attention is critical in order to achieve economic success; Strategic Capacity Economic competitiveness has to be fashioned and implemented it doesn t just emerge. Innovation - 40% of the variation in per capita regional income can be explained by differences in innovation performance. Skills for companies deciding where to locate, availability of staff is second only to access to markets. Diversity successful cities need a diverse economic base AND key specialist strengths. Connectivity Physical, telecoms and cultural networks. Quality of Life core service quality / city buzz factor. On top of the six critical success factors as detailed above the Economic Strategy also highlights nine key themes which set out how the Borough can achieve its 2025 vision. Theme six details Supporting Economic Diversification and Sector Growth of which logistics is a key sector. The Economic Strategy recognises the fact that Doncaster is already a major hub for Logistics in the UK and also addresses the prospect of increasing the skill level of jobs to create a complete advanced logistics cluster. Doncaster is not seeking a dash for growth in the sector but instead wishes to be known as a premier location of increasingly sophisticated advanced logistics and supply chain management operations. The report also states that A clear strategy for future growth in advanced logistics is required which this report addresses. Atisreal UK a BNP Paribas Company 23

24 Doncaster Access Strategy The Doncaster Access strategy aims to provide a vision and objectives for taking the transport system forward in order to support the wider aspirations for the Borough An initial Baseline for the strategy determined that Doncaster benefits from excellent transport links and for many is the gateway to regional, national and international travel. Doncaster has higher than the national average of households who do not own a car, and who rely on public transport to provide mobility and accessibility. Traffic growth in Doncaster has been rising at a rate faster than the national and regional average due to increased prosperity and demographic changes. Doncaster is focussed on developing into a Regional City of significance. Increased economic activity is a key goal. The Strategy is underpinned by the new shared transport priorities. These are improved accessibility, tackling congestion, safer roads and better air quality There are proposals for a new station to serve Robin Hood Airport Doncaster Sheffield. In the short term it is proposed to include the station on the Lincoln Line, in the medium term to include a spur into the airport and in the longer term, to include a Parkway Station on the East Coast Main Line (ECML). Major highway projects under consideration currently include: A638 Quality bus corridor, which includes 2 park and ride sites and will run along the A638 from Woodlands to Rossington. Finningley and Rossington Regeneration Route Scheme (FARRRS), which will provide direct access between the motorway network and airport A6182 White Rose Way scheme will increase capacity between the M18 junction 3 and Ladybank roundabout. The strategic outcomes from the access strategy are to ensure that Doncaster has: A town centre is an attractive, vital and accessible location; A transport system that provides improved access to existing and new major developments, particularly for those most in need; and A transport system is safe, sustainable and attractive, helping to protect and enhance local communities and the environment. These outcomes are identical to those identified in the Doncaster Transport chapter of the Doncaster Sustainable Community Strategy and therefore show a committed and coordinated approach to the future of the city. Air Quality Action Plans Pollution and air quality is fast becoming a major issue for both local authorities and transport providers, in order to document and improve the air quality in the region, action plans are now developed as The key objectives for the Doncaster Air Quality Action plan are: Reduction of emissions from road vehicles; Improvements in public transport; Traffic reduction and management; and Land use planning and development control. Atisreal UK a BNP Paribas Company 24

25 Part of the Air Quality Action plan declared three key areas where national policy guideline levels of Nitrogen dioxide are likely to be exceeded. These Air Quality Management Areas (AQMAs) are located in different parts of the city however AQMA 4 includes parts of the M18, a key transport route for the logistics industry. Robin Hood Airport Master Plan As part of its White Paper on aviation in the UK, the Government required regional airports to produce masterplans, detailing future development plans from 2014 to The masterplan for Robin Hood Airport has recently been published and is currently (Dec 2008) in consultation. The masterplan lists 15 objectives central to delivering their vision to 2030 including: become a strategic transhipment hub for cargo with accessibility to intermodal rail port(s); provide an Airport that is accessible to all through an integrated Airport Surface Access Strategy, including the enhancement of public transport and the delivery of the Finningley and Rossington Regeneration Route Scheme, linking the Airport to communities in need of regeneration; To support this vision the report details the following evidence: Forecasts show a potential cargo throughput of 68,000 tonnes per annum (pa) by 2016 and 125,000 tonnes pa by There are potential opportunities going forward for RHADS to secure the role of a Transhipment Hub for a major Integrator and in such circumstances, the throughput at 2030 could exceed 200,000 tonnes pa. Congestion and increasing costs at established South East airports, such as Heathrow that currently handle much of UK cargo throughput, will also be a factor of growing importance. Almost 470,000 tonnes of cargo a year bound for the UK s 12 largest trading partners in Asia and the America originates within 100 miles of the Airport. The linkage with the Humber Ports is also a material factor. The synergies have been recognised in the work being carried out on proposals for ports and airports in the Region to be seen in the context of a Global Gateway. Accessibility from the M18, M180, A1(M) and M62 will be important in this respect. Economic projections recognise the substantial and growing importance of the India sub-continent and Chinese markets to the world economy. In the medium and long term, direct connections to these markets will be vital for trade links and the movement of goods. Development of Long Haul services for freight to these markets directly from Yorkshire represents a substantial economic opportunity. Doncaster Aviation Strategy The Doncaster Aviation Strategy will support the Robin Hood Airport masterplan by maximising the economic and social impact to be gained from the development of Robin Hood Airport from the Aviation Sector. The report details seven key growth areas for the future: Maintenance, Repair and Overhaul Flight Training Air Freight Handling Component Manufacture and Stockists Business Aviation Incubated Aviation Industries Atisreal UK a BNP Paribas Company 25

26 Aviation Renewables And makes seven key recommendations: Joint marketing of RHADS to potential aerospace investors with AMP team Specific marketing to targeted aviation sectors Closer Communication with Peel around identified airside opportunities Enhancement of the competitive position of the airport by early delivery of FARRRS The Take off at the Airport team to reach out to the global aviation investment community Strategic Zone plan for RHADS looking beyond the land owned by Peel Redefinition of RHADS project board to become RHADS key strategy group. Sheffield City Region Development Plan The Sheffield City Region Development Plan published in 2006 as part of the Northern Way identifies Doncaster as a key national logistics interchange and makes policy recommendations as to how this can be achieved. As part of this a number of recommendations were made to both the Sheffield City Region and Regional and National Government, including: Market RHADS Business Park to businesses and embed investing companies in the City Region economy through development of supply chain activity. Working jointly with the South Yorkshire and Peak District and Derbyshire Destination Management Partnerships, incorporate the airport into marketing and promotional material. Establish an Airport Academy and Centre of Vocational Excellence. Develop training and employability initiatives based around future employment growth at the Airport and the Business Park. Promote airport employment opportunities to local communities, schools and colleges. Prioritise a direct rail link to the airport. Yorkshire Forward to prioritise the airport for freight, logistics, commercial and industrial development. Support the development of the FARRRS link road to the airport from the M18 to enable the full potential to be realised, including better linkages to the Humber Ports. Improve surface access to the airport from other parts of the City Region, including transport interchange facilities at RHADS. Ensure the RSS provides a land use framework which maximises the economic opportunities from future airport and business park growth. Local Development Framework Most recently updated in 2007, and covering the period up to 2026, the Local Development Framework consists of a number of documents which are constantly being updated and improved. This study is intended to inform the next generation LDF. Of the key objectives that the LDF identifies, the following are relevant to the discussion herein regarding the logistics future in Doncaster: Doncaster Borough will have rates of economic activity, employment and earnings that are at, or above, the regional average and will be experiencing net in-migration and steady population growth. Atisreal UK a BNP Paribas Company 26

27 New strategic employment sites will have been implemented along the M18 corridor and elsewhere on sites accessible to communities and will be delivering high quality jobs that local people are able to access. Doncaster will have enhanced its position of strategic importance in the national transport infrastructure with increased road and rail freight facilities utilising the Borough s excellent motorway and rail links including to the Humber Ports, East Coast Main Line improvements and an expanding international airport. Robin Hood Airport will have reached its 2014 capacity and secured additional capacity beyond this and is anticipated to provide approximately 11,000 jobs. It will be served by a road link from the M18 and a rail link from Doncaster Town Centre and regular fast bus services. More and better quality sustainable transport links will be in place connecting communities particularly the more deprived communities and including those in rural areas to Doncaster Town Centre and strategic employment sites. The LDF also outlines a number of economic objectives. These are as follows: To create a prosperous, diverse and vibrant economy with the necessary strategic employment sites to attract inward investment particularly in the creative, digital and other growth sectors. To match the regional average economic activity rates, employment rates and earnings levels and reduce the need for Doncaster s residents to commute outside the Borough for work. To provide employment locations, transport links and improvements in the skills levels to enable existing residents to access a range of new jobs. To create a cluster of new technology and air related logistics-employment linked to Robin Hood Airport. To ensure that the main benefits from the Airport flow into Doncaster (and in particular the Town Centre/Main Urban Area) rather than outside the Borough. To further develop Doncaster s reputation as a leading regional centre for logistics and as a location for businesses where accessibility is central to their competitiveness. To diversify the economic base of Doncaster s rural areas so as to meet the economic and social needs of residents and visitors whilst maintaining and enhancing the character of villages and the countryside. Sufficient land will be provided to meet the identified employment needs of the Borough and specifically to support rates of economic activity, employment and earnings which match or better the regional average and to provide the opportunity for all Doncaster s resident workforce to work within the Borough The LDF also outlines a number of accessibility objectives. These are as follows: To continue to support the development of Robin Hood Airport with its range of national and international connections serving South Yorkshire and the Region; To provide and upgrade road links at junction 3 of the M18 serving Lakeside, Woodfield, Rossington and Robin Hood Airport (FARRRS, White Rose Way improvements and Woodfield Link). To remove key congestion points in the road network and make Doncaster more accessible and attractive to inward investment; To ensure that the town centre is accessible with a high quality public transport system linking it to principal areas of settlement; To increase the number of trips made to the Town Centre and journeys to work by sustainable modes (bus, train, cycle, walking); Atisreal UK a BNP Paribas Company 27

28 To improve transport links to areas of major job creation particularly from the most deprived communities; To locate new developments so as to minimise the need to travel and provide a genuine choice of travel mode; To ensure that the transport system is safe and sustainable, helping to protect and enhance local communities and the environment; To continue to be a key point of interchange on the national rail network linking South Yorkshire to London, Scotland and the rest of the country. LDF Growth Strategy At the time of writing this report, the Core Strategy Preferred Options (CSPO) is the current published version of Local Development Framework. Consultation took place between December 2005 and March Since then, the Core Strategy Further Options has been published in August 2007 which identified the following matters for further consultation; Broadly where different numbers and types of jobs should be created across Doncaster e.g. office, distribution, industrial jobs The role of Robin Hood Airport in providing new jobs New proposals for a major strategic rail freight interchange ( Inland Port ) located south of junction 3 of the M18 near Rossington Growth of the logistic sector and its locational requirements The Core Strategy will be published later in 2009 as a consultation document prior to submission in The Logistics Strategy will inform the developing strategies in the Local Development Framework including the Core Strategy. The analysis undertaken herein supports the emerging policies which identifies areas of search along the M18 corridor for strategic employment sites suitable for large warehousing developments, including a strategic rail freight interchange at Rossington. It is clear that Doncaster s future employment pattern will be very different from the past and there is now a greater emphasis on identifying larger sites with in close proximity to the strategic transport network whilst also being located near to settlements where public transport links serve new sites. It is therefore critical that subsequent iterations of the Core Strategy are substantiated to ensure that the logistics strategy can be supported in planning policy terms. Summary of policy Section three has discussed the highlights of the large body of policy framework that exists at a National, Regional and Local level with the aim of highlighting Doncaster s prevalence as a current hub for logistics and with the potential to become an advanced logistics cluster. At a national level the ECML RUS, the Ports Policy Review and the National Airports Policy all set out objectives which will allow Doncaster to promote local policy to support goals within the logistics sector. Regionally, a key document that supports the vision of Doncaster for the logistics sector for the future is the Sheffield City Region Programme which makes key recommendations for Doncaster including prioritising a direct rail link to the airport and to support the development of the FARRRS link road to the airport from the M18 to enable the full potential to be realised, including better linkages to the Humber Ports. Atisreal UK a BNP Paribas Company 28

29 A further key regional policy is the Regional Spatial Strategy which contains key policies relevant for Doncaster including policy SY1. At a local level the Doncaster Sustainable Community Strategy, the Economic Strategy, the Doncaster Access Strategy, the forthcoming Aviation Strategy and Robinhood Airport Masterplan all provide significant policy framework to promote the development of Logistics within Doncaster and the sub-region. Overall, these policies identify that Doncaster is already a hub for logistics both nationwide and within the sub region of Yorkshire and Humberside. The Logistics Strategy that this report addresses will make further recommendations to allow Doncaster to maintain and grow this market dominant position. Atisreal UK a BNP Paribas Company 29

30 4 Logistics and the Regional Economy The aim of this section is to place the Logistics sector in an economic context within the UK and the local region in general. The study identifies how much the logistics sector is worth as identified in the brief yet also examines the potential future worth of the sector. 4.1 Logistics Market Definition In order to accurately place the economic position of the logistics sector it is necessary to create a consistent definition of what elements of the economy make up the logistics sector as a whole. Using Standard Industrial Classification codes (SIC codes) Atisreal in conjunction DMBC identified key sectors which in turn make up the logistics sector. This definition was then used to interrogate the ABI in order to identify the current worth of the logistics sector and the potential future worth. The definition includes: : Wholesale sub-sectors 60.24: Freight transport by road 63.11: Cargo handling 63.12: Storage and warehousing 64.11: National post activities 64.12: Courier activities other than national post activities 60.21: Other scheduled passenger land transport 60.23: Other passenger land transport 63.21: Other supporting land transport activities 74.50: Labour recruitment and provision of personnel (50% employed in the logistics sector) Self-employed A fuller explanation of the logistics market definition is provided in Appendix Current Economic Contribution Methodology To differentiate the worth of logistics the study examines three areas of contribution: Direct contribution - such as the employment, output and fiscal contributions generated by the sector/ company itself Indirect contribution - employment and output supported by the sector/company via purchases from its supply chain Induced contribution - employment and output supported by the spending of those employed directly or indirectly by the sector/company The study does not however examine: Public services job effect - there is also a potential public services job effect, reflecting the increase in demand for services created by the extra people in an area. Tax contribution - the direct, indirect and induced effects would all have tax impacts in the form of corporation tax, PAYE etc. Atisreal UK a BNP Paribas Company 30

31 Capital/investment spending by indirect and induced sectors the capital spending from direct logistics employment is factored in to our modelling but not for induced and indirect jobs Economic Contribution Summary Direct contribution The logistics sector within Doncaster directly supports the employment of 16,200 employment within Doncaster in 2006 (employee jobs and selfemployed). By their nature direct jobs are all located within Doncaster. This equates to 12.3% of Doncaster s total employment placing logistics third behind retail & distribution and health & social work in terms of overall largest employment sectors in Doncaster. The direction contribution of these jobs to GVA (wages and profits) is estimated at 564m in constant 2003 prices, which represents 14.9% of Doncaster s total GVA in Logistics contribution to GVA is higher than its employment contribution as at national level, the logistics sector has higher productivity than the economy average. There are however large differences in productivity within logistics, ranging from high productivity sub-sectors such as cargo handling and wholesale to low productivity sub-sectors like other passenger land transport. Indirect contribution The logistics sector within Doncaster indirectly supports the employment of a further 17,200 jobs, with indirect employment concentrated in the transport & communications and financial & business services sectors. We estimate that 2,000 of these indirect jobs are located in Doncaster and a further 4,000 in other parts of Yorkshire & Humber. The remaining jobs are located in other UK regions and outside the UK. The indirect supply-chain employment multiplier for logistics is around 1.1. For every ten jobs directly supported by logistics within Doncaster, another 11 jobs are created in the supply chain. This is based on multiple round effects as opposed to simply first round effects. i.e. logistics buy from one sector (firstround), which then buys from another sector (second-round) etc. This indirect employment of 17,200 jobs supports a contribution of 620 million of value added further down the supply chain, 47 million of which is generated in Doncaster. (Capital expenditure by supply-chain firms supports an estimated 3,500 indirect jobs and 120m of value added, though the majority of this impact is outside Doncaster) Induced contribution The logistic sector s induced effect, from direct and indirect employees spending incomes, is estimated at 360 million in value added and 8,700 jobs in A high share of induced jobs is in consumer sectors based on the Family Spending Survey (retail, other personal services and hotels & restaurants). Induced jobs are located in areas where direct and indirect jobs are located (with an adjustment for commuting as people will spend more of their incomes closer to where they live than work) so there is a sizeable induced contribution outside Yorkshire & Humber. A summary of the economic contribution of Doncaster s logistic sector in 2006, in employment and GVA terms, is presented in Table 4.1 overleaf. This also compares Doncaster regionally and with rest of the UK. Atisreal UK a BNP Paribas Company 31

32 Table 4.1: Economic contribution of Doncaster s logistics sector in 2006 Doncaster Rest of Yorkshire & Humberside Rest UK Outside UK Employee Jobs 14,401 Self - employment 1,818 Total Direct contribution Indirect contribution Induced contribution GVA ( m constant 2003 prices) Total GVA in area % total GVA in area 16,218 2,022 3,945 7,519 3,738 3,565 1,436 2,495 1, , % 4.3 Future Economic Contribution This section of the report examines the future employment in the logistics sector. Using sophisticated forecasting techniques the report provides a baseline forecast and a policy on forecast. The baseline forecast details the jobs that will be created within Doncaster based upon current economic forecasts. Where as the policy on scenario forecasts the potential employment within the logistics sector based upon a more aspirational approach and sits in line with the policy framework identified in local, regional and national policy Baseline Forecast The baseline forecast details the jobs that will be created within the Doncaster logistics sector based upon current economic forecasts. Oxford Economics market baseline forecast for logistics employment in Doncaster over the period is: Employment growth of 188 per annum (173 for Strategic Warehouse subsectors in total). Reflecting Doncaster s competitive advantage, logistics employment growth is forecast to be led by storage & warehousing and freight transport by road. While this market baseline forecast is slower than recent years (average of 1,000 jobs pa ), the rate of growth is still higher than employment growth forecast for the whole Doncaster economy and the recent rapid growth cannot be sustained indefinitely. Atisreal UK a BNP Paribas Company 32

33 Table 4.2 below details the market baseline forecast for growth in the logistics sector in Doncaster. Table 4.2: Doncaster Baseline Forecast Oxford Economics market baseline Change Annual change Annual % change Logistics 15,078 18,650 3, % o/w Strategic Warehouse 10,909 14,188 3, % Policy on Forecast This is more aspirational than the market baseline scenario and sits within a policy approach as set out in the RES and RSS and the Sheffield CRDP. Our interpretation then of what a policy on scenario means in practice is Doncaster advancing its role to become one of the premier GB logistics hubs. While Doncaster s logistic sector is already fairly well-developed (rank 28 of 408 GB local authorities), it is still not as large as benchmark areas of similar economic size (e.g. Northampton, Wakefield and Milton Keynes). In addition with its joint road and rail connectivity, Doncaster also potentially offers a greater logistic opportunity over the next years than more traditional logistic hubs, such as Milton Keynes where recent growth has slowed. Our approach therefore to setting a policy on scenario is to: Look at sub-sector employee job levels in Doncaster relative to comparator hub areas and to pick out those sub-sectors which could be larger given Doncaster s competitive location and infrastructure advantages Sizing how much higher employment in each sub-sector could be from a demand perspective. (Also factoring in that by 2026 employment levels in hub areas will have risen) Note we assume Doncaster will develop enhanced critical mass across these sub-sectors as opposed to specialism in just one sector. Specialism (or having the highest employment) across all sub-sectors would be unrealistic. The policy on forecast for logistics employment in Doncaster over the period is: Employment growth of 547 per annum (522 for strategic warehouse subsectors in total) or 10,937 jobs over the next 20 years (10,442 for strategic warehouse sub-sectors). This compares to 188 pa in the market baseline forecast. Table 4.3: Policy on scenario employment forecast ( ) Oxford Economics policy on Forecast Change Annual change Annual % change Logistics 15,078 26,015 10, % o/w Strategic Warehouse 10,909 21,350 10, % Atisreal UK a BNP Paribas Company 33

34 Summary This section has aimed to detail the current and future contribution of the logistics sector the Doncaster Economy Direct contribution 26,015 logistics jobs by 2026 in the policy on scenario compared to 18,650 in the market baseline scenario, generating an additional 220m GVA Indirect and induced contribution an additional 7,400 indirect and induced jobs in the policy on scenario, of which 1,600 are assumed to be in Doncaster (including the indirect capital spend effect). Based upon Doncaster s goal to be acknowledged as a city of significance in the country and in Europe by 2025, it is clear that the policy on scenario of employment and GVA must be used as a benchmark and target for future growth of the logistics sector. For this goal to be achieved almost 10,500 net additional jobs will have to be created in the logistics sector by The report now sets out to deliver a strategy to achieve these goals. Atisreal UK a BNP Paribas Company 34

35 5 Spatial Provision Analysis This section will outline the demand drivers in today s market for the occupier community. It will also detail the criteria upon which these occupiers base their decisions and thus what developers and investors focus on in an attempt to meet these requirements. Finally, it will analyse how Doncaster currently and will continue to meet these demands. 5.1 Analysis of supply chain trends affecting future warehouse demand Globalisation Numerous definitions both economic and non-economic of globalisation exist, but according to one of the most oft-cited definitions, that of the International Monetary Fund (IMF), globalisation is the process through which an increasingly free flow of ideas, people, goods, services and capital leads to the integration of economies and societies. Increasingly global value chains allow intermediate products to be sourced from abroad, leading to increased exports and imports of both intermediate inputs and final outputs. Such activity, whereby firms trade internationally within the supply chain, is often referred to as offshoring. Strong evidence that increased outsourcing (domestic trade in intermediates) has taken place in the UK, with intermediate consumption within manufacturing industries in the UK increasing by almost 40 per cent between 1992 and The greatest proportion of these intermediate inputs come from the manufacturing sector itself highlighting how production processes are becoming increasingly fragmented. It is the role of the global supply chain to bring these products and services back together for delivery to the consumer. The consequences of this import growth are far-reaching, starting with the transportation industry and the infrastructure that supports it, with fallout all the way through the supply chain. In short, the transportation infrastructure in the West has not kept up with the demands created by the growth of international trade. This has not only made transportation more costly, it has also made lead times longer and more critically, less reliable. Many shippers quickly realised that longer, less reliable lead times mean more inventory and more premium freight for expedited shipments. In response, some shippers choose to bypass the traditional ports opting to unload in smaller, less frequented ports or on the continent with shortsea legs to the UK s east coast ports. B&Q was one of the first high profile retailers to pursue this strategy when it abandoned Southampton in favour of continental offloading and shortsea services to the east coast with onward transport to Doncaster. The CooLogistics Conference held in London in the summer of 2008 clearly identified the need for more capacity in the UK port system, but this is not an easy short-term solution. Beyond this, the prospect of a greater dependence on transhipment was raised with feedering solutions into secondary UK ports where it was felt there may be a greater degree of reliability available, i.e. less congestion. The combined effect of shippers seeking alternatives was increased east coast volumes and subsequent infrastructure investment to promote the opportunity and to deter a return to traditional southern ports. In addition to deep sea shipping, North sea traffic itself is particularly relevant to Doncaster. Overall in terms of existing and forecast maritime intermodal/unitised port capacity Atisreal UK a BNP Paribas Company 35

36 covering both the container and ro-ro sectors, three main areas account for 90% of NSR (north sea region) traffic: The Haven/Humber Rhine/Scheldte Elbe/Weser Economic downturns aside, the long-term forecast for continued year on year growth in these ports is substantial as they will continue to expand and dominate intermodal maritime traffic flows in northern Europe. Many manufacturers are taking advantage of the current economic condition and acquiring eastern European and Baltic facilities. This will also aid increased North Sea traffic expectations. FTA - House of Lords Crossrail Bill Committee April 2008 This shift in import port preference and methodology made Doncaster an ideal locale with transport links from the ports onward to market. Thus, with increased traffic forecasts, the expectation is that Doncaster will continue to benefit from this process as long as sufficient appropriate facilities are on offer Multi-Tier Distribution Hub & Spoke After several years of consolidation and a drive towards larger and larger distribution facilities, many tier one firms have successfully re-implemented hub and spoke distribution to achieve a competitive logistics advantage. They have found that this method of distribution reduces transportation costs, improves cycle times, and reduces inventory. These firms and many other companies now realise that significant cost savings can result from improving their distribution processes. A hub and spoke network is a centralised, integrated logistics system designed to keep costs down. Hub and spoke distribution centres receive products from Atisreal UK a BNP Paribas Company 36

37 many different origins, consolidate the products, and send them directly to destinations. Studies have shown that logistics costs are between 10 percent and 35 percent of companies gross revenues. Sixty percent of these logistics costs are for transporting goods. In the SCM Benchmarking Study by consulting firm PRTM, Francis Quinn, chief editor of Supply Chain Management Review, found that companies considered to be best practice organisations in moving product to market enjoyed a 45 percent supply chain cost advantage over their median competitors. A 2007 study by E2open found that industry leaders had embraced a shift in focus to multiple tiers of suppliers and multiple tiers of distribution to ensure that the right product got to the right location at the right cost. Early adopters of the multi-tier synchronisation model such as Tesco and B&Q have achieved superior customer service levels, streamlined inventory across the supply network, reduced costs and improved flexibility. In this model, the retailer may have a large national distribution centre (NDC), several regional distribution centres (RDC) and local distribution centres (LDC). The larger facilities enable the firm to capture the economies of scale that derive from large volume handling. The size of these various types of units is dependent upon the size of the occupier and their throughput requirements. In this model, freight is broken down into smaller and smaller units for onward distribution. As freight progresses through the network, handling and time onsite decreases. The smallest of these are located as close to the end user as possible to reduce the last leg of the journey. The largest however, are generally located within easy reach of the product entry point, with land and labour availability/cost taken into account and with ease of access for onward distribution to market. To this end, Doncaster provided the optimal locale for firms such as Ikea, Next and B&Q to pursue this distribution model. Continued infrastructure improvements to the road network and particularly multi-modal capabilities in Doncaster will reinforce the area as both a prime site for hub location (access to imports, labour and onward distribution) and for smaller spoke location (ease of access from Midlands hubs to serve the north of England and Scotland) Type of Work Performed As is illustrated from the table below, an increasing percentage of distribution activity is being performed to service contracts with a broader scope, either pan- European or global in nature. The recent spate of mergers and acquisitions has in some instances been driven by a desire to expand geographical reach and to endeavour to provide end-to-end service which has driven many of the freight forwarder and logistics provider integrations recently. The implications are of refocused NDC s and an emphasis on proximity to ports and airports. As this trend continues over the long-term, it will be increasingly important for firms to be able to access extra-national markets via facilities such as the Doncaster rail hub and Robin Hood airport. Atisreal UK a BNP Paribas Company 37

38 Figure 5.2 Source GVA Grimley Multi-Modal Transport Most freight is moved by road which remains the mode of choice for commodities. Road currently accounts for 64% of all goods moved (tonne kilometres) and 82% of those lifted, suggesting rail and water are moving more goods for longer journeys. The continued growth in the volume of international trade poses considerable economic and sustainability challenges, particularly as transport routes become more congested and concern grows about the role of transport movements in accelerating climate change. There is no intention to suggest that transport of freight by road is going to be replaced entirely; nonetheless, the face of UK freight is currently undergoing a gradual transformation and the freight transport system may look rather different in 10 to 20 years time. Various critical factors have led to an increasing focus on alternative and combined modes of transport in the supply chain. The key factors most likely to influence this transformation are the environment, the cost of food and fuel and UK and EU policy. This form of transport is not new, the original governing rules having been set down in the 1930 s. However, it was the advent of increasing congestion on roads, at the ports and costs such as fuel prices and road charging which have seen the rise in adaptation over the last decade. Cost and speed to market have long been the driving factors for retail distribution. The old site selection criteria of access to good motorway networks has been expanded to a requirement for access to water, air and rail as well. This document discusses site selection in detail elsewhere, but it is worth noting that Nike stated that they chose Laakdal, in the Flanders region of Belgium for a multitude of reasons: central geographical location; easy access to a number of transportation alternatives (including inland waterways); available workforce; and room for expansion at the selected site. Atisreal UK a BNP Paribas Company 38

39 Multimodal transport effectiveness and competitiveness is dependent on the selection of optimal modes of transport for the movement of goods from door-todoor as well as on the quality of the infrastructure in place. Some current statistics from the Department for Transport s Transport Statistics for Great Britain are offered below to provide an overview of freight trends between road, rail, water and air. Goods are being moved further than in the past, a trend attributed to a number of factors including changes in distribution patterns and the types of goods lifted. Domestic freight moved increased from 175 to 252 billion tonne kilometres between 1980 and 2006, an increase of 44%. Foreign import tonnages through UK ports increased by 44% between 1996 and 2006 (DfT port statistics). This growth was led by imports of consumer goods and coal during this period. For unitised tonnages (goods in containers and trailers) there was an overall growth of around 46%. UK industry spends in excess of 80 billion per year on transporting goods by road, rail and water. Multimodal transport choice is of vital importance to the success of international trade. Various models have also been created (Beresford & Dubey, 1990; Beresford, 1999; Minh, 1991; Barnhart & Ratliff, 1993; Yan, Bernstein & Sheffi, 1995) to aid transport decision makers in choosing the most effective transport mode or combination of transport modes that not only minimises cost and risk, but also satisfies various on-time service requirements. This provides the all-important ability to flexibly route freight. As can be seen in the figures below, the break-even point for transport costs varies when transport modes are intermingled. This makes it important for the transition between modes to be as seamless as possible. The capabilities of deep sea ports to provide onward carriage by rail needs to be met with the appropriate intermodal ports inland for example. Atisreal UK a BNP Paribas Company 39

40 Figure 5.3: Breakeven points for logistics operations An ever-increasing volume of containerised freight imported into the nation s major seaports is now carried onward by rail. Recent join ventures by Hutchison Ports and Freightliner, investment by property developers and the ports in rail infrastructure all support further growth of non-road alternatives Railfreight Between 1994 and 2006, goods moved by rail increased by 70% and rail accounted for 8% of all goods moved. In 2006, rail moved 22 billion tonne kilometres of goods. Rail freight plays a major role in the inland transport of containers passing through the main British container ports, and potentially could play a more significant role in the future. Companies with logistics requirements are increasingly realising the environmental, commercial and operational advantages of moving product by rail. Rail freight produces less greenhouse gas emissions, provides fuel cost savings and reduces delays related to congested road travel. In most instances, the benefits of railfreight depend on the nature of the goods in question. Like sea freight or air freight, rail freight has considerable strengths to draw on in complementing a road based supply chain. These include: Atisreal UK a BNP Paribas Company 40

41 Reliable, consistent departure and arrival times giving predictability. Known transit times to plan around. High maximum payload capacity. Reduced exposure to driver's hours and working time directive issues. Excellent load security. Protection from the effects of road congestion. Less direct exposure to fuel price variance. Many successful parcel and pallet networks survive because of the efficiency of scheduled collection and departure times of trunk vehicles at the core of their business. The key feature of rail is that by its very nature it has to run to a timetable therefore the opportunity exists to build into the supply chain a core trunk by rail, just as international parcel businesses build networks around their scheduled air freight movements. With planning & minor modification to distribution patterns within a supply chain, the advantages of rail can be substantial. The biggest advantages come where distribution centre and consolidation activity happen at a location which is directly rail connected, removing entirely the cost of onward road distribution. As more freight can be consolidated via port initiatives and terminal consolidation, the cost effectiveness of rail increases. When asked about the importance of proximity to intermodal hubs in the spate of projects the company has been pursuing Gerry Smith, senior vice president for global supply chain for Chinese personal computer concern Lenovo, said they were "absolutely a consideration we took into account. They are not 100 percent of the decision process, but it's personally one of my hot buttons." It is imperative that Doncaster maintain, increase and promote its intermodal capability to ensure that it remains at the top of occupiers thoughts when addressing their site selection criteria Waterborne Cargo Deep Sea Risk can be offset with a more co-modal system where rail and water work in greater cooperation with road and vice versa. Water s market share fluctuates from year to year. Between 1980 to 2006, a low of 48.1 billion tonne kilometres was reached in 1997 whilst a high of 67.4 billion tonne kilometres was reached in Waterborne freight dominates UK international trade. In 2006, 96% of all goods by volume arrived in the UK by sea. Between 1988 and 2006, the volume of imports moving through UK ports increased by 64% and the volume of exports increased by 13%. Globalisation has brought huge gateway challenges. Two thirds of global container traffic goes through just 60 or 70 ports worldwide. The Humber Estuary is number one for UK shipping tonnage. Ideally located for intra European/UK trade, the Humber area is part of the multi-modal North European Trade Axis (NETA), the broad trade and transport corridor from Ireland, to the Mersey Ports, to the Netherlands, Germany, Poland, the Baltic States, and Russia; all via the Humber ports. Humber-based logistics companies ship directly to more than 50 countries, with over 170 shipping lines operating regularly, 130 within the EU. The Humber ports account for the second largest volume of RoRo trade in the UK and total shipping movements through the Humber Estuary are in excess of 40,000 per annum. Atisreal UK a BNP Paribas Company 41

42 With significant new investments in ports infrastructure, landside development sites and rapid access to the UK distribution network, the Humber area is uniquely placed for further growth in added-value logistics. Situated on the UK s busiest commercial estuary, Grimsby and Immingham combine to form one of Britain s fastest-growing ports. It provides a complete logistics package for port users and handles more foreign trade than any other single port in the UK. The port also enjoys a strategic location close to the North Sea and facing mainland Europe. This position, along with a huge diversity of shipping lines, puts a market of 170 million people within 24 hours travel. Hull is also a major foreign trading port, offering worldwide deep-sea services and European short-sea trade routes. Since 2000, traffic in the Humber ports has increased by 17.5%. This increase was largely due to growth in the ports of Grimsby & Immingham and Hull, which both experienced around a 20% rise in traffic over this 6-year period. The local impact, especially on roads is enormous and forecast to grow. Again, the risks of not building greater diversity into supply chains are carbon and congestion. Onward distribution by water offers a part of the solution but, where possible, one must extend the coast inland for ships. Smaller-scale operations using barges will help but will not be sufficient. Additionally, all ports, the big hubs and the smaller regional operations will need plenty of space for storage. The Port of Felixstowe owns and operates two Rail Terminals. Both Rail Terminals are multi-user facilities, with open access to Train Operating Companies. Combined capacity at these facilities is currently 416,000 containers per annum. Container volumes transported by rail have increased significantly in recent years. The Port saw record-breaking throughputs at the end of 2007, handing almost 9,000 containers per week. Rail volumes currently represent 23% of the Port s UK domestic throughput and continue to grow. There are currently 51 services to and from the Port each day, operated by Freightliner Ltd, GB Railfreight Ltd and EWS Ltd. These trains link Felixstowe with the major markets of the UK, providing direct connections to Glasgow, Manchester, Liverpool, Leeds, Cleveland, Birmingham, Cardiff, Doncaster, Tilbury, Selby, Ely, Hams Hall, Wakefield and Ditton (Widnes). There are indirect connections with a broad range of customers depots through onward transportation from these inland terminals. Coastal and Inland Waterways Excluding North Sea oil and sea dredged aggregates, non deep-sea water currently accounts for only 9% of goods moved. This should not detract from the growing importance of short-sea and inland waterway transport alternatives. In September 2006, market leaders Eddie Stobart launched their first rail service and in August 2007 they diversified into their first port operation. They are developing their skills base to respond to the opportunities that co-modality will bring. Wincanton offers a fully inter-modal range of services to clients and are in fact the third biggest barge operator on the Rhine. A diverse supply chain will prove more robust when one or another component is for some reason not functioning optimally. Diversity offers choice and reduces risk. The market is seeing increasingly diverse cargos travelling shorter distances between the most unexpected destinations. Even a fairly small ship will take a Atisreal UK a BNP Paribas Company 42

43 payload equivalent to up to fifty loaded lorries. This is why deciding where to build new Regional Distribution Centres is crucial. The waterway traffic is significant in Yorkshire and the Humber carrying about 14 million tonnes per annum. Once the major infrastructure is in place the costs associated with barge traffic are relatively modest, with one of the most expensive parts of the operation being the dock handling. If this can be done by modern means without traditional dock labour costs, then operations can be efficient. There is an economy of scale because of the large carrying capacity of many inland waterway barges meaning that one vessel movement can take the equivalent of more than 20 lorry loads. The Sheffield and South Yorkshire Navigation canal, once a major transport route between Sheffield and Goole, underwent substantial modernisation in the mid 1980s and is capable of accommodating very large vessels as far as Rotherham. Recently, limited bulk freight has returned to the canal and can occasionally be seen passing through the modern Swinton Lock. In terms of potential for sustainable transport modes to be used, the Sheffield and South Yorkshire Navigation, a waterway running from Goole via the Aire and Calder Navigation onwards to Doncaster, Rotherham and Sheffield has been upgraded but is currently not well patronised by freight transport, although it is popular for leisure purposes. Swinton-based E.V.Waddington Ltd want to build a wharf, complete with new road and rail links, to load steel from the Corus Thrybergh Bar Mill on to barges. There are many more examples of a gradual shift in volume to water alternatives. Tesco has become the first major UK retailer to start transporting freight by canal. The pioneering, green move will result in thousands of lorries being taken off Britain's congested roads. The move to ferry wine by barge from Liverpool to Manchester will cut carbon emissions compared with the existing method by 80 per cent. It will also take 50 lorries off the road every week which will result in a saving of 1.1 million kilometres of heavy lorry journeys on British roads. And Goole's excellent waterway connections mean it could too be part of this new scheme. The new cargo service started in Autumn 2008 and will involve three journeys a week, delivering an estimated 600,000 litres of wine on each journey along the 40 mile stretch of the canal. The containers of wine from Australia, California, Chile and Argentina are then transported to a bottling site less than half a mile away where they are packed for Tesco supermarkets across the country. Each 20ft container of wine taken by barge up the canal will take a truck off the road. A spokesman has stated: "If Goole has extensive waterways then we would definitely evaluate it. We are currently evaluating waterborne schemes around the UK." Generally speaking where major retailers such as Tesco and Asda go, others follow. As part of British Waterway s efforts to encourage waterborne freight carriage on its waterways, Wynns were appointed to carry out a market study to examine the potential for container barge services on BW s commercial waterways. This project will involve providing commentary on developments in shortsea and coastal shipping and an overview of the UK container market; assessing likely demand for container barge services from coastal ports to inland locations linked to waterways and an initial assessment of the economic viability of container barge services. Atisreal UK a BNP Paribas Company 43

44 This transport shift highlights and promotes the role of inland ports as nodal points for intermodal transportation, combining road, rail, inland waterway and based on geographical accessibility. Increased traffic to Doncaster will primarily be deep sea and short-sea in origin. Maintenance of links to the available inland capabilities should be sustained however in order again to provide multi-modal flexibility to occupiers Airfreight A quarter of the UK s visible trade, i.e. tangible goods not services or intellectual property, goes by air. Department for transport figures show that 2.6 million tonnes of air freight were moved in 2006 and it is increasing. Aviation delivers one third (by value) of the UK s exports at 13 billion. Air cargo and mail tonne kilometres moved by UK airlines increased by 56% between 1996 and Over the last twenty years, international air freight tonnes lifted have grown more quickly than domestic air freight tonnes lifted, reflecting the growth in international air freight. Although there is a great deal of concern regarding airfreight and its role in sustainable transport, it is expected to continue to carry time sensitive and/or perishable freight into the future. Airfreight offers superb opportunities for moving urgently required or perishable goods. Robin Hood Airport at Doncaster Finningley is capable of handling 50,000 tonnes of freight by The airport has expanded its international air freight services with the arrival of GX Danbrit Logistics, a global freight forwarder and logistics provider which now has offices at the airport. The firm s location enables it to move small cargo very, very quickly. Doncaster was chosen as it was seen to have enormous potential and could offer extremely competitive prices. The role of secondary airports in the growth of logistics is discussed in more detail later in this document Near-Shoring Higher energy prices are impacting transport costs at an unprecedented rate. So much so, that the cost of moving goods, not the cost of tariffs, is the largest barrier to global trade today. In fact, in tariff-equivalent terms, the explosion in global transport costs has effectively offset all the trade liberalisation efforts of the last three decades. Not only does this suggest a major slowdown in the growth of world trade, but also a fundamental realignment in trade patterns. We are already starting to see some change in capital-intensive manufacturing whose products carry a high ratio of freight costs to final selling prices. Exactly how much trade, soaring transport costs divert from China and other low margin manufacturing sources depends ultimately on how important those costs are in total costs. Goods that have a high value to freight ratio carry implicitly small transport costs, while goods with low value to freight ratios typically carry significant moving costs. And there is already evidence that Chinese exports of freight-intensive goods are beginning to slow under the pressure of rapidly rising transport costs. With this shift, the market has seen manufacturing being brought closer to home predominantly in the emerging Eastern European countries or southern Europe for apparel. Atisreal UK a BNP Paribas Company 44

45 5.1.6 Conclusions Increasing fuel costs and rising eco-consciousness will lead to a shift in sourcing models. Doncaster is ideally situated to capitalise on this with superb access to east coast ports. Rising costs will also make the logistics sector more focused on strategic initiatives. Achieving cost effective multi-modal capability will see an increasing prominence in supply chain decisions. These same costs concerns have reversed the trend toward strategic distribution relocating to a European base with freight trunking into the UK. Local hub and spokes have re-emerged as the paradigm of choice. Sites which can provide multi-modal access to the ports and manufacturing bases in Europe will be the clear winners. 5.2 Site Selection Criteria It is imperative that strategic logistics sites developed in the region be commercially attractive to the logistics market. Sites must be seen to meet the traditional selection criteria as well as represent modern best of breed standards. An Aberdeen survey of global supply chain professionals on area development published in Supply Chain Brain.com on 24 December 2008 resulted in the following list of business and operating criteria: Business and Operating Conditions 1. Access (customers, suppliers, connectivity) 2. Work force (availability, capability, scalability, sustainability, livability) 3. Utility infrastructure (power, fuel, water/sewer, telecom) 4. Transportation infrastructure (roads, air, rail, port) 5. Regulatory/permitting environment 6. Business/support services and amenities Traditional factors which are fundamental to sites being commercially attractive to the logistics market include: Proximity to Market Modal Flexibility Site Availability and Size Labour Proximity to Market Access to markets for customers, raw materials, and clients affects location decisions for just about any industry, but some much more acutely than others. Indeed, proximity can be the sole driver in industries where it is imperative to get goods to an end consumer particularly where the product is perishable as well as in industries where customer desires change rapidly or there s a high degree of customisation. In addition to key industries such as food production, parts manufacture, and others that produce high-turnover, quick-demand items, other industries are being pushed by current trends to consider proximity to the end user when making site selection decisions. Fuel costs again play a key role as many companies have outspent their 2008 transportation budgets before mid-year. Although this has not been permanent, the damage done has led logistics professionals to rethink a significant change in the types and locations of distribution facilities to safeguard against a future reoccurrence. Atisreal UK a BNP Paribas Company 45

46 The greening of manufacturing, warehousing, and distribution generally has fed this same dynamic, but in a different fashion. While the oil crisis has forced behaviours that reduce the use of energy in an attempt to reduce costs, consumer and government pressures have forced companies to reduce reliance on carbon-based fuels and to generally make less of an impact on the environment. So although the driver is different, many of the strategies have been complementary. A distribution strategy that reduces a company s carbon footprint because of efforts to use less fuel has been embraced by environmentalists and accountants alike. In sum, some measurable advantages have evolved for locating more manufacturing and distribution in close proximity to the direct zones of consumption. In Doncaster, this creates an opportunity to provide regional distribution for the north of England and Scotland. Alternately, it creates a requirement for Doncaster to provide multi-modal infrastructure to continue to attract occupiers desiring a large national DC who have strong CSR considerations Modal Flexibility Highway Links Despite any ongoing changes in transport theory, road transport will remain the dominant mode. It accounts for approximately 67% of all goods movements and is considered the most practical and cost effective form of transport. This means that the majority of cargo arriving and departing distribution centres located on rail connected logistics sites will be by road transport. In their 2004 ASSESSMENT OF RAIL FREIGHT TERMINAL POTENTIAL for Corby Borough Council, MDS Transmodal has noted that: At a rail linked NDC, if rail freight services work to their full potential, around 50% of inbound goods can be expected to arrive by rail (balance by road), and around 25% depart by rail. At an RDC, the comparative figures are 25% of inbound goods arrive by rail (balance by road), and all departing goods leave by road. For a rail connected logistics site comprising 200,000m2 of NDC floor space, this would equate to around 330 outbound HGV road trips per day. Sites containing RDC floor space will generate additional road traffic movements due to the faster turnover of stock at such facilities. In addition to this, any intermodal terminal facility will also be serving manufacturers and distribution activities located off site by road. Hence even in today s eco-friendly climate, facilities must have good access to the highway network. A quality network must be maintained with good access, reasonable flow through congested areas and alternate routing capability. Doncaster has traditionally been recognised for its prime position for motorway access. This factor was instrumental in recent growth and will continue to be key in the future. Doncaster must focus on improved infrastructure. Initiatives to reduce congestion through improved public transport would also be aligned to this goal Rail Connectivity There is often an emphasis on rail sided facilities as the ultimate goal. This design works well for a large operation or one which is externally managed by a rail experienced third party. For the majority of end-users however, an own siding may be more difficult to manage as a non-core competency. Thus a rail served site which provides terminal handling capability may be a more optimal solution for the majority of occupiers. Atisreal UK a BNP Paribas Company 46

47 Developments which can offer a mixed siding and services option will provide the broadest appeal. So too, there is argument regarding gauge offerings. Though it is commonly held that one should seek W10 as the optimal solution, many industry changes are in the pipeline which reduce this dependency. Low-rider wagons are more commonly available throughout the network. As always however, they provide reduced efficiency and larger margin. Increasing rail freight volumes and lengthy timeframes for infrastructure changes have necessitated innovation. Large retailers such as Tesco have designed their own boxes to alleviate issues should they need to divert from their normal W10 path. An alternate flat-bed type wagon has also been designed which does not suffer the same capacity shortcomings as the traditional low-riders. Regulating bodies are also devising methods to curb the train path monopolies while operating companies endeavour to speed path access offerings to applicants Modal Choice The trends described previously are expected to drive further growth in alternative transport. The advent of strategic railfreight interchanges throughout the country is intended to reduce the traditional onward carriage by road by creating a network of rail linked sites. Combined with road charging and rising fuel costs, this will make shorter distances more cost effective. Good access to other transport alternatives will also be key to attract certain industry sectors. Apparel retailers tied to brief demand cycles tend to utilise oceanfreight for the bulk of their primary order fulfilment. Secondary stock to satisfy increased popular demand is often produced nearer to end-user and often relies on time critical air shipment. Zara and TopShop both use this sourcing model. Increasingly, occupiers are insistent on the provision of modal choice even if they do not currently split transport. This provides them with confidence that they have future proofed their facility choice thus also facilitating the business justification for their new site. In this regard, Doncaster is ideally suited to meet the criteria established by the occupier community by providing road, rail and air access with the added benefit of ease of access to ports Site Size and Configuration The size and configuration of a site are important for a number of reasons, including the viability of rail freight services and the ability to accommodate the large scale distribution centres and ancillary services the market requires. Distribution and its ancillary services can be considered in several broad categories as seen in the table overleaf. Atisreal UK a BNP Paribas Company 47

48 Table 5.1: Size Configuration of Hub Categories TYPE SIZE RANGE EXAMPLE LOCAL Various REGIONAL 20ha Nimbus Park STRATEGIC 40ha Magna Park RAIL LINKED Various BIFT, ProLogis Coventry SRFI 60 ha DIRFT/Howbury Source: Atisreal Research The logistics market is increasingly looking for developments which facilitate size ranges appropriate to mixing each of these types. In this manner, the largest retailers and distributors are able to site share with other ancillary firms. As an example, the previous configuration of Tesco, Sainsbury and NFT in Crick with access to DIRFT. It also produces a traffic mix more acceptable to both the park occupiers and surrounding community. Mixed size sites and a mix of site types should be the goal for which Doncaster aims. This will meet the needs of both the tenant and investment communities. Again, it is important to remember that one is looking for large scale mixed use parks. As long as scale is met, it does not matter that those parks may be disconnected. Hutchison Ports commissioned Atisreal to produce a report which assessed the suitability of the land available outside the port for distribution. A key finding of this report was that although there was a volume of land allocated, it was not satisfactory. It illustrated that when the available development plots are both small and scattered, they are not of interest to the development/investment market as they can not be built to suit the occupier demands. The ability to provide rail within this mix is not only commercially preferred, but is also in line with current and forthcoming national planning policy. Commercially attractive rail linked sites are considered to be an intermodal terminal and contain distribution warehousing, with at least 200,000m2 of floor space in total, and individual plots allowing very large units. Enquiries logged by Atisreal and anecdotal evidence from the agent community shows that recent new developments indicate that the market is increasingly demanding the following: Potential facilities in excess of 50,000m2 (5 ha plot) and up to 100,000m2 (25ha plot). Internal rail reception sidings capable of receiving trains up to 750m trailing length An appropriate estate road layout together with parking facilities to accommodate visiting HGVs The above sub-sections clearly demonstrate the requirement for distribution warehousing and intermodal terminals on the same site. This does not imply that every distribution site needs to be an intermodal terminal. A mix of intermodal sites which incorporate warehousing and distribution parks with access to intermodal facilities is the goal. In addition to the cost of rail freight compared to road haulage, rail as a mode will only be attractive to the occupiers of the distribution buildings on a logistics site if the site is able attract frequent full length rail freight services to/from a wide range of locations. As a minimum, this means at least a daily train service to/from 5 different locations, with twice daily services to/from some locations (around 8 train services in total). Essentially a 'critical mass' in terms of site size Atisreal UK a BNP Paribas Company 48

49 exists, above which the logistics site will generate the requisite number of daily train services. This critical mass is in the region of 200,000m2 of floor space, this implies sites should be at least 50 hectares (ha) in size, on the basis that warehouse floor space occupies 40% of a site footprint. An appropriate site is also one which is able to accommodate very large individual warehouses of at least 50,000m2 floor space, though recent trends in the retail sector suggests that units up to 100,000m2 are being increasingly demanded by the logistics market. The ability to accommodate reception sidings is also an important feature of a competitive logistics site. Reception sidings effectively act as a place to 'park' trains off the mainline before and after cargo handling at an intermodal terminal or rail connected warehouse. Reception sidings are required at a rail freight terminal for four main reasons: Due to pathing and timetabling constraints, trains will normally arrive at a rail freight terminal well before they are required for cargo handling. Hence they require somewhere to 'park' while they await their turn in the actual cargo handling part of the rail terminal. Once a train has been loaded/unloaded and is ready for departure, it requires somewhere to await the arrival of a mainline locomotive. Completion of cargo handling can be well before the mainline locomotive arrives, The cargo handling sidings, either at the intermodal terminal or rail connected warehouse, are unlikely to be long enough to accommodate the whole train. The emerging standard on the rail network for intermodal trains is 30 wagons x 20.3 to 20.6m per wagon. This results in a trailing train length of between 609m and 618m. In the longer term, the aspiration is for 750m trailing length intermodal trains. Trains will therefore need to be 'sectioned' at some point before they can be accommodated in cargo handling sidings if the intermodal terminal sidings are less than m long. As a reception siding would not normally belong to Network Rail, the terminal operator is not reliant on mainline locomotive traction providers to undertake shunting or sectioning of trains, and can undertake these operations themselves by employing the use of their own 'off mainline' shunting equipment. This improves the efficiency and throughput capacity of a terminal TruckStops Distribution centres generally operate 'time window' systems for the inward delivery of goods. A vehicle delivering to such a facility will be allocated a time slot during which the goods must be delivered, and in many cases the time slot can be as tight as plus or minus 10 minutes. If a haulier misses the allocated time slot, deliveries can be rejected or the vehicle may have to wait a considerable period of time before the load will be handled. In view of journey time un-reliability issues, many hauliers consequently allocate additional time into their operating schedules in order to ensure that vehicles do arrive on time and meet the allotted time slot. As a result, vehicles often arrive early for deliveries. Consequently there is a need for drivers to park their vehicles and wait until allotted delivery times. Commercially attractive logistics sites can provide facilities so that they can handle all generated HGV traffic in an environmentally sensitive manner (i.e. avoid the need for HGVs to park on the internal road network, causing possible congestion or queuing onto the public road network). This may mean that individual plots can contain their own traffic or that the park maintains a shared user space for this purpose. Atisreal UK a BNP Paribas Company 49

50 External to the sites themselves, increased lorry traffic in the region needs to be accommodated for. The shortage of lorry parking and the issues associated with it are of national significance. Areas for goods vehicles to stop and park when away from base are essential in contributing to freight operations as well being places for drivers to refresh themselves and maintain their vehicles. Huntingdonshire District Council is currently looking at setting up a Cambridgeshire-wide lorry parking forum involving councils, MPs and LGV operators. It follows concerns expressed by residents and businesses along the A14 about the number of trucks parking in streets, lay-bys and industrial estates. A recent review by the council concluded there was little that it could do "in isolation", but that there was an "urgent need for a national strategy. Noted elsewhere, the RFS has set a goal to survey rest area and lorry parking facilities to assess usage and determine where additional facilities may be required. It should be noted that we do not mean strictly additional lay-by type areas. John Franks, Director of Security for EUROWATCHCentral Limited, noted in 2007 that in the world of freight security, few subjects have received so much attention and so little investment as secure truck stops. Figures published in May 2004 by R.O.A.D. (Research on attacked drivers) note that: 1. One in three drivers are attacked whilst asleep % of drivers were injured in the attack 3. 10% of drivers have had their cabs broken in more than once 4. 90% of cabs were locked at the time of attack 5. Most incidents happen during the night Operators such as NightOwl have responded to this growing business requirement. The NightOwl management has worked closely with local police crime reduction teams in a 2 million security upgrading project to ensure new security measures have a real effect on reducing lorry crime. In addition to security issues, increasing numbers of foreign lorry drivers increase the service requirements of such facilities. In addition to physical comfort offerings such as rooms, washrooms and hot meals, technology capability such as phone/fax, cash points and WiFi are in demand. A further initiative to be developed shortly in Tyne & Wear is a private sector lorry parking reciprocation pilot. The scheme would allow companies to buy secure parking spaces at the depots of other operators, or sell space at their own sites. The pilot will include research into companies willing to enter reciprocal arrangements, including contact with operators connected with Tyne and Wear Partnership, the Freight Transport Association (FTA) and Road Haulage Association (RHA). The website would be amended to act as a platform for companies to buy and sell spaces. Its success will be judged on the number of spaces being made available for trading and on the take up. Though this is an innovative solution, we believe it to be a short term response. Modern warehousing no longer offers the extensive staff facilities of the past and this methodology creates additional access and security issues. To meet growth in Doncaster, a long-term fully functional solution should be sought. 5.3 Analysis of current and future supply As discussed in section three, National, Regional and Local policy provides a clear policy framework for the promotion of a logistics cluster in Doncaster. Atisreal UK a BNP Paribas Company 50

51 This section provides an assessment of the current allocated land and available sites within the DMBC region, along with the potential future requirement based upon the employment potential from the policy on scenario. It is also important to examine the quality of these sites in terms of their attractiveness to market, as a key aim for Doncaster is to become a logistics hub and attract good quality tenants that bring ancillary features that help to build logistics clusters which we examine in more detail section Current Supply quality, quantity and location In order to gain an accurate picture of the current supply it is important to examine existing sites, sites already allocated for future developments and then potential sites for use. Work on this subject has previously been undertaken by Roger Tym and Partners with King Sturge in the Employment Land Study, Following consultation between 29th October and 23rd November 2007, Doncaster Council adopted a suite of Interim Planning Position Statements (IPPS) in February A key conclusion of the Roger Tym and Partners report reads: Our analysis suggests that the Borough has the potential to attract further regional and national inward investment, which would lie over and above the forecast land demand, in strategic warehousing. The promotion of such development is supported by the emerging regional policy framework. It remains difficult to quantify this potential footloose demand. However, with regard to strategic warehousing, demand in the short term is extremely high, fuelled by the restructuring of retailers distribution networks and the lack of land in more traditional locations to the south of the region. The above point remains valid over the period of the LDF, even taking in to account of the current economic climate at the time of writing. Retailers, manufacturers and logistics operators will be looking to gain further efficiencies from their supply chain. We discuss the over supply of strategic warehouses in the region in greater detail later but this will apply a downward pressure on rental levels and ensure that demand remains strong in the borough. IPPS 3: Employment in Doncaster provides an update in total employment hand available. The 2007 Employment Land Review identified an overall supply of 338.4ha of land however, when land reserved for specific uses, small sites or 39 unlikely to come forward is discounted, a supply of 151hectares remains. The survey showed that in the last 2 years the specific take up rates of employment land was 126 hectares. A large proportion of this was taken up by large sheds at Nimbus Park, Redhouse and First Point. Such a rate may not be maintained in future years, even if land was available, but the market interest suggests that demand remains for locating logistics related development in Doncaster Atisreal UK a BNP Paribas Company 51

52 Table 5.2: Remaining Employment land Supply HA Total land available Sites started or to be developed for other uses 33.9 Sites unlikely to be developed in 5 years 60.5 Land reserved for air related uses 27.3 Small sites less than 3ha 47.7 Adjustment for mixed use sites 18.0 Remaining supply Source: Doncaster MCD IPPS Future Demand quality, quantity and location The employment forecasts in section 4.3 detail how many jobs with logistics can be created by This section uses those employment forecasts to detail how much land will be required to be allocated to provide warehousing space to reach these employment targets. Table 5.3 below details demonstrates the land allocation requirements for both the baseline and policy on scenarios. Table 5.3: Land Quantum s for Doncaster Floor Space Land Requirements Jobs Created Sq M Sq Ft acre ha Baseline 3, ,248 3,382, Policy on 10, ,896 9,890, The figures in Table 5.3 are based upon previous research by Atisreal, Challenging perceptions of B8 dispelling the myth, we have used a figure of 88 sq m required per worker in the strategic warehouse sector. This figure is also consistent with previously commissioned reports by Roger Tym and Partners. This allows a total floor space requirement to be simply calculated. In order to transfer this to actual land allocation requirements we have used an industry standard definition of 25ha per 100,000 sq m floor space. It is noted that plot ratios for schemes will be different over time, however the figures presented should be taken as a minimum requirement. There is also anecdotal evidence that plot ratios will reduce into the future as developers become more aware of requirements for overnight truck storage and other driver facilities. Other employment land uses can take into account other factors such as churn and choice when calculating future land requirements. In these circumstances there is an additional multiplier used to take into account the choice available to the occupier and the churn of occupiers moving from one unit to another. Atisreal UK a BNP Paribas Company 52

53 In usual circumstances these would be applicable to the strategic warehouse sector, however Atisreal recommend that these factors are not utilised in this case for the following reasons: There are a number a empty schemes in the area Logistics occupiers (3PLs, Retailers and Manufacturers) generally move units as part of a strategic shift in their operation, such as rationalising or consolidating their supply chain or changing the point of entry/exit of goods into the UK* Table 5.4, however, examines the land use quantum s required should different choice and churn factors be applied. Table 5.4: Land Quantum s for Doncaster taking into account choice and churn Floor Space Land Requirements Choice and Churn Factor Jobs Created Sq M Sq Ft acre ha N/A Baseline 3, ,248 3,382, N/A Policy on 10, ,896 9,890, % Baseline % Policy on % Baseline % Policy on % Baseline % Policy on *A deeper analysis of the commercial aspects of the market is provided in section Based upon current market conditions and current recovery estimates should a churn factor be applied to our land use quantum s then a factor between 10 and 25% would be sensible. This allows for the market to choose which land allocations will be best placed to be developed and then come to the market. The previously referenced Roger Tym and Partners report contains a substantial appendix on the national strategic distribution sector. The appendix examines the National and Regional overview of demand and by sector. The report states that average size of units is falling and whilst this remains the case there are still large units being let and this will continue as accommodation let in the early 90 s come to the end of their leases and occupiers look to move into newer accommodation. The report remains relevant aside from projections on yields as the current economic climate and the credit crunch have seen interest rates fall to their lowest recorded level. Over the period of the LDF however the investment market will return. Summary To achieve the policy on scenario of employment growth in the logistics sector in Doncaster a minimum of 230 Ha of employment land must be allocated. Atisreal UK a BNP Paribas Company 53

54 Previous studies and IPPS 3 detail a remaining amount of suitable land, however it is clear that more must be allocated. Of the remaining amount of allocated land, 151 Hectares is not suitable for strategic warehousing developments. Atisreal have provided alternative land use requirements however it is our recommendation to use a quantum at the lower end of the scale, as displayed in tale 5.4, due to the volume of existing supply, both in Doncaster and the Yorkshire and Humber region as a whole. 5.4 Local Market Analysis Based upon our extensive national and regional experience, Atisreal are well placed to provide commentary on the UK Logistics Market. In this section we examine Doncaster from an occupier s perspective and look at how recent legislation such as empty rates will affect the market in the coming years. Another key part of this section is to examine the types of property the market is demanding, hence we offer a typology of sizes based upon our market knowledge. As part the study Atisreal also conducted a survey of local business and held a stakeholder event in Doncaster to gain feedback on the proposed strategy and discuss wider issues Atisreal Commercial View of Landuse Quantums According to Atisreal research, and in conjunction with our agency teams in Sheffield and Leeds, The Yorkshire and Humberside industrial and logistics market currently has the most available stock in the country. Of approximately 125 million sq ft of space available (new build and second hand stock over 50,000 sq ft) 21% of this in located in Yorkshire and Humberside, the nearest other regions being the Midlands and North West with 19% each. Whilst this available stock is both industrial and logistics land the figures for Yorkshire and the Humber do include a significant number of large (250,000 sq ft +) units. Of this stock however much is unsuitable to current occupiers as it is second hand and not fit for modern distribution purposes. The current economic climate is also exasperating matters with occupiers unwilling to commit to strategic projects until a recovery is in sight. In Doncaster historical take up of employment land sites has, over the last nine years, averaged at 20ha a year totalling 180ha. Extrapolated over time to 2026 this will create a future land requirement of 358ha. This is however an unrealistic forecast to be using. Many of these historic schemes, such as First Point and some units at Redhouse, were completed speculatively and led from an investment perspective and remain un-let. Furthermore many economic forecast houses are not predicting a return to positive capital growth until at least 2011 meaning that there will be a lag until further development kicks in. Current economic conditions have seen take up slow in Doncaster as retailers and manufacturers scale back capital investments. Furthermore there is anecdotal evidence that occupiers are beginning to move to smaller units, meaning that much of the available stock in Doncaster is too large for current requirements. Atisreal UK a BNP Paribas Company 54

55 Historical take up figures provided by DMBC demonstrate that over time, however, large units will be occupied. Therefore over the LDF time period Doncaster has enough current stock that will be let in the first half of the time period covered by the LDF. In turn by allocating the required amount of employment land this will ensure that there are enough good quality sites for developers to bring to the market and reach the policy on jobs forecast. A market led approach will mean that schemes are developed with occupiers in mind after the completion of a pre-let, ensuring the developer is not burdened by the liability of empty rates after completion. The Oxford Economic Forecasts of 500 jobs created a year in the Strategic Warehousing sector will drive demand for future development schemes in the area. The Atisreal view is that this figure is achievable, bearing in mind schemes currently planned such as inland port and already completed schemes such as First Point. Furthermore if policies are implemented to achieve the policy on target then this should become even more achievable. Roughly speaking an annual increase of 500 jobs equates to 500,000 sq ft of take-up in the logistics sector annually until The Atisreal commercial view is that this is achievable bearing in mind the schemes already in the pipeline. Over this time period there will be economic cycles that will see increased employment, which will mean an average that meets the policy on target, is achievable. Adopting a market led approach to land requirements will allow the market to decide the size of units that should be built over time, therefore allowing the market to cater for exactly what occupiers require and therefore make the policy on target of jobs achievable Occupiers Perspective Trunk Road Access As has been discussed, multimodality is a key factor in occupier choice but does not negate road accessibility. Within Doncaster specifically, this raises the question of the locating on the M18 rather than the A1. When seeking alternative or new sites for large scale logistics, an occupier will focus on a small number of external items which an opportunity must satisfy. These are as follows:- Accessibility & Multi modality Availability of labour Cost Other factors such as congestion, land availability and in some cases proximity to other occupiers will also come into play. Existing routes for public transport exist to the M18, however further solutions in the short term with bus links and in the medium long term rail links could be considered. With regard to sites along the M18, all offer more direct motorway access compared to those sites along the A1 to the North of the M18 and therefore will be preferred by companies utilising either the M62 or M18 from the East Coast Ports. We would expect therefore that locations to the North of the M18 along the A1 may be seen as secondary when compared to those on the M18 or those locations on the A1 south of the M18 to most distribution related companies. It is understood that both the M18 and A1 have their limitations with congestion and that proposals to improve both are in place. However we are of the opinion Atisreal UK a BNP Paribas Company 55

56 that proposals for the M18 will be easier to deliver in the short term whilst the local commercial perception is that A1 issues have a longer term solution attached. There is an increasing focus on multimodality for logistics occupiers and providing alternative logistics solutions in order to minimise the supply chain cost. A modern distribution occupier will therefore seek out regions which can offer a multi faceted modal choice arena. In this regard, the M18 offers potential for airfreight at Robin Hood Airport, subject to improved road links, an existing rail facility at Trax Park and potentially at Rossington. It also offers good road communications to the rest of the UK motorway network and to the East Coast Ports. Including the above as an occupier deciding factor (which partially drive developers and investors decisions), market availability is another key driver in the decision making process. Sites which offer a simpler development process with a lower risk profile are likely to garner more interest from developers over and above more complicated opportunities. Challenging topography will be one such complication some may prefer to avoid. In a simple development appraisal the more costly the site preparation and overall development, the more rent a developer will need to charge to gain a return similar to that offered by a cheaper alternative. Following this logic through, sites with topographical or similar complicated infrastructure challenges which may not be attractive in the market may be avoided by the development community. This is not to say that the development market negates all opportunities which require such works as they are quite familiar with this being a requirement throughout the country on many prime sites, simply that they factor the added costs into the equation. Sufficient occupier demand for a locale ensures an active market and thus increases other factors in the equation which make works simply a part of the development plan Empty Rates Legislation The overall effects of the empty rates policy can be outlined over the short term and long term. In the short term, developers/occupiers and investors who are holding stock which has been vacant for more than six months are starting to feel the pain of a cost which was never factored into the acquisition costs. This, together with the softening of yield, has meant that whilst empty rates are encouraging rents down in the short term, the softening yield is not allowing owners to offer cheap deals and the market is stagnating. We are seeing a variety of effects on the commercial market in logistics development. Currently, as a consequence of the credit crunch and lower demand, few speculative developments are being started. In terms of investors those that are still in the market are pricing short leases accordingly, or if they have premises on the market, particularly in areas of over supply, will reduce rents to obtain rental flow. With regards to occupiers, this is the sector who will feel the full force of the policy both in the long and short term. In the short term, those that remain in the market for space are attempting to make the most of the tenants market in negotiations but where empty or redundant property is being held, this will come straight out of profit. Atisreal UK a BNP Paribas Company 56

57 With regards to long term effects, the largest burden will fall onto corporate occupiers as developers and investors will simply price the effects into their bids for property. We may also see a return to the fast track delivery of buildings rather than speculative construction which the market has experienced over the last few years. Alternatively, we may see land prices fall as the extra costs of holding stock are factored into site purchases Survey of Local Businesses As part of the study into a logistics strategy for Doncaster Atisreal conducted a survey of local businesses with the following aims: To establish where logistics operations and businesses source products and services from To identify what skills issues local businesses faced Methodology The key aims of the questionnaire were to establish the local and regional economic contribution of logistics operations in the Doncaster along with their skills requirement. Having identified the key areas a short questionnaire was designed to collate both quantitative and qualitative information. The survey Atisreal undertook was carried out both online and by telephone in the first two weeks of May The questionnaire was distributed via a number of channels including Atisreals own logistics mailings list and also a mailing list of local businesses provided by the Doncaster Chamber of Commerce. The contact details provided by Doncaster Chamber of Commerce also contained telephone numbers and where appropriate Atisreal telephoned occupiers and fed the results into the online survey. A hard copy of the questionnaire was also distributed at the London Supply Chain Forum, hosted by the Chartered Institute of Logistics and Transport; again the results obtained were then submitted to the online survey. The break down as respondents was as follows: Of the respondents 27% were located in units of up to 50,000 sq ft, 30 % in units between ,000 sq ft, 9% in units from ,000 sq ft and 5% in units larger than 250,000 sq ft 25% of respondents employed up to 100 people, rising to 27% for , up to 500 saw 11% of responses and 7% employed over 500 The key finding of the survey were: Cheap Labour, Transport and available space were listed as key reasons for locating in Doncaster Companies source goods and services from both the local, regional, national and international economies as figure 5.5 highlights: Anecdotal evidence from the comments section of the survey suggests that location is key for a logistics operator, the industry estimates that 2 per km is added to transport costs for every 1km you are located away from the optimum location between your delivery and input points. 75% of respondents do not currently use air or rail, but 73% suggest that it is possible in the future. Atisreal UK a BNP Paribas Company 57

58 Figure 5.5: Where do companies source good and services 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Construction services Financial services Business services Transport services Fuel Machinery Office supplies Transport equipment Building works Locally Regionally Nationally Outside UK Do not purchase Table 5.6: What factors were important in attracting the company to Doncaster? Answer Options Response Percent Response Count Transport 57% 25 Skilled labour 45% 20 Cheap labour 68% 30 Access to rail/air 23% 10 Available warehouse space Sustainable warehousing 43% 19 11% 5 Grants 5% 2 Tax breaks 2% 1 Other 11% 5 Atisreal UK a BNP Paribas Company 58

59 Table 5.7: Does your company use rail and/or air freight? Answer Options Response Percent Response Count Rail 16% 7 Air 9% 4 Neither 75% 33 Table 5.8: What is the potential for use of these modes of transport in the future? Answer Options Response Percent Response Count Not possible 27% 12 Low possibility 43% 19 High possibility 30% 13 Appendix 2 provides the raw data and further information on the survey. Conclusions The Survey of businesses has provided us with a number of conclusions that inform the Logistics Strategy. Employment levels in units of varying size is in line with industry expectations and standards Large National and International operators are already locating in Doncaster, key reasons cited include cheap and readily available, excellent transport links and the availability of high quality accommodation. Currently the balance of good and services sourced from other local providers is small. By implementing the recommendations of this strategy this will change towards local providers and logistics clusters grow. Three quarters see that there is a possibility of using multi-modal transport options in the future. Currently local business do not source goods from the local area as figure 5.5 suggests, this provides Doncaster with the potential to expand in this area and build a logistics cluster Consultation Event As part of the study Atisreal undertook a consultation event in Doncaster on 27 th November A database of contact from Atisreal, DMBC and the Doncaster Chamber were invited to the First Point warehouse in Doncaster to receive a presentation by Atisreal and then form a number of round table discussion groups to discuss the strategy and local stake holder issues. The main themes of the round table discussion were: The provision of access to Robin Hood Airport to improve freight use The perceived congestion on the motorway network surrounding Doncaster Developers are unaware of what operators require due to the large amount of space currently on the market. The attendees and details of the round table discussions are provided in Appendix 3 Atisreal UK a BNP Paribas Company 59

60 5.4.6 Typology of sizes Within the strategic warehouse sector there are a number of different scales of operation, the type of occupier and the operation they are running will have a direct effect on the amount of space required. In this section we name and define the characteristics of different types of strategic warehouses and offer example occupiers. Mega Strategic Warehouse 500,000 sq ft + of floor space Often occupied by retailers who are taking space for a National Distribution Centre within their network Typical occupiers, retailers such as Marks and Spencer, Tesco, Ikea and other high street operators such as Primark Large Strategic Warehouse 300,000 sq ft 500,000 sq ft of floor space Typical occupiers include 3pls (DHL, Ceva, etc) taking space for a specific contract or customer. Primary distribution units for manufacturers are also typical uses for strategic warehouses in this size group. Could also be a smaller NDC or part of a RDC network. Traditional Strategic Warehouse 100,000 sq ft 300,000 sq ft of floor space Wider range of operational uses, but location is key. Generally a mix of smaller NDC and RDC operation. Also used as a hub within the hub and spoke distribution model. Medium Strategic Warehouse 50,000 sq ft 100,000 sq ft of floor space Warehouses in this size are often used for home delivery operations, internet-retailing fulfilment, out of town consolidation and other secondary distribution activities. Also used for LDC operations. Small Strategic Warehouse Less than 50,000 sq ft of floor space Typically used for smaller contract specific 3PL operations, express parcel delivery units and smaller regional transport companies Typically a Distribution park or SRFI will be made up of a combination of these units. Greater description of units is provided in Appendix 5, along with a glossary of terms Summary This section has demonstrated the commercial aspects that need to be taken into account whilst developing this logistics strategy. Key issues are: Access to Robin Hood Airport Congestion on the M18 Occupier sentiment in terms of the type of units being developed. Coupled with investment in public transport routes, further land allocation and the delivery of new schemes in the M18 corridor this will see Doncaster build on the current logistics sector and move towards an advanced logistics sector which section 6 addresses. Atisreal UK a BNP Paribas Company 60

61 6 Advanced Logistics The phrase advanced logistics has been shorthand for technologies and business processes that permit firms to reduce costs by substituting transportation, e-commerce and just-in-time deliveries for large inventories, multiple warehouses and customer service outlets. Firms can and do reorganise in response to transportation infrastructure improvements so as to reap the rewards of advanced logistics. However in a broader scope, organisations aiming for a higher level of competitiveness are in search for innovative business models. One such model which engenders increased collaboration will foster such economic benefits. Logistics is currently a multifunctional branch of the economy and constitutes more than merely transporting goods from A to B. Along a product s value chain, logistics includes planning, implementation and checking of material, information, value, people and energy flows in systems. Partial disciplines include, for example, procurement, storage, transport, production, distribution and disposal logistics. The logistics market is a worldwide growth market, which depending on the traffic carrier is characterised by high growth rates. The reorganization process of the European distribution systems which is changing from a national to an international network is still going on. The long-term growth rate of the logistics industry is between 4% and 8% and exceeds on average 2.5 times the GDP growth rate. About half of the logistics industry is concentrated in only three countries: Germany, the United Kingdom and France. Approximately 40% of the total turnover is accumulated by logistics service corporations, while the other 60% are still internal activities of companies from the rest of the economy. In addition to classic key fields of business, such as transport, transfer and storage, which contribute around 46 per cent of the total turnover of the logistics industry, the logistics service providers are increasingly offering logistics-related subsidiary fields of business, which were previously carried out by their customers inhouse, as well as so-termed added value services. Taking into consideration both intra- & inter-enterprise logistic chains and ancillary services, advanced logistics encompasses two key aspects which are intertwined and inter-reliant: industry clusters and skills development. 6.1 Sustainable Logistics The increasing complexity of the global corporate environment, rising energy costs and greater visibility of compliance challenges have been driving forces in the focal shift on sustainability and Corporate Social Responsibility (CSR) initiatives. Previously considered part of empty marketing campaigns, or greenwashing, sustainability is now a serious component of most CSR agendas. It is helping to revamp business processes and stakeholder relationships Atisreal UK a BNP Paribas Company 61

62 It is imperative however, that the Triple Bottom Line approach be maintained. TBL ensures that business has positive impacts on the three P s: People, Profit, and Planet. Customers are also emerging as a key force driving the sustainability movement in the commercial real estate industry. Executives concerned about corporate social responsibility are demanding that their business facilities incorporate a design that is sensitive to environmental considerations. Climate change has become a top public policy issue in countries across Europe, Asia and North America. Regulators in all three regions are moving toward tougher standards for real estate development projects, and are requiring builders to account for carbon emissions and other environmental impacts in a more holistic manner. Thus, consumers and legislation have pushed companies to re-design their logistic networks in order to mitigate negative environmental impacts. The objective in the design of logistic networks has changed, therefore, from cost minimisation only, to cost and environmental impact minimisation. Atisreal UK a BNP Paribas Company 62

63 A holistic approach to reengineering the supply chain is required, with due consideration of technical, people, process, environmental and financial issues, in order to ensure system wide optimisation. It is important to enable a more effective use of finite logistics resources whilst maintaining the greatest consumer choice in product as well as the time and place of delivery/sale. By improving the industry s ability to better manage the supply chain end to end, we can ensure that everyone in the chain focuses on end customer service while sharing risk and rewards through waste minimisation, both in economic and environmental terms while providing tangible benefit to the communities in which these operations take place The Fabric Though green is just one aspect of the sustainable equation, for the objectives of this study in setting out future policy, it is important to look at the fabric of logistics property. Logistics property developers deal with comparatively low margins, and with occupiers who are forever looking for the cheapest deal, so they haven t seen much scope for upgrading their construction practices. However, they re now facing pressure from all angles. Leading industrial distribution property developers such as ProLogis and Gazeley have made great strides in improving the efficiency and green credentials of the buildings themselves as well as their environs. It is however, important to distinguish between the many features that are currently available. Some technology has been around for quite some time and is simply undergoing greater visibility and upgrades in the market, whilst others are too new to have substantial measurable history as yet. This is an important distinction as local authorities approve plans and set requirements, which may force inclusion of features which are more hype than help. As an example, Adnams Brewery s new distribution centre opened in 2006 designed by Aukett Fitzroy Robinson, set within 88 acres of grassland on the site of a disused gravel pit in Southwold, Suffolk, has been built with the aim of meeting a BREEAM (Building Research Establishment Environmental Assessment method) Excellence rating. This is an established construction industry standard that ranks domestic and commercial buildings according to their environmental credentials. It was the first commercial building in the UK constructed from environmentally friendly and highly sustainable lime hemp blocks and includes a 'living' green carpet on the roof, solar panels which provide 80% of hot water and the longest spanning glulam (laminated timber) beams in the UK. The warehouse's 4,000 square-metre roof features a syphonic drainage system that enables rainwater to be harvested. The roof is designed to absorb rainwater and release it gradually so that it can be used for washing fleet vehicles and flushing staff toilets. Another new green warehouse includes self-sustaining energy sources, including wind turbines and solar panels. A band of 4-foot-high translucent panels around the exterior walls will reflect the sun in the summer and absorb the sun in the winter. All of the steel used will be recycled. Low-volume flush toilets will be installed, and energy efficient lighting will be used. The efforts are expected to reduce energy use by 40 percent. Sainsbury s new depot developed by ProLogis that will set new standards for environmentally friendly design in industrial real estate. Based in Pineham, Northampton, the new 530,000 sq ft distribution centre is being developed using a number of advanced features designed to markedly reduce energy consumption and carbon emissions at the site. They include: Innovative new wall-mounted photovoltaic panels that generate electricity Solar walls that produce heat from sunlight An on-site power plant that reuses the heat produced by air conditioning Atisreal UK a BNP Paribas Company 63

64 An on-site recycling facility Energy efficient lighting systems Air-tight construction that minimizes energy loss through the external fabric of the building. The installation of a rain water system will harvest 16 million litres of water per annum which will be utilised in a variety of processes by Sainsbury s, And the creation of an ecological corridor will enable plants and animals to form a natural habitat. The Morewood Centre, located in Wallis Way, off Cambridge Road, Bedford, will be the new distribution centre for Wells and Young's Brewing Company. The 136,000 sq ft (12,630 sq m) distribution centre was built by leading sustainable logistics property developer Gazeley in just 22 weeks. The unit is already setting a high environmental standard as it has been designed to offset up to 208 tonnes of carbon dioxide (CO2) a year. The warehouse incorporates Gazeley's pioneering sustainable design concept and features eco-initiatives to reduce operational costs, energy and water use, improve energy control and provide clean energy from renewable sources such as roof mounted photovoltaics and a solar water system to provide hot water. The eco-template as it is known has a standard 11 state of the art eco-friendly energy- and watersaving measures including rain water harvesting and recycling, energy efficient lighting, low water use appliances and FSC approved timber. These include solar thermal heating, storm water collection, energy-efficient lighting, recyclable floor coverings, water-saving toilets and timber from sustainable sources. All developments also feature some other renewable technology, such as ground source heat pumps, photovoltaics and wind turbines. This building is set to achieve the following annual savings: 20% reduction in carbon emissions tonnes CO2 pa 60% reduction in water use 16,284 reduction in operational costs. While the green building movement is gaining momentum, fears of increased construction costs -- many of them unfounded, according to a host of studies -- remain a significant barrier locally and nationally. The perceived increased cost of green construction spurs fears for developers who are already concerned about the cost of short-term debt and conventional building materials," according to Green Building Reality: Industry Perception vs. Acceptance (Summer 2007) by CB Richard Ellis said. But an exhaustive report Costing Green: A Comprehensive Database released in 2004 by Davis Langdon, a firm which provides construction cost management services to architects and property owners, with respect to logistics property, found that "many project teams are building green buildings with little or no added cost, and with budgets well within the cost range of non-green buildings with similar programmes." The payback time has decreased as well with the rise in energy costs from a seven-year payback to a two-year payback. There are other less tangible benefits for developers or property owners who go green. According to a November study Does Green Pay Off? by The Burnham-Moores Center for Real Estate at the University of San Diego and CoStar Group Inc., green buildings have higher occupancy rates and lower operating expenses than nongreen buildings. This is consistent with the motivations expressed by UK developers as well. The US study however says green buildings garnered higher rental rates by almost $2 dollar per square foot and command sales prices of 30 percent more on average when compared with other buildings. This has not been the case in the UK to date and is not expected to alter in the future. Rather, it is hoped that green credentials will act as a positive site asset in reducing void periods or when choosing a developer to work with. Atisreal UK a BNP Paribas Company 64

65 As the examples above illustrate, there is a great deal of new technology and options available and substantial improvements to the basic strategic warehouse are in the works. It is important however not to leap at certain features as the latest trend when their efficacy is as yet unproven. Green walls for example may be a preferable alternative both environmentally and aesthetically than a green roof yet developers are often driven to the green roof by planning constraints. More important, are the efforts by major developers to form the Sustainable Developer Forum which brings them all together to set a common benchmark and common terms of reference so that one may compare apples to apples in terms of green credentials. It also furthers efforts to ensure that those firms supplying the developer s projects are striving toward product and supply chain improvements as well thus tackling issues of embodied energy footprint and simultaneously creating a trickle down benefits effect. A common theme is the recycling of materials on the project sites and use of recycled materials in the construction of buildings. A similar trend is the purchase of materials within a predefined mile local radius of the construction site, reducing transportation and energy costs while supporting local businesses. It is thus key that a combination of the specification and the work processes be adhered to in future development considerations to achieve an overall benefit The Community As Chartered Institute of Logistics and Transport (CILT) Forum Chairman Derek Bliss has stated, Distribution plays an important part in the economic growth of the country and must remain safe, clean, equitable and competitive, having minimal impact on the environment and the wider community. An effective sustainable distribution system is one that supports continued economic growth while protecting the environment and delivering a better quality of life for future generations. Distribution activity needs to operate 24 hours per day, seven days per week. However there are noise and visual impacts associated with distribution. Where possible, deliveries by HGV are normally undertaken during the night when traffic congestion is minimal. Distribution centres therefore need to be accessed during night time hours. Rail freight facilities, parking areas for road trailers or areas where containers are stacked need to be illuminated during the hours of darkness for both practical and safety reasons. Large flood lights therefore need to be erected. Many freight trains also run at night when conflicts with passenger services are minimised. Rail freight facilities at a logistics site will therefore need to receive, despatch and handle trains at night time. All of these activities, and others which occur, cause noise and visual pollution. Commercially attractive logistics sites are therefore located away from residential areas, for the above given reasons, so that 24 hour operation is possible. There are many facets to sustainable interaction between the logistics community and the broader community that can be grouped into generic categories: Environmental Economic Quality of Life Atisreal UK a BNP Paribas Company 65

66 Environmental The significant benefits to the local community and big picture planet that changes to the design and specification and work methodology can produce have been briefly described above. As noted many of these design features also have an aesthetic component which renders today s distribution properties less of an eyesore than perhaps in the past. Section 106 arrangements and planning conditions must also be utilised in a focused and constructive manner. Several of the developments noted previously have restoration components whereby some of the space within the development envelope will see marshland and other natural habitats reinstated. In some instances the design is such that bicycle/pedestrian pathways will be incorporated as well. ProLogis Howbury site which is a greenfield release will do so as well and is expected to include a visitor s education centre. Proposals in the Nene Valley similarly incorporate this concept. The operational environment of such distribution locales can also be leveraged. Modern sites necessitate 7x24 operations and lorry traffic which can often make bad neighbours. Location within motorway corridors and the development of intermodal capabilities certainly serve to alleviate much of this. Again however, design features such as quiet tarmac, new loading bay technology, and counterbalance truck technology can all be utilised where proximity is an issue to minimise impact. The CSR initiatives of many global firms have far reaching impacts on the local environment in which their plants operate. In June 2007, The Coca-Cola Company pledged to replace the water it uses in its beverages and their production: Reduce the amount of water we use to make our beverages. Recycle the water used in production processes such as rinsing, cleaning, heating and cooling. Replenish water by expanding support of initiatives that protect, conserve and improve access to water in communities around the world. McDonald s UK is a founding sponsor and partner in a long term farming project called the Food Animal Initiative (FAI). The project has been set up to develop commercially robust alternative farming methods that significantly raise animal welfare standards, address human health and environmental concerns. The project is being run in conjunction with Oxford University s Zoology Department on a farm in Oxfordshire. These types of CSR initiatives in the supply chain and distribution process strive to both do no harm and do good in local environments. Economic This will be discussed from a broader perspective in the next section as well as in its advanced form in the section on Logistics Clusters. From the perspective of the actual property however, it is important to note that the enhancements to design which have been described also serve to lengthen the viable lifespan of distribution property. By increasing the economic viability of the property through efficient and adaptable design, it sustains the economic use of the property reducing the risk of second-hand pocketing and derelict sites and thus promotes continued employment opportunity. Quality of Life A reduced rate of joblessness and improved economic fortunes are of course tangible measures of quality of life. It is important to note within the topic of Atisreal UK a BNP Paribas Company 66

67 sustainability however that there are other less easily quantifiable benefits. The return of natural environments described above improves the surroundings in which we live. The production of such leisure spaces also provides community enhancements important in an age of increasing concern over obesity. Though Section 106 agreements can not be so onerous as to create an unattractive business environment, where they are in effect, much good can be achieved. In addition to utilisation for the provision of expanded core services, many examples of their use in the education and secondary sectors can be found. A multi-million pound project to transform Peterborough's former brickworks into sustainable communities is half-way through its 20 years lifespan. So far, more than 2,000 homes have been built and more than two million square feet of employment space has been created along with 280,000 sq ft of retail space at Serpentine Green. In addition, Hampton has become a strategic location for large scale distribution centres, including IKEA, Debenhams and Prologis. So far, the scheme has also provided two of four planned primary schools and a secondary school. Owners of the Hampton development, O + H, London, financed the land and construction of the primary school at a cost of 3.4m. This was a requirement of Hampton's Section 106 Agreement with Peterborough City Council. A multi-use community centre in Hampton Centre will provide healthcare, social services, day centres and leisure space under one roof. New roads, bridges and extensive wildlife habitats have been created. Skills will be discussed in great detail in section 6.5 but have a three-tiered effect on current and future workforce members. Today s modern firms recognise the importance of retaining staff and continuous improvement. By providing these opportunities to existing staff, job satisfaction and retention remain high. These skills are often then also utilised within the broader community, as employees are encouraged to join mentoring programmes, serve as Scout/Guide leaders or in other community groups. Crucially it also assists in the retention of future jobholders. The drain of youth and brains is endemic in many cities across the country. It is fostered by a general feeling that the local community holds no prospects for the school leaver or one seeking advancement. The fostering of a positive environment in which existing staff can achieve has the knock on effect of producing a quality environment with a growing economic future for the next workforce to aspire to join The Economics Previous sections have detailed at great depth the potential job creation effects in the local area. The section above illustrates how this type of development and the high quality firms that are attracted can raise economic futures and curb the brain-drain. To achieve sustainable economic development, a balance of the business sector needs with those of the community must be met. Sustainable Development does not just mean a cleaner environment; it also requires a stable and healthy economy. To deliver a more sustainable economy we need to do more with less by making better use of resources, increase investment, promote stability and competition, develop skills and reward work. Sustainable development requires us to take a long-term view of the economy, rather than adopting short term fixes. Social and economic investment is essential to achieving sustainable development. Much existing infrastructure and many existing practices are unsustainable, and investment will be needed to replace them. Investment in a sustainable future requires the development of skills needed for a productive workforce and competitive economy, and increased participation in lifelong Atisreal UK a BNP Paribas Company 67

68 learning across society, in addition to the protection of our natural resources and natural environments. To promote this kind of investment, an international as well as national investment regime will be needed. A broad spectrum of political opinion now accepts that the best way to achieve investment in a sustainable future is through competition. In the UK, the Government is developing a set of competitiveness indicators: the Competitiveness Index. Indicators of competitiveness may include the level of available human, technological and natural capital, levels of innovation and entrepreneurship, and economic stability. Maintenance of a stable economy in particular, without the swings of boom and bust and their social repercussions is essential to a successful sustainable development strategy. Many of the major industrial funds are global in scope. The development proposed in Doncaster must meet the advanced modern standard to be found elsewhere in the country and the world to attract it. Progressively reducing pressures on the environment and natural resources is part of the competitiveness challenge. Business needs to create more value with less impact: seizing opportunities to innovate and to enhance competitiveness through better use of physical, human and financial resources, while meeting growing customer demand for more environmentally and socially acceptable goods and services. The term 'eco-efficiency' is sometimes applied to such an approach. The World Business Council for Sustainable Development has identified key elements of eco-efficiency, including reducing the materials intensity of goods and services, enhancing recyclability and durability of goods and reducing dispersion of toxic substances. Many firms have substantial programmes in place to support such initiatives. At a simple level, it is increasingly common for distribution centres to use equipment which converts packaging into void fill rather than simply compacting it as rubbish. In Doncaster, these business practices must be incentivised and encouraged to continue and expand Summary Sustainability in Doncaster must be promoted by creating a business environment which attracts firms committed to CSR. This in turn attracts those developers and ancillary firms which service them. Developers such as ProLogis and Gazeley concur that the CSR demands of major retailers such as Sainsbury have driven their investment in new development methods and materials. With its optimal distribution locale from the ports to England and the north, Doncaster by providing the requisite infrastructure and labour supply will attract such occupiers. Facilities for such tenants become merely one unit in a broader development built to similar high standards, thus attracting other likeminded tenants. As a group, these firms provide educational and social benefits thus generating a complete sustainable loop. The process however relies on the commitment of the local Doncaster community to support the infrastructure and business requirements of modern distribution. 6.2 Logistics Clusters Defined Usually the logistics industry evolves in clusters. A cluster is a geographically proximate group of interconnected companies and associated institutions in a particular field, linked by commonalities and complementarities. The geographic scope of a cluster can range from a single town to a network of locales and even countries. According to the Organisation of Economic Cooperation and Development (OECD) definition, clusters are networks of interdependent firms, Atisreal UK a BNP Paribas Company 68

69 knowledge-producing institutions (e.g., universities, research institutes, providers of technology), bridging institutions (e.g., providers of technical or consultancy services) and customers, linked in a value-added creating production chain. The concept of clusters goes beyond that of firm networks, and captures all forms of knowledge sharing and exchange. Clusters create a partnership among key stakeholders such as: Support services: maintenance, machining, fuel, etc Combine modes of transportation: air, rail, road Training schools: drivers, repair, logisticians, engineers Government: human resources, financial institutions, legislature, infrastructure Manufacturing & Distribution Distribution and Transportation & Logistics share many of the same industries, and therefore complement each other in the region. The Distribution cluster includes, wholesale trade, trucking, rail transportation, air freight, couriers, messengers and delivery services, recruitment agents and job placement services, postage services and warehousing and storage. The Transportation and Logistics includes trucking, rail transportation, air freight, couriers, messengers and delivery services, postal services, warehousing and storage, school and charter buses, pipeline transportation, and scenic and sightseeing transportation. The creation of logistics clusters in major economic regions in the country could provide a catalyst to spur further growth in the logistics industry. Such clusters will attract logistics players to amass at one place and will spur the development of a critical mass of industry players that can provide high value-added and comprehensive logistics services to businesses. The Cluster Chart is commonly used to describe the basic structure in a compact way. It compiles separate but closely inter-relating elements affecting a cluster and illustrates their interconnections. The elements in brief are: Primary Goods: the globally most competitive goods the cluster produces Specialty Inputs: the main physical factors Technologies: the main technologies, machines, equipment used by the core companies in the cluster Related and supporting industries: the sectors whose products are used directly or indirectly in the process of making the primary goods Consumers: the main consumers or consumer groups of the cluster Atisreal UK a BNP Paribas Company 69

70 The World Bank has created a survey, The Logistics Performance Index, which assesses the logistics friendliness of various nations. It assesses the availability of these ancillary features as well as government policy with regard to development and finance Development The Logistics Centre concept was developed for large corporations and is intended for the implementation of large-scale logistics clusters. Under the Trade Park concept, smaller companies can also achieve the same benefits as large companies in their premises and service solutions. Its missions lead it to improve the intermodality and interworking and thus to improve the added-value of the area. European distribution locations can be divided into about 25 primary logistics clusters and more or less 60 secondary logistics clusters. Please note in figure 2 that the borderlines of the cluster may overlap and are not set by consistent methods among the different market participants. At least four locations operate as global logistics clusters: London, Paris, Frankfurt (Rhine-Main) and Randstad Holland (with an extension to Rhine-Ruhr and Northeastern France. Source: Dr Dieter Rebitzer, University of Nurtigen-Geislingen The analysis of clusters also goes beyond traditional sector analysis, as it accounts for the interconnection of firms outside their traditional sector boundaries. Clusters are seen as the drivers of growth and employment. Governments can nurture the development of innovative clusters primarily through regional and local policies and development programs, and by providing the appropriate policy frameworks in areas such as education, finance, competition and regulation. Atisreal UK a BNP Paribas Company 70

71 An awareness of the infrastructure needs and how the cluster benefits the society socially, economically, environmentally and culturally, is key thus leading to an understanding that we need to preserve and expand upon these jobs. A compelling story about this cluster can be made to effect change that will enhance the cluster. Certainly the logistics part of the equation will communicate the understanding of the myriad services that participate in the transport of goods and services through ports and airports. As capacity is reached on transport systems, economic prosperity is endangered. At the same time, if we seize on the opportunities the potential role Doncaster as an international gateway offers, one can increase the economic and social opportunities. Critical Mass has been referred to in varying contexts in previous sections i.e. to describe the size threshold for development. In terms specific to a Doncaster cluster, critical mass refers to the point at which sufficient distribution activity is present to warrant the co-location of ancillary services. These services and the availability of mixed use developments as described previously, in turn attract further desk based services such as R&D, call centres, training/education and finance. Doncaster currently has the distribution element and the underpinnings of the educational and training environment required to produce the requisite labour source. This needs to be built upon in conjunction with the drive for inward investment to secure associated firms not distributors themselves. Case Study It is perhaps easier to step from the abstract concept to locales that have achieved or are achieving successful cluster environments. We will take representative samples from North America, Europe and Asia contribute to the development of the sector of transport and logistics in the Walloon Area. North America A recent study dubbed Atlanta "a powerhouse for transportation and logistics," and noted that over the last decade and a half, Atlanta has garnered more of the national market and grown jobs faster than any of the nation's top 20 logistics clusters. Conducted by Harvard University's economic development and cluster expert, Michael Porter, the study recognized the Atlanta region as one of the best logistics clusters in the nation, ranking the area fourth behind New York, Los Angeles and Chicago. Atlanta-based technology companies that provide logistical support and solutions are being caught up in the undertow. Last year, Georgia Tech's H. Milton Stewart School of Industrial and Systems Engineering claimed the No. 1 ranked program of its kind in the nation -- for the 16th consecutive year. According to a Milken Institute study, Tech is one of the top universities in the world in terms of start-up businesses, ranking fourth. Since 1992, the Supply Chain & Logistics Institute (SCL), a unit of Tech's School of Industrial and Systems Engineering, has researched, educated and assisted the Atlanta area in terms of logistics and supply chain management, and area companies have come to rely on Tech as a talent wellspring. In fact, Manhattan Associates, a leading supply chain solutions provider with 1,600 employees (with an office in the UK also), relocated to Atlanta from Manhattan Beach, Calif., in 1995, in large part to leverage key recruiting opportunities and top technology resources in Atlanta. According to published reports, more than 170 of the company's employees are Georgia Tech graduates. "Atlanta is on the science side of logistics," said Mike Landry, a Tech Atisreal UK a BNP Paribas Company 71

72 graduate and president and founder of Servigistics, a strategic service management company that helps companies mitigate the risk associated with delivering on service commitments. In 2004, Georgia ranked 13th nationally in terms of engineering doctorates awarded by its educational institutions. One of the reasons many of these graduates stay is that they have places they can work. Some of this is due to efforts made by the Metro Atlanta Chamber of Commerce. In 2004, it established the Atlanta Logistics Innovation Council "to attract, grow and retain high-value logistics industry companies and jobs... [and] to position Atlanta as the place the world comes for logistics solutions," according to a letter co-written by Sam Williams, president of the Metro Atlanta Chamber of Commerce, and Lee Torrence, chairman of the Atlanta Logistics Innovation Council. In a similar vein, the Columbus, Ohio region is striving to be known as a major U.S. and international centre of logistics commerce for national and international markets, marked by creative intermodal approaches, competitive service support, cutting edge technology development and application, and outstanding performance serving global suppliers and end customers driven by multi-lingual, world-class information systems. They like other area around the globe have drawn on local educational resources and have also created a local Logistics Cluster organisation which works to facilitate the interdependencies required to reach this advanced step and then market the achievements to attract onward investment and occupiers. Europe Since July 2004, the Cluster Transport & Logistics Wallonia-Belgium has aimed to support Wallonia to be THE land of Logistics. By gathering together all the actors of the sector (Conveyors, logisticians, managers of infrastructure and the training organisations) and coordinating the local initiatives via, among other things, the local Transport & Logistics Poles, the Cluster Transport & Logistics Wallonia Belgium has to contribute to the development of the sector of transport and logistics in the Walloon Area. Moreover, the Cluster plays a major role as the natural intermediary of the political authorities, the firms and organisations, as well as potential investors It describes its mission as: Setting up a network of industrial and/or commercial businesses is the main mission of any cluster. The peculiarity of this industry is primarily the fact that each segment is vertically integrated, this verticality is caused by dispersion of each individual sector, i.e. forestry, harvesting, lumber, and then the manufacture of semi- or finished goods. This vertical integration is a hurdle to exchanges or partnerships. Hence, the capability of setting up networks in the wood industry acts as a lateral integration that circumvents the obstacle. Finally, the cluster adds a dynamic to each group and acts as a coordinator of their activities so that they may become self-sufficient in the achievement of their objectives. Schiphol s Cluster Strategy (since 2004) has succeeded in expanding from 150 Logistics service providers to: Aerospace (tradition, knowledge) Fashion (change life cycles) ICT/ New Media/Creative industries (A dam) Healthcare /Life Sciences (growth) Atisreal UK a BNP Paribas Company 72

73 Fresh (Aalsmeer) China (new policy) Success factors touted have been: Skilled and flexible labour force Favourable tax climate Good cost-quality ratio (e.g. real estate) Gateway to Europe Outsourcing opportunities (logistics) Independent in different industries Excellent global accessibility (network airport) Quality of life Asia-Pacific Among the most advanced of the new kinds of zones is the one in Kaohsiung, Taiwan Province of China. It began with simple sewing manufacture in 1967, expanded to fashion garments, then to higher skilled electronics assembly. Educational support and infrastructure investment then led to electronic design, testing and R&D. The region is now moving into the business of hosting corporate headquarters and global logistics centres. The transport and logistics cluster is an important sector in the UAE economy, comprising 10.4% of non-oil GDP in As Dubai has witnessed tremendous growth and diversification in its economy, logistics in particular has had great success as one of the first clusters to develop international growth. It is worth noting that growth of the transport and logistics cluster in Dubai has been largely spurred by the government. Two state-owned conglomerates in particular, Dubai World and Dubai Holdings, each encompass their own entities including ports, terminals and financial institutions. Built to both complement and compete against one another, this model is intended to foster competition on the premise that firm will grow and develop greater efficiency with competition, while at the same time be able to complement one another in areas the other lacks. Though this is a state owned example as many are in this part of the world, many of the core principles for growth hold true as does the importance of government legislative and infrastructure support. 6.3 Aviation as a Logistics Economic Spur This section is not intended to be a comprehensive aviation strategy or to redo the work completed by the Council in preparation of the Council s Aviation Strategy. It will however discuss the airport in relation to its impact on overall logistics capability in the region. In today s international and technology-oriented economy, essentially every business sector gains operating efficiency because of air service. Trends such as just-in-time production and delivery and the fast-paced technology sector rely upon quick goods movement over long distances. Air transportation reduces the time and storage cost of doing business. Corporations too continue to decentralise their operations by moving to smaller, more economical communities to be more competitive. Many companies locate in a community because of the presence of an airport, and adjacent industrial parks. An increasing number of companies and executives are avoiding the hassle factor of larger commercial airports and airlines by opting to use smaller airports often serviced by lower cost airlines. Atisreal UK a BNP Paribas Company 73

74 Air transportation systems play an important role in promoting national and regional socio-economic activities. Airports are Economic Engines of Growth for large urban areas in a globalised economy. Air freight for example accounts for 40 percent of world trade volumes by value and is regarded as a leading indicator of the state of the world economy. Enhancing the connectivity, quality of services and competitiveness of airports can create jobs and spur the economic growth of the surrounding region. Airports should be viewed as an essential component of the urban planning process. Cooperation and coordination between central government, local government, airport management and the business community are key factors of success for economic development initiatives around airports. There are mission critical logistics and supply chain benchmarks to attract and facilitate international investment and trade which airports must achieve in order to position themselves as optimal city and country gateways, air cargo hubs, and business zones. Optimising airports for competitive advantage needs to incorporate logistics, maintenance, air cargo hubs, storage and multi-modal sea - land - air linkages. Urban planning for the airport to facilitate logistics needs should include Free Trade Zones. A Foreign Trade Zone (FTZ), also known as a Free Trade Zone, is a government sanctioned site where foreign and domestic goods are considered to be outside of the. Customs territory. Merchandise can be brought into an FTZ to be stored, exhibited, repackaged, assembled or used for manufacturing free of customs duty, quota and other import restrictions until the decision is made to enter the goods into the local market. No duty is ever paid on foreign goods that are re-exported from the FTZ. These are relatively few in the UK and have been proven to attract both distributors and manufacturers and have served as the USP for many smaller logistics locales in both the US and Asia. The aviation survey references Vatry as a successful regional example. Available space there is specially equipped to provide for the storage of perishable goods under controlled temperature conditions. This feature has proven a substantial selling point for the port of Cardiff as well, encouraging growth. This capability supported the rapid growth of the port of Charleston, South Carolina also drawing traffic away from more traditional ports. It is often the capability to provide a difficult to find service that creates rapidly incremental growth. Vatry also is a certified Border Inspection Point for Europe and conducts requisite customs and phytosanitary controls of all products transiting through the facility. Here again, like the FTZ, the airport can provide services which meet ever more stringent legislative requirements integral to the success of manufacturing logistics operations. The aviation report discusses aviation clusters as this report investigated logistics clusters. The two are not mutually exclusive and have similar skill and ancillary requirements. They feed each other generating additional growth for both. Logistics providers increasingly demand multi-modal sites which would require an air link which was cost effective and efficient and could provide the value added services that congregate in an aviation cluster. A successful example of the co-joining of multi-modal capabilities to spur logistics and economic growth can be found in Ohio. The Rickenbacker intermodal project is a private-public partnership with Norfolk Southern Railroad, which will make a $25 million investment. The facility will be built on 300 acres Atisreal UK a BNP Paribas Company 74

75 south of Rickenbacker International Airport and the Airport Authority will develop another 1,000 acres in association with this project. An independent study concluded an intermodal facility at Rickenbacker can be expected to result in the following: Benefits after the first 10 years: $660 million in transportation benefits to shippers. A reduction of 49 million truck miles in Ohio. Significant reduction in emissions. Benefits realized over the next 30 years: 9,500 direct jobs. 10,900 indirect jobs. $15.1 billion economic impact. $800+ million in direct local, state and school district tax revenues. Rickenbacker boasts an international cargo airport and Foreign-Trade Zone operated by the Airport Authority. The area has grown to encompass 13 industrial parks with more than 100 companies. This facilitates international airfreight, e-commerce fulfilment, freight forwarding and warehousing services. An intermodal facility will further Rickenbacker s reputation as an advanced logistics hub. The Columbus Chamber has identified advanced logistics as one of the three pillars of the Greater Columbus Economic Growth Strategy. The centrepiece of the logistics initiative is an Advanced Logistics Park at Rickenbacker, which is enhanced by an intermodal facility. Closer to home, GAC Logistics (UK) Ltd has opened a new, purpose-built 3PL logistics facility at East Midlands Airport. The move from previous premises trebles the company's floor space and will enable GAC Logistics to offer enhanced 3PL (third party logistics), warehousing and distribution services. The move is the first step in GAC UK's strategy to leverage global expertise to provide specialised services for the fast moving consumer goods (FMCG), pharmaceutical, textile and entertainment industries. GAC's new East Midlands Airport facility is located at the East Midlands Distribution Centre (EMDC), a 140 acre rail connected national distribution. Thus the aviation starting point and existing local logistics combine with a rail link to present a full service package required to attract more advanced processes. Both aviation and logistics also require similar up-skilling of the job pool. In Doncaster, this would include the provision of both mechanical and engineering type training as well as planning and scheduling. Many of California s smaller airports serve aviation-related training and education functions that are at the forefront of technological innovation. The students and visitors that take part in these training programs spend dollars in local hotels, restaurants, shops and service establishments. The air clusters draw business & conference centres and technology firms which would be integral parts of an advanced logistics park. Modern use of information technology in optimising logistics and cargo processes is key to advanced logistics. Doncaster College s current plan for qualification enhancements incorporates the technical needs of manufacturing, aerospace and could be extended to parlay this training into logistics technical needs. Atisreal UK a BNP Paribas Company 75

76 The earlier example of Atlanta as an extremely successful logistics cluster highlights a similar link to Georgia Tech and the chicken and egg scenario by which an educational institution produces technical and engineering graduates desired by the regional airport, who then extend to the logistics community which grows with the availability of cargo links and highly skilled labour and in turn increases the profile of the university and the region perpetuating itself. Specifically designed and tooled for cargo, Vatry is able to charge significantly less than other airports for comparable services, saving operators time while guaranteeing them first quality, professional cargo handling operations. It is this specialisation and streamlining which needs to be promoted in Doncaster to provide a similar cost saving USP. This has been a critical success factor in the growth surrounding East Midlands airport. Speedy delivery of goods and services is essential to many manufacturing, e-commerce, catalogue and service businesses. Postal services depend on air transportation for timely delivery of mail and small packages, and dedicated air cargo carriers such as Federal Express, TNT, DHL, and United Parcel Service provide air express service. The employees of the express industry are widely spread around UK, with some concentration in the East Midlands associated with the use of Nottingham East Midlands International Airport as a key hub for express services. The express industry contributes to regional development in a number of other ways as well: It enables businesses dependent on fast delivery to customers to locate in regions that are not necessarily close to their market. The express industry therefore brings all regions of the UK within the boundaries of the Day+1 economy. Moreover, businesses operating from lower-cost locations do not have their benefits dissipated by excessive transport costs and poor delivery times. Companies who rely on next-day delivery to customers may have an incentive to locate near hubs for express services so as to make the last pick-up time for their deliveries as late as possible, providing them with maximum production flexibility. Such clustering around the major express hubs in the US and continental Europe is common, and it has also offered a potential stimulus to the region around Nottingham East Midlands Airport. More generally, the catalytic benefits generated by the express industry help to support and develop businesses in high-growth and high valueadded sectors in all regions, and to enable businesses in established sectors to adopt and benefit from modern business practices. Without access to these services, firms in a region would be put at a competitive disadvantage both nationally and internationally. Some may well choose to relocate or expand operations elsewhere rather than in a region where express delivery is either not available or limited. Similarly, as discussed earlier, express services are very important to many SMEs and hence to encouraging entrepreneurship. They therefore support the aspirations and objectives around continued economic restructuring, and growth in highvalue sectors. There are many concrete examples of the successful expansion of airport express hubs to larger logistics and regional growth: Liege Liege Airport has been TNT s European operating hub since As express and air cargo traffic has grown, so a number of distribution and logistics companies have established in the close vicinity of the airport. These companies are located within the Liege Logistics platform: Liege Logistics now employs over 500 people. Around 845 acres have been Atisreal UK a BNP Paribas Company 76

77 designated on and bordering the current airport site to enable Liege Airport s economic growth through to Brussels In 1985, DHL established the Brussels hub as a sorting facility in the corner of a hangar at Brussels National Airport. Within a few years it became DHL Brussels Hub, the largest express hub outside the USA. Through its Express Logistic Centre (ELC), the hub acts as a central distribution point for a number of major companies based in the surrounding areas of the Brussels National Airport. DHL is not only the biggest customer of Belgocontrol (providing about 25% of their income) but also contributes almost 50% of the profit before taxes of the airport owner BIAC. According to a report issued in September 2003 by the Vlerick Leuven Management School and KU Leuven Universite Libre de Brussels and ECORYS Transport Rotterdam, the presence of DHL s major hub at Brussels National Airport contributes 394 million of valueadded to the Belgian economy. As from mid-2008, Leipzig will become the main hub in DHL s European network and the Brussels hub will downsize. Memphis Memphis International Airport - Federal Express' world headquarters and Superhub - is the world's largest cargo airport. In addition to the jobs and direct economic benefits it provides, FedEx is a magnet for attracting distribution centre development to Memphis. According to SRI International more than 130 foreign-owned firms from 22 countries employing 17,250 workers have been drawn to Memphis since the early 1980s, largely due to the presence of FedEx. Examples of customers that relocated to Memphis metro area include Williams-Sonoma (distribution & data centre); Submitorder.com (Internet fulfilment centre); Hewlett Packard (Distribution) and Ingram Micro (Distribution / assembly / repair). Louisville Louisville Airport is home to the international airfreight hub of UPS. Many companies have located in or near Louisville because of the extensive logistics and distribution opportunities there. According to Greater Louisville Inc. The Metro Chamber of Commerce, the estimated annual impact of UPS Hub 2000 expansion was 13,965 new jobs (direct and indirect) and $478 million new payroll (direct and indirect). Companies doing e-commerce fulfilment in Greater Louisville include Nike and Gateway Computers, while companies doing traditional transportation fulfilment include GE and Ford. The necessity of night flights for the express industry should not be discounted when assessing policy and growth. Increasingly, products are time-sensitive because they move according to thin and high velocity supply chains, enabling reduced obsolescence costs and inventory costs. This usually requires goods to be picked up at the end of the working day, for delivery early the following day. This reduction of daylight in-transit time is how companies perceive delivery lead times in order to provide competitive advantage. As referred at the outset, express transportation is multi-modal, with decisions made as to how to move goods based on the requirements and expectations of the customer. Air travel is an important part of what makes express movements possible and competitive in international markets. The only way to achieve such a delivery schedule is by the operation of aircraft outside of normal business hours, including those defined as night, between 11pm and 7am. There are certainly positive features to night flights as they also enable: Optimal use of both road and air infrastructure (i.e. on a 24 hour basis) Atisreal UK a BNP Paribas Company 77

78 Spreading of airport, airspace and Air Traffic Control utilisation, keeping those capacities open for higher volume passenger traffic during daylight hours. Better utilisation of existing airport resources since night flights have comparatively little add-on cost to their normal operations. Although the synergies are obvious between aviation and logistics cluster growth, it is important to gauge the relative impacts of various initiatives. Because funding is a finite resource, it necessitates choosing one option over another. As such, initiatives which will have beneficial knock effects to the other vertical should potentially be weighted higher than those which will generate the silo effect. 6.4 Logistics Skills The local logistics industry also needs to develop skilled and trained manpower to enable them to serve higher-end clients by introducing new services and bringing innovative solutions. The small domestic market and globalised nature of the industry call for local companies to spread their wings abroad in order to grow, but the lack of emphasis on service excellence and a limited range of logistics services will curtail their growth and confine them. To this end, it is important that industry players pay equal attention to investing in human resource development as they do capacity expansion. To attract the best minds and skilled talents, the level of professionalism in the industry must be enhanced. In today s knowledge-based economy, the focus should be on developing mental manpower as much as muscle capital. The region needs to understand the opportunity presented by the growth of logistics as part of globally competitive manufacturing value chains and invest in the workforce and infrastructure required to meet increasing demand Current Environment The Industry and National View It is anticipated that substantial growth will continue in the industry and that replacement demand will also be substantial. In addition, the sector is likely to see compositional changes with more managers required due to the increased customer facing and technological advances in the sector. An aging work force and a skills shortage ensure great job opportunities and good salaries into the future. There are a broad range of occupations and sectors within transport and logistics and the range of entry points into the industry, stretching from clerical and operational, to specialised craft, to management, mean it is accessible to a variety of jobseekers. It is this facet that created the environment for the industry to be so attractive to and facilitated the entry of great numbers of eastern European workers in recent years. Similarly, it must be harnessed to spur like interest in the regional workforce. Logistics doesn t just have an important cross-company supply chain function for industry as a whole but also for individual companies. Therefore logistics companies have to have expertise at the interface between marketing, production, acquisitions, research and development as well as finance. It used to be valued that logistics managers had learned their trade from the bottom up at the coal face. Practical, real-life operational know-how remains a key element as may be seen from firms such as UPS that require all levels of personal to work in delivery and depots as part of their probationary training programme. But now you can only gain acceptance from international participants if you have the same specialist qualifications as them. Our research has shown that Atisreal UK a BNP Paribas Company 78

79 you must have strong coordination skills that go beyond your own department and further your own company. Soft skills should also not be forgotten as many companies see this as being the weak point in many logistics graduates. These skills include inter-cultural competence, communication and team skills as well as a good grasp of politics. This was shown to be true even amongst smaller regional firms who hoped to prove their ability to service larger national and multi-national contracts. Yet despite this being generally acknowledged in principle, we still find that the skills reality within the industry remains significantly below the competitive ideal. The national organisation, Skills for Logistics, has been involved in an in depth educational and employer research and policy exercise in order to make Foundation Degree (Fd) recommendations. The results published in May 2008 Foundation Degree Framework In Logistics note that: The UK logistics sector has far more people qualified at below National Vocational Qualification (NVQ) Level 2, or no qualifications than the rest of the UK economy. Currently, only 16.5% of the logistics sector workforce have a level 4 or above qualification 14% hold a level 3 45% of the workforce are below level 2 or have no qualifications at all 7% hold a trade apprenticeship. At management levels, the sector is polarised. 29% hold qualifications at or above Level 4. 32% however, have qualifications below level 2 or no qualifications at all. Broader management and logistics knowledge is generally seen as less important than meeting the requirements of an Operators License. They also note that: The sector is dominated by a male workforce with only 27% of the workforce being female. For key occupations such as LGV driving the figure is less than 1%. In terms of age groups, only 11% of the workforce is between 16 and 24 years old. 41% are over 45 years or age. 8% of the workforce is Black and Minority Ethnic (BMEs). Their research cites the National Employer Skills Survey 2005 for England which showed: 16% of logistics firms have at least one vacancy, 7% have at least one vacancy that is hard to fill 5% have a skills shortage vacancy The main reasons for these gaps are low numbers of applicants and insufficient interest in the work. 15% of employers identified an incidence of a skills gap within their employees, of which 20% of these skills gaps were within managerial occupations. The public perception of distribution and logistics centres on big, ugly warehouses full of uninspired, low paid workers performing monotonous tasks. Even the fond designation of a shed within the industry does no favours to add glamour to this field as a career choice. In fact, few actually view it as a career and deem it to be a last resort. The results from the central government sponsored Leitch Review released at the end of 2006 note that the UK falls woefully behind other advanced nations in the skills base required to achieve the optimal level of productivity and hence Atisreal UK a BNP Paribas Company 79

80 competitive success. The review goes on to highlight emerging economies such as China and India. From a narrower logistics perspective, it is important to recognise that like these two examples, many members of the Association of SouthEast Asian Nations (ASEAN) community have achieved the advance from manufacturing to distribution to R&D and back office functions as we are proposing is the path to achieve the required local employment growth. To some degree, this achievement was grounded in multi-nationals desire for low cost which could be maintained whilst these economies funded the skills leap required to move on. More worryingly from a UK competitive standpoint however, is that this process of advancement from distribution to higher skilled logistics work and advanced clusters has been replicated in countries closer to the local market. Though higher in land and labour costs, Belgium and The Netherlands are good examples and pose a significant threat to the goal in Doncaster as they are often seen as viable central distribution points for firms with UK and EU needs. Green issues and rising fuel costs maintain the hub and spoke model which encompasses a UK DC but a return to a favourable economic climate and improvements in transport options such as rail will eventually make them more significant threats once again. The interim period must be used wisely to gain the advantage. The Local View Doncaster, like much of South Yorkshire, suffered economic decline in the wake of mine and manufacturing closures. Although a great deal of commitment has made to redirect the borough s economic future, it still has one of the lowest take-up rates of higher education in the country at just more than 14%. Meeting the challenge described in the section above will require a significant increase in the skills base of Doncaster s labour force. Providing a more highly skilled workforce is key to making the transition to advanced logistics and to stimulating growth in higher value-added jobs associated with logistics itself as well as ancillary services that arise within and around a successful logistics cluster. The Leitch Review identifies the importance of a skilled labour force if the UK economy is to remain competitive internationally. The Review highlights significant skills gaps that must be closed across the country and the need for a significant increase in the number of people holding higher level qualifications at Level 4 and above. It is estimated that a doubling of the number of working people with Level 4 or higher qualifications would be required in Doncaster to meet the Leitch target. The recent National Employers Skills Survey conducted by Skills for Logistics found that 44% of employers in the Yorkshire & Humberside logistics sector did not fund or arrange any staff training. 52% formally assessed staff training needs, whilst 35% of employers do not have a business plan, training plan or a budget for expenditure. There are enormous job opportunities available in the modern logistics market, beyond the generally held misperception of low paid warehouse floor operatives. The method of working whereby various parts of an organisation worked in a silo have long been proven to increase overall cost and inefficiencies. The logistics function is now an integrated core capability rather than a service. As such there are larger groups of medium and high skilled roles which serve intermediate functions between traditional back office and warehouse floor operations. Roles such as: Commercial Contracts Manager - Makes sure that all the commercial and legal support is provided in relation to the sales, logistics and marketing aspects of an organisation. Atisreal UK a BNP Paribas Company 80

81 Logistics Analyst - Role is to make sure enhanced customer service is achieved through cost reductions, process improvements and understanding of warehousing and distribution aspects of the organisation. Lean Implementation Consultant - This role extends to delivering of lean implementation projects with emphasis on human element cultural changes. Supply Chain Logistics Consultant - Job is to assist the clients of the organisation in leveraging the value of logistics. She also designs various networks and framing of steps to efficiently manage and implement orders of an organisation. Procurement Consultants - This position relates to procurement made by the organisation. It must ensure accurate and timely delivery of goods at an economical cost. This requires consultations with vendors, industrial managers, quality managers and accounts department. This emphasises the customer facing aspects now present in the logistics industry and the fact that the workforce is not yet adequate in this skill. Customer handling, problem solving, and technical, practical and job specific skills were identified as the skills that needed improving in over 50% of employees with skills gaps. Figure 6.1: Skills Found difficult to obtain from applicants Yorkshire & Humberside Logistics English Logistics Technical, Practical or Job-specific Skills 48% 53% Customer Handling Skills 43% 38% Problem Solving Skills 43% 37% Oral Communication Skills 43% 30% Team Working Skills 35% 35% Numeracy Skills 35% 28% Management Skills 34% 22% Written Communication Skills 34% 25% Literacy Skills 26% 27% Foreign Language Skills 17% 20% IT Professional Skills 17% 10% Office admin skills 17% 12% General IT User Skills - 12% Experience/lack of Product Knowledge - 3% Other - 4% Personal Attributes - 2% No Particular Skills Difficulties - 6% Source: NESS (National Employer Skills Survey) 2005 (all skills shortage base) Unfortunately, despite recognising the need, the study found that training provision in reality did not reflect stated aims. Of the training provided on-thejob, 68% involved a proportion of training for health and safety or induction, while for off-the-job it was 55%. 13 to 15% of employers dedicated 100% of their training to only health and safety or induction. Atisreal UK a BNP Paribas Company 81

82 This is a rather broad generalisation however and there are some effective examples of more varied and comprehensive training provision readily available both locally and nationally Current Provision DHL DHL Logistics is a significant global player in the industry and a major employer within the borough. DHL has endeavoured to attract and inform the labour pool in a medium especially relevant to the youth category. With the Discover Logistics initiative, DHL attracts young people and informs them about the company and the variety of careers that logistics offers. The core of the initiative is the online portal with two web-based applications, DHL Fast Forward The first worldwide Business Simulation and Logbook The DHL Logistics Compendium. These interactive tools offer a detailed look at the innovative, varied, international world of logistics. The business simulation allows international participants to prove their management skills. Interactive multimedia elements in the logbook communicate established technical logistics knowledge. The DHL logistics compendium Logbook is an interactive internet application that offers established technical logistics knowledge. It was developed by DHL in co-operation with scientists at Darmstadt Technical University. The Logbook explains key technical terms in a glossary. Several chapters detail the challenges, processes, and management approaches in the logistics field. It independently presents the latest in comprehensive logistics know-how. Practical experience reports from around the world give up-and-coming and existing managers a detailed understanding of different occupations. Each information section ends with a quiz regarding the management of complex product streams, transportation processes, and the use of innovative technologies. DHL Exel Supply Chain recently won a National Training Award for its management training programme. The company received the award for its Effective Manager programme, developed in partnership with Ashorne Hill, the residential training Provider and conference centre. The Effective Manager programme is aimed at developing good leadership and management skills through specific modules: leadership styles; simple psychology; self organisation; and improved decision taking, planning and communication skills. DHL has now trained 1,700 employees across the business from line manager to Board level and the programme counts towards the Diploma in Management qualification. They believe that their investment in training has reaped real and tangible benefits and cost savings across the business. These include: improved staff retention, increased efficiency and productivity, a significant fall in absenteeism and a dramatic improvement in management skills development. The consistency in approach achieved through the programme ultimately has a positive impact for customers too. DHL Exel Supply Chain also won a special award, sponsored by City & Guilds, for employer/provider Collaboration. This important industry and education link will be discussed in further detail later as it is integral to the successful adoption and results of such programmes. Atisreal UK a BNP Paribas Company 82

83 , Three Double Six Three, as the firm's name is normally rendered in speech, is officially the largest player in a mushrooming industry called "foodservice," and which supplies raw materials to restaurants, pubs, canteens, and any other outlets from which people buy or are served cooked meals. The firm serves 30,000 customers who run the more than 50,000 outlets - a staggering 20 per cent of the commercial kitchens in the country has driven to the top of its vertical by placing customer relations at the heart of the business. Each 3663 depot services its local area, meaning that individual telesellers, delivery drivers, and field sales reps build up personal relationships with local chefs and restaurateurs. Again highlighting the more varied skill base required by many logistics firms. Their internal First for Service team executes the Total Quality Programme. The operating principle is that the quality of service and ability to improve the total package provided to clients improves by ensuring that staff are given the skills they need to reach the service level targets set by the firm for operational excellence. It is an end to end process which by necessity goes far beyond the product itself. They have also developed an Operations Academy which initially had a Transport focus but has now been extended to Warehouse. Rather than the credit crunch leading to curtailed emphasis, the firm sees continued investment in their staff as the key to maintaining a superior level of service which differentiates them from the competition and will assist in safeguarding market share in a difficult economy. The firm also promotes innovation and achievement through their PIPERs programme. This endeavour fosters and rewards innovative thinking and practical application of acquired skills sets to promote efficiency, improved service levels, internal and external improvements in sustainability, etc. Wincanton Wincanton have recently gained accreditation by the ILM, (Institute of Leadership & Management) which will enable delegates to achieve an ILM Level 4 Diploma in Management. There is also a Management Development Programme (MDP), a 14 month modular development programme that involves formal residential off job training. Investment in all the staff is given high priority. The MDP typically lasts 14 months, beginning in an employees first year at Wincanton, which will run in parallel with on the job training and encompasses a number of residential courses and ongoing commercial projects. It provides an integrated programme of skills and knowledge designed to maximise the employees practical contribution and value. Often the emphasis may be led by the client that a 3PL is servicing. As part of a national agreement between Spirit Group and Wincanton, the driver training trial at the Luton Regional Distribution Centre was rolled out across operations at Worsely, Avonmouth and Mossend. 100 of its employees working on the Spirit Group contract in Luton have completed NVQ training up to Level three. The National Vocational Qualification (NVQ) training programme is being carried out as an on-the-job qualification lasting for five to six months. Wincanton started the programme with its LGV drivers to help them to gain a greater understanding of the Road Transport Regulations and to provide best practice customer relations at delivery points. The training of warehouse and administration staff in using Qudos compliance and risk management software has led to an increase in productivity in the warehouse operation, and a positive result is that staff turnover has reduced since the training started. By providing Atisreal UK a BNP Paribas Company 83

84 on-the-job training, employees benefit from an increased skills set and customers gain an improved service on an on-going basis. The sentiment that training had resulted in staff retention and improved service capability was uniformly expressed by all respondents who had even the modest for of training provision The Challenge As noted previously, careful collaboration between the industry and educational providers is key. The Skills for Logistics study further showed that several reasons for not using the teaching or training services of Further Education colleges were provided by employers. 48% of employers say that the courses they provide were not relevant, while 36% stated they prefer to train in-house, which would reflect the sector image of logistics being hands on. Table 6.2: Reasons for not using teaching or training services of FE colleges in past 12 months Yorkshire & Humberside Logistics English Logistics The courses they provide are not relevant 48% 44% Prefer to Train In-house 36% 36% No need for training/staff are all proficient 8% 8% None of the Above 7% 9% Lack of information on offer about the courses they provide 3% 2% Other 3% 2% Lack of time / Too busy to organise training The start dates or times of the courses provided are inconvenient The quality or standard of the courses or training provided by FE colleges is not satisfactory Training provided by professional/industry training body/association Lack of knowledge about the courses that they provide Staff unwilling/do not want to train 2% 2% 2% 1% 2% 2% 2% 1% 1% 2% 1% 1% It is too expensive - 2% Use specialist/private training provider - 1& Training arranged by HO/Senior management - 1% Source: NESS (National Employer Skills Survey) 2005 (All employers not using FE colleges) Atisreal UK a BNP Paribas Company 84

85 Existing employers can not and will not expend staff time or incur costs if they believe the effort is irrelevant. In some instances, it is simply that a change management process must be undertaken to effect a cultural shift toward recognition that there are real benefits to training. However, in many cases the concern that available options are not fit for purpose is all too accurate. Even under the best circumstances, public institutions have difficulty making substantial investments in capacity to serve emerging or rapidly-changing workforce needs. Many have ramped up capacity only to find that employers needs have shifted, and the programs are no longer in great need Evolving Opportunities The Leitch Review and other central government initiatives have focused attention on the skills gap and the danger to UK plc. In response to such positive reinforcement, various professional bodies, educational institutions and commercial firms have developed various initiatives which are beginning to flourish but must be supported and promoted by local bodies to be successful. Skills for Logistics Nationally, this organisation has recently completed extensive survey work which is now in the process of conversion to substantive foundation degree frameworks. They found that one of the major criticisms of the current level 4 qualifications is that they tend to be too generic and academic in nature. The Skills for Logistics foundation degree framework recommends that foundation degrees in the sector should combine operationally relevant management skills with sector specific knowledge. The framework has been developed with employers at national level in response to a request for a degree that can be delivered consistently throughout the UK. Although a number of employers have been involved in the development of this framework, logistics operations are varied and regional priorities differ. Providers are therefore encouraged to establish links with local employers or national employers who may specify a particular focus on each of the thematic areas. This employer provider collaboration can not be stressed strongly enough. Without buy-in, the effort can fail from inception. The work made critical observations as to content but equally important, as to implementation. They correctly note that the sector necessitates that providers adopt a flexible approach, minimising time away from work. Some of the delivery modes that were suggested included: Afternoon/Evening shared time between employer & employee. Blended Learning enabling remote learning but ensuring that learners had the opportunity to learn from others within their cohort. Block study some national employers felt that this would enable them to plan the absence of employees where they have a number of candidates working towards the Fd, This mode can enable students to study/be trained for some of the modules as a group. Modular enabling Fd students to register for individual modules and build credits towards a full award at their own pace Multi location offer same course available in different sites Collaboration between institutions developing the capacity to offer the foundation degree across different institutions throughout the country, sharing expertise in course development. It was also felt that some parts/modules of the Fd could be used as: development for new entrants into the sector with degrees in other fields Atisreal UK a BNP Paribas Company 85

86 continuous development for other employees seeking to broaden their understanding of different elements of logistics operations In order to achieve this, they suggest that course design should consider modularisation and a range of entry and step off points which could be certificated. This is particularly relevant to a sector that responds to certain peak periods in the economy. These peaks can affect college attendance and completion of foundation degrees. University Challenge When outlining his vision in A new University Challenge in March 2008, John Denham, Secretary of State for Innovation, Universities and Skills saw a local, high quality campus which can open up the chance of higher education to young people and adults who might otherwise never think of getting a degree. He too pointed out that Higher Education now provides the skills and knowledge transfer that enables local businesses to grow and attract new investment to the area and are seen as making a real difference to the cultural life of towns and cities. Crucially, he stated that to ensure that these new opportunities are to be provided first in those communities that can best demonstrate that they have the support from local people, local businesses, and a range of funding bodies, including for example, Regional Development Agencies (RDAs). To this end, a proven track record in successful provision of services will be more beneficial than simply producing a good plan of action. It provides demonstrable evidence of ability to execute such a plan. As such, Doncaster College s reply to the Secretary s call to action and goals to achieve university status should serve as a viable umbrella under which to gather disparate offerings. The choice of advanced manufacturing and business innovation focus align with the already demonstrable high success discussed previously with regard to cluster development in Atlanta. Train to Gain Train to Gain (T2G) initiatives have been generally successful overall. In the logistics sector, the initial driver training focus is widely seen to have improved retention, advanced capabilities and effected cost savings. Maxim Logistics was looking at ways to make the business more effective, to get its staff to understand the part they play in the company, and to have a formal way of recognising the talent that exists within the business. They also wanted to motivate the work force, in particular the more long serving members of staff who do the job well, but do not necessarily consider new working practices or a fresh approach to their work because if it isn t broke why fix it. The company identified two areas where skills development and qualifications could help. Firstly, in the technical skills specific to a job such as driver training, traffic office and office administration, accountancy etc. The second area is at supervisory / management level where there was a need to develop interpersonal skills to ensure integration across the two aspects of the business the warehouse operation and the distribution side of the company. The results of implementing NVQ s and Apprenticeships within the firm: Maxim Logistics has a 96% staff retention rate The sickness absence rate has been reduced by 55% Atisreal UK a BNP Paribas Company 86

87 Following the introduction of the qualifications one of the warehouse operatives has reduced his absence from 21 days to 1 in the last year Some staff members who have developed their skills and gained qualifications have been rewarded with promotions that represent 45% to 70% salary increases The Skills for Logistics stairway has been designed to perform a number of functions for the sector. Firstly, it offers a career framework allowing those who work in logistics to see how their future can be mapped and helps managers plan which skills they need to develop. It also enables them to identify where they need to import new skills into their team. Secondly, it offers companies of every size and type a programme of continuous professional development which is an increasingly significant factor in staff retention. The Logistics Academy launched in the West Midlands is intended to be a network of educational bodies able to offer the range of courses required to meet the multiple needs of the stairway s twelve steps. Again, recognition of the need for collaboration to provide effective and relevant provision. Also, crucially, recognition that a level of administrative oversight from a recognised body is required to maintain consistency, moderate relevance and ensure provision to a high standard of qualification. Doncaster College with its proven track record and university progression could thus serve a role similar to that which Birmingham City University is assuming in the Midlands. A survey released in early 2008 from the T2G Strategy Team highlights several concerns which could be addressed by maintaining a recognised oversight body familiar with broad spectrum education provision: The Leadership and Management strand of T2G is useful but excludes companies of less than 10. The majority of businesses in our sector are less than 10, unless freelancers can be included in the body count. Train to Gain overall is making a positive contribution to skills development in our sector. Where we are working closely with LSC regions, have dedicated lead brokers and engage with specialist providers, we can see evidence of progress and employers are benefiting. However, the regional differences which range from significant SSC involvement to no SSC involvement, means that there is no consistent approach to integrating the sector specific dimension within T2G. To enable SSC s to engage with T2G they need to have the resources to fund this capacity to engage. To date much of the offer has not been detailed at a level our industry needs. It is encouraging to see a shift in this offer. To achieve sustainable success, provision needs to address the needs in the short term of the majority of the existing sector which is made up of relatively small firms locally. In the longer term, it will need to also accommodate the requirements of larger and more advanced firms Youth Much discussion has been noted regarding the needs of business and existing workforce advancement. The industry as a whole is in dire need of young blood. At the same time, Doncaster needs to provide concrete opportunity to its youth and curb the inevitable brain drain Schools Programme Survey respondents from all sub-sectors expressed a strong desire to get young people more informed of the career opportunities available in transport and logistics. It is imperative that interaction begins with students as early as Atisreal UK a BNP Paribas Company 87

88 possible. Many respondents expressed frustration at the legislative hurdles required to bring young people into an organisation. In April 2008, Audi participated in a National Logistics Day. Under the motto Logistics makes it possible, a series of talks and theme-based tours were held, presenting the subject and offering information on career opportunities in the various professions at Audi Logistics. AUDI AG in Ingolstadt put on a varied program of events with the overall title Automotive Logistics with Success and Passion aimed primarily at students, graduates and young professionals with a logistics background. The objective of the nationwide Logistics Day was to give a wide audience an insight into the processes and professions of one of Germany s core areas of industrial expertise and enhance the public perception of the logistics sector. A total of some 160 events were organised to reflect the diversity of logistics achievements. Importantly, the initiative had the backing of a large number of businesses, organisations, associations and educational institutions. Similarly in the UK, raising awareness of the logistics industry with young people in schools and highlighting the range of rewarding career opportunities within the sector are the aims of the Schools Programme. Supported by industry and managed by Skills for Logistics, the programme continues to gain momentum. To date, the programme has produced careers brochures for schools across Scotland, the North-West and East Midlands. These resources play a crucial role in explaining what logistics is all about and why it is one of the most important industries in the UK. The brochures go on to dispel the myths that young people might have about the sector, and show case studies of people who describe their roles and what they find enjoyable about their work. Training opportunities are also covered by the brochures, so young people can see that, whichever branch of the industry they wish to join, there are many opportunities for them to improve their skills and knowledge. Alongside the careers work, considerable progress has been made in raising young people s awareness of logistics. This has been achieved through the development of Made in China. This web-based resource has been designed to support the Maths and Enterprise curriculum at Key Stage 4 (14 16 year olds) and helps young people learn about logistics through the story of an ipod. The resource follows the journey of an ipod from its manufacturer in China to the consumer in the UK and uses the logistics supply chain to deliver the Maths and Enterprise tasks. Teachers and pupils from across Scotland, the North- West and the East Midlands have been piloting the resource and learning about pallets, containers, shipping rates and distribution centres throughout this year. Once the pilot is completed further schools will receive the materials, with a view to a national roll-out in Another very successful example which places the emphasis on industry engagement may be found a bit further afield. In August 2006, Queensland Transport formed the Industry Capability Initiative to partner with the transport and logistics (T and L) industry to develop and maintain sustainable, workable solutions to the current and projected skills and labour shortage in Queensland. To attract young people to the industry they need hands-on exposure to spark their interest and demonstrate the breadth of opportunity transport and logistics can offer. By facilitating direct relationships between transport and logistics operators, schools, and community organisations, one can establish sustainable partnerships that are owned by industry. Another example of the types of promotion that the initiative undertakes is the Girls Day Out held in May 2007 which promoted women in transport to 400 female students in regional areas. This day featured guest speaker Heather Atisreal UK a BNP Paribas Company 88

89 Jones, WA Transport Woman of the Year and highlighted the diverse opportunities available to women of all ages within the transport and logistics industry. As a result of this type of work, school-based apprenticeships and traineeships in transport and logistics are steadily increasing. School to work programmes Queensland Transport partners with schools, local community, training providers and industry to deliver innovative school to work training programs. Together with students expressing an interest in transport and logistics programs, this program targets indigenous students and female students as well as those at risk of leaving school. Participating students undertake a workready program prior to commencing formal traineeships to ensure a higher completion rate. These students are given opportunities to undertake career placements, traineeships and ongoing work opportunities within the transport and logistics sector. Adopt-a-school programme Adopt-a-school matches schools with transport and logistics businesses and introduces students to a varied and rewarding career involved with the global movement of passengers and freight. Key goals of adopt-a-school include: career information for students and introducing them to modern workplaces practical industry experience for teachers and students businesses learning about the education sector enhancing employability by directing skills to the needs of local businesses developing positive attitudes towards industry and local business. It is imperative that any successful effort achieve buy-in from industry, recognised educational bodies and local government. The collaborative effort has been repeatedly highlighted as it is consistently the method with the highest demonstrable success rate Apprenticeships Apprenticeships offer young people real choices in jobs with training rather than the school or college option that is more commonly known to young adults, parents and their advisors. Not everyone is well suited to a traditional classroom environment; the apprentice process traditionally provided the ideal method for bringing young people into many industries. We should not lose focus on the requirements to support growth and advanced logistics in Doncaster. However it is equally important that the borough address the short term community needs and develop alternatives to service the broadest spectrum. Apprenticeships and the associated qualifications should not be considered separately from other training programmes discussed. Rather they should be seen as a delivery method within the broad scope of educational provision. Skills for Logistics now enables employers to offer reliable training linked to recognised national qualifications across their business whatever part of the freight transport sector they operate within. In 2004 Unipart determined that apprenticeships could help the business tap into a recruitment pool with future potential that could be developed and moulded using the Unipart Way - company techniques and tools developed to ensure the smooth running of the business. Apprentices would be recruited alongside the business other emerging talent recruitment activities (including graduate and student placement schemes), in order to develop its future Atisreal UK a BNP Paribas Company 89

90 management teams. At the end of the two years, Apprentices are asked to specialise in a specific area of the business and will undertake a Level 3 NVQ to support the chosen discipline. As a result: The retention rate for Apprentices has significantly improved from 50% since Unipart s first year of recruiting Apprentices to a current retention rate of 99% The absenteeism rate for Apprentices is less than 2% compared to 5% across the company as a whole The scheme has the buy in from both employees and managers at all Unipart sites. Managers now understand these Apprenticeships will help to deliver the leaders of the future, initially in junior management, where there is potentially a shortage Conclusions Raising public awareness is an important step in the process. Raising awareness at a young age is imperative. To do so among today s youth accustomed to a high tech environment requires innovative ideas and projects designed to engage at the school level. This would require tight coordination with the overall initiatives for logistics in the Doncaster area. Both industry stakeholders and those from education would need to be guided to work in tandem toward creating effective solutions. 6.5 Partnership Delivery Collaboration from multiple tiers of stakeholder groups has been repeated throughout this section with concrete examples of successful implementation. Local regions should stimulate similar kinds of workforce partnership intermediaries to accelerate the speed and scope of change. These regionallybased intermediaries would involve partnering among Workforce Investment Boards, community colleges, universities, and industry. A national study by the Ford Foundation-funded Partnership for Employer-Employee Responsive Systems of over 200 examples of workforce intermediaries found that they can effectively help create skill standards and career paths, improve the workforce development system, and assume some of the business risk and reduce the fixed labour costs associated with training and recruitment (Workforce Intermediaries: Generating Benefits for Employers and Workers, 2003, p. 7). For all the right reasons, intermediaries offer individual institutions the ability to participate in a way that shares the risk and allows flexibility, but also meets regional needs more quickly and effectively. Intermediaries can offer the flexibility to shorten the time for developing industry-responsive curriculum, offer open entry/open exit based on competency-based outcomes and certifications instead of set class schedules, and allow for continuing learning anytime or place beyond the classroom. Employers also limit their risk and spread out the cost by investing in an intermediary. A major scaling-up of the most effective initiatives and regional seed money for innovative efforts that have strong employer involvement and investment would be bold steps in the right direction. If this requires temporarily changing the rules to meet an urgent need, then new approaches should be allowed at least for a short time period with evaluation of results. In some cases, this may require creating intermediary training institutions that allow alternate funding and community college resources to be tapped in innovative ways to meet urgent demand. Atisreal UK a BNP Paribas Company 90

91 Workforce Policy: Logistics Training Partnerships The workforce system needs to be redesigned to assist individuals in managing transitions. While current programs provide elements of the necessary assistance, they do not utilise real time information to work as a system in order to meet the greatest needs. Within manufacturing, assembly workers have been losing their jobs due to productivity gains as well as shifts in global demand. Regions should have the discretion to design innovative partnerships involving Workforce Investment Boards, community colleges and other training institutions to help prepare dislocated assembly workers for jobs in other growing clusters such as logistics. The program for logistics worker career training in Gateway Cities is an example of the potential for this kind of innovative partnership. The Gateway Cities Partnership, based in the region of Southern California around the Port of Long Beach, encourages the development of logistics training programs to meet growing employment opportunities for entry-, middle-, and higher-level occupations. In Los Angeles County alone, logistics grew by 6,950 from 1997 to The challenge is to prepare a region with relatively low educational attainment (58% of the adult population has a high school education or less) for employment opportunities in growth occupations. The Gateway Cities Partnership works with local institutions to develop career pathways, helping workers move upwards from office, administrative, and stock, positions to accounting, customer service, and dispatcher positions and then on to first line supervisors for transportation and materials movement and eventually into higher level management, research and logistic analyst positions. As can be seen in Appendix 6, the plan for the Yorkshire & Humber Logistics Academy here in the UK incorporates this partnership delivery methodology. Doncaster should support and enhance its existing training offering to become a key spoke in the planned delivery method. Similarly, coordinated partnerships in both education and as an extension of the cluster concept with first, the Wakefield District Development Agency which is a public - private partnership created to help draw together and realise the many economic aspirations of the District. As noted previously, the cluster concept can extend to incorporate and expanded area. Coordinated effort can convert a potential logistics competitor into a resource to expand the Doncaster offering itself. 6.6 Skills & Replacement Demand Analysis The key question to be asked of replacement demand analysis is what flows and training requirements are necessary to ensure the forecasts presented can be realised (a similar concept to land use requirements)? This is particularly pertinent for the achieving the policy on scenario. Appendix 4 details the factors and analysis utilised. The analysis has shown the number of entrants from the education system and migrants required at each skill level. While it is beyond the scope of this project, it may be possible to break this down into more detail by undertaking qualitative research with logistic businesses to find out sources of labour recruited over recent years, alongside quantitative research on university qualifiers from within the UK entering the logistics sector in Doncaster by using Higher Education Statistics Agency (HESA) destination data. Oxford Economics has also undertaken research for the Energy & Utilities Sector Skills Council on enrolment trends and forecasts for key subject areas in the Science, Technology, Engineering and Mathematics Atisreal UK a BNP Paribas Company 91

92 fields (STEM subjects) and assessed to what extent supply of university qualifications is likely to meet demand. Similar work could be undertaken for the logistics sector in Doncaster, linked specifically to the outputs of local universities (e.g. Hull University Institute of Logistics). Though we recognise, based on Skills for Logistics research, that the experience of some employers is that graduates in logistics are not necessarily the most suited to the realities of work in the industry and firms do recruit graduates from other subject areas. Anecdotal evidence from Atisreal interviews with logistics businesses in Doncaster revealed that a high proportion of vacancies in the last year were filled, though not all joiners had the desired level of skills. This indication of potential skill issues is echoed by wider UK-level research by the Skills for Logistics Sector Skills Council which describes the following problems: Management skill gaps - limited and inconsistent progression opportunities for people from operatives into management; limited success in attracting graduates into logistics; and skills gaps among junior and middle managers Basic skill deficiencies - firms are suffering from deficiencies in basic skills - notably literacy and numeracy - among the lower levels of their workforce. Image - one of the major reasons for the shortage of labour, in the sector, is the poor image projected by the industry. To quote Skills for Logistics, employment in logistics is sometimes seen as a job of last resort. Unrepresentative labour profile - the logistics sector has an ageing driver workforce. In 2004 an estimated 23% of LGV drivers were aged 55+. The number of younger people entering logistics is disproportionately low in comparison with other industries, with only 9% being under 25. (Many firms have difficulties arranging insurance for drivers under 25) Workers in the logistics sector are also overwhelmingly male, white and have European ethnic origin. Only 22% of those employed in the sector are women. Recruiting women into the profession still proves to be a difficult task. Appendix 4 details in some depth the occupations and forecasts which result in the findings of the economic study. It is important to note some conclusions from the work. The sector as a whole is predicted to grow, with the largest expansions predicted for process, plant and machinery operatives (which include transport drivers), managers, elementary occupations (include goods handlers) and administrative occupations. As discussed elsewhere, it is imperative that Doncaster produce managerial and technical staff to fill the needs estimates provided. The industry, particularly the third party logistics providers, tends to look at its staff with a national eye. Though the estimates show that the area requires a percentage of in migration, a substantial amount of the positions at this level should be able to be filled readily locally. This will both satisfy potential firms that the labour supply they desire is available, and will also ensure that community sustainability goals are met through the inclusion of decision making staff with a vested interest in the local community. Having said that, the local community must support quality schools, shops, employment opportunities to present and attractive place to relocate thus producing the requisite in migration that is also required. The skills requirements should also provide practical or business readiness skills in addition to formal qualifications in the logistics sector. Many firms in the sector offer on-the-job training, actual qualifications held when joining may Atisreal UK a BNP Paribas Company 92

93 matter less than in other sectors but employers report concerns related to the lack of these alternate soft skills. The percentages of occupation level may shift in the future if Doncaster moves towards more high value added logistic activities as is strategically planned. 6.7 Conclusions The logistics industry has been transformed in recent years, from a labourintensive, manually operated transportation industry to the new enterprise culture's favourite service industry. Yet perception of the industry as a whole remains negative. This is true in terms of both skills/salary as well as green issues. During the Atisreal research conducted for this survey, many firms expressed the concern that schools and career counsellors tend to steer prospective employees to any and all careers except logistics. They believe in fact, that they steer only those least capable and lowest skilled toward them. Sector specific branding has been successfully implemented as part of the Queensland Logistics Capability and closer to home in Belgium and the emerging eastern European nations. Logistics in Wallonia is the Transport and Logistics Centre of Competence, created to promote the transport and logistics sector of Wallonia (Belgium) both within the country and abroad, by coordinating activities, by defining a common strategy and by optimising human and technological resources. Its role consists of coordinating common action between various service providers, setting up effective partnerships, with all of this based upon a joint, well-defined strategy. The key to all of them however is that they have created a common brand identity for the area, with a logo and vision, that they then promote in a focused manner. The Logistics Performance Index discussed earlier may be applied to Doncaster as well. Items requiring more effort should be pursued jointly with local occupiers to improve. The resulting high performance place could then be utilised in marketing efforts. Working with the logistics industry itself, Doncaster can assist in challenging public perceptions. Leaving aside skills programmes in schools discussed elsewhere, Doncaster can assist the industry by promoting knowledge. As noted in the previous Audi example, importantly, the initiative had the backing of a large number of businesses, organisations, associations and educational institutions. It is this type of effort which requires key coordination. The local Doncaster community must support the infrastructure and business requirements of modern distribution in order to attract the firms committed to sustainability. A circular reference is created as suitable developers/investment funds are drawn to the area in the belief that it provides an attractive base to the occupiers who are similarly committed. They in turn rate the area highly due to the provision of facilities by such developers. This in turn attracts the ancillary firms which support these larger distributors/retailers and who are often expected to meet the same exacting standards as their customers. Thus a range of size and type of facility is required to meet the needs of varying interrelated firms. All of these firms will seek to ensure that the requisite skill base exists in the labour pool to meet their needs both in the near term and in support of business change over time. Doncaster needs to support its existing educational bodies to develop programmes which meet this challenge. This may be accomplished through joint ventures with other regional institutions. This in turn will facilitate Atisreal UK a BNP Paribas Company 93

94 the step toward such processes as R&D and back office services which will complete the cluster. Such collaboration and joint partnerships should be utilised to attract national and regional resources which can reduce Doncaster s own investment and allow it to broaden its potential offering. The benefits of the aviation strategy assist the overall logistics strategy by providing an additional mutli-modal capability. A successful cargo offering from a regional airport has been illustrated to generate additional distribution growth. Whilst FARRRS is a key component of the overall aviation strategy, achievement of the overall logistics goals may be accomplished without it, just over a longer period as it would reduce the ability for aviation to fuel growth as discussed earlier. Additionally, though the airport would not be negated, the intermodal infrastructure would not be seen as quite so cohesive and thus less attractive. Atisreal UK a BNP Paribas Company 94

95 7 Policy Recommendations and Strategy The recommendations below should be obvious conclusions from the requirements definitions, data and examples of successful execution that have been offered throughout this document. By way of illustrating our conclusions and policy recommendations we have chosen to demonstrate in a manner similar to the Logistics Performance Index Doncaster s current status compared to other areas which could be considered as alternatives to Doncaster. As with the original LPI, this represents a mix of objective data and subjective input from logistics community and Atisreal experience. The table below illustrates occupier criteria. The areas listed were chosen based on: Doncaster Current status East Midlands Major competition due to current growth and future ambition Golden Triangle Tradition of success Manchester Recent growth, similar ambition Liverpool Potential and ambition based on effects of port & rail infrastructure investment Milton Keynes Successful distribution locale Peterborough Current growth area with similar challenges This section will conclude with a summary of how the interventions described would potentially alter Doncaster s standing within the table. Table 7.1: UK Logistics Regions Compared Area Highways Rail Connectivity Labour Availability Labour Skills Private Sector Invest Public Sector Invest Total Score Doncaster East Midlands Golden Triangle* Manchester Liverpool Milton Keynes Peterborough Source: Atisreal Research 1 = Very Poor 2 = Poor 3 = Average 4 = Good 5 = Excellent *Golden Triangle defined as the area in the Midlands covered by the M69, M6 and M1 Motorways. The report now presents policy recommendations and strategy with the aim of achieving the policy on scenario of Logistics employment to The results are presented in time scale objectives of short, medium and long term Atisreal UK a BNP Paribas Company 95

96 7.1 Short Term Branding Doncaster desires to promote the area for best practice, advanced logistics opportunities. Hence, two marketing activities need to be put in place. Doncaster needs to brand the locale as such a hub and market itself to the industry both nationally and internationally by coordinating activities, by defining a common strategy and by optimising human and technological resources. The role consists of coordinating common action between various service providers, setting up effective partnerships, with all of this based upon a joint, well-defined strategy. The objective is to create a common brand identity for the area, with a logo and vision, that is then promoted in a focused manner. Doncaster can pursue a more comprehensive version of the Atisreal survey which is similar to that of the World Bank. The Logistics Performance Index assesses the logistics friendliness of various nations. This may be applied to Doncaster as well. Items requiring more effort may be pursued jointly with local occupiers to improve. The resulting high performance place could then be utilised in marketing efforts. Working with the logistics industry itself, Doncaster can assist in challenging public perceptions. Leaving aside skills programmes in schools discussed elsewhere, Doncaster can assist the industry by promoting knowledge and familiarisation of the sector through materials and events which reflect the diversity of logistics achievements Logistics Coordinator Although the emphasis will be on effective partnerships, without some form of centralised oversight, the effort quickly becomes unfocused and disjointed increasing the risk of failure considerably. Therefore, there must be an administrative oversight responsibility role created. Initially this may simply be a single position within the Council or the Chamber which will grow with time. This role will be responsible for maintaining the big picture tying marketing, skills, local employer, aviation and government together. Obviously there will be a concrete cost to this intervention. It will however be a sound investment in long term success much as a dedicated programme manager is to any project. In the near term, the quantifiable benefit will be a streamlined approach and a focused organisation of the many interests competing in Doncaster for prevalence. An additional short and medium term benefit is to illustrate commitment to the existing logistics supplier base within the area. The current economic climate is resulting in many such firms rationalising their portfolios and rethinking their operations. It will be important to provide an added value factor which weights the current Doncaster operation more favourably than others they may be considering. In the longer term after initial set-up and effectiveness have been achieved, there are two alternatives for this role. It may be retained as a central service or it can be transitioned to a stand-alone organisation of stakeholders. The success of both models has been described in this document Planning Design As described, there are a wealth of modern sustainable building materials, construction methods and design methodologies for the industrial sector. Atisreal UK a BNP Paribas Company 96

97 Doncaster should ensure that applications for planning consent incorporate these features. Both for the benefit of the community surrounding them and to promote the perception of forward thinking facilities which will attract the desired type of logistics and ancillary firms, planning policy should focus on high quality comprehensive designs. It is key when reviewing these potential designs that the correct mix of site sizes and types is provided for. This will ensure that Doncaster creates the environment for a sustainable mix of industry sectors, ancillary services and multi-distribution portfolios that will have the greatest appeal Development Structure Further, planning policy must ensure that the facilities and services which support advanced logistics are included in the individual developments and provided for externally. Adequate external yard space per facility and congestion relief areas within a park are key to traffic flowing smoothly and not backing up onto nearby areas. Doncaster should also investigate the need for appropriate truckstop type welfare facilities which will provide the security and services logistics firms require for their cargo and staff as well as alleviate the impact on nearby communities when these are not readily available Infrastructure Infrastructure improvements designed to reduce congestion and provide access to larger scale industrial and R&D parks will continue to be important even with modal shifts in freight as the majority will still travel by road. Though it is entirely within reason to anticipate commercial input to funding for certain major roadworks as part of the planning process such as additional junctions or spurs, it must not result in the perception that to do business in Doncaster is to fund Doncaster. Public transport provision to existing parks must be seen to be a model so that future developments do not view Doncaster as unable to provide an accessible labour pool. This is in keeping with central focus on greener routes to the workplace. It will be as important to office and educational opportunities as it is to industrial. Any cost here in the short term would be to establish improvements to transport and to create a process by which access can be achieved in the relatively short time it now takes to develop a distribution and mixed use park. The report also recommends that the policy framework for improvements to the M18 as discussed are accelerated as this will boost the existing logistics sector and prepare the sector for increased growth to Skills Although there is a bit of a chicken and egg challenge with providing skilled labour versus employers raising the bar and skills rising, there must be a substantial skills increase to progress beyond standard operations and into higher capabilities. Doncaster will remain in the distribution only marketplace if it can not market higher skilled availability of labour. Here again though, this must be a focused effort by a recognised body which is responsive to changing business needs. We would suggest utilising the ambitious plans of Doncaster College to provide the oversight in this process. In addition to the traditional education offerings they could provide, they would coordinate the total offering from other service providers and skills development groups including Train to Gain, Skills for Logistics, Connexions etc to ensure a uniform quality of provision at all levels. They are also best suited to work in tandem with a Logistics Coordinator to provide business requirements analysis to ensure relevance and buy in. Atisreal UK a BNP Paribas Company 97

98 In the near term, efforts to implement concepts such as the Schools Programme described earlier must be stepped up so that Doncaster becomes an early adopter. Efforts must be made in conjunction with logistics coordination to create industry led initiatives at the youth level. The short term benefit of this intervention will again be perception of commitment to existing employers. It will show a pro-active response to a concern repeated in the employer survey as to difficulty in creating a labour pipeline. Increasing the apprenticeship capability would go in hand with facilitating broader opportunity and filling the labour gaps. With this focus on recognised educational bodies, there may be some resistance to this effort being facilitated by a logistics coordinator with different skillset requirements. A subordinate to the coordinator role may be required as a schools coordinator who would possess a background in education or skills provision but with ties to the business community. Medium and long-term efforts should be made to create the logistics foundation degree capability in order to prepare the pipeline for management level labour locally also. Costs of these efforts are likely to include funding support for the College and for provision of set up and administration of these types of degree and apprentice programmes. Another potential cost would be if DMBC offered incentive to employers and or takers of these opportunities. 7.2 Medium to Long Term Partnership A longer term benefit would be their work with Wakefield first. The selling points for Doncaster as a distribution locale i.e. proximity to and motorway access from the east coast ports, air links etc may be parlayed by Wakefield as well. In addition, they may draw from a substantial and well respected transportation and logistics programme at Huddersfield University. As was illustrated previously as in the case of Wallonia, very successful clusters can stretch over a wide physical or virtual area. Wakefield has also successfully implemented a Foundation Degree course in Logistics and a Skills Academy targeted at 14+ to provide post-16 training is underway. Collaborative efforts between Doncaster and Wakefield could draw from existing experience as well as provide a successful counter point to the East Midlands which stretches over an even larger area. It will be ever more important to utilise point to point rail capabilities as developers such as ProLogis build networks of strategic rail freight interchanges elsewhere in the country. The principles of this can also be utilised to establish a dialogue and build further partnerships with the East Coast ports to create a joined up approach. This is of particular relevance with increasing through flow of goods into the East coast ports and also the proposed Inland port at Rossington Multi-Modal Doncaster must maintain investment in the existing rail capability and support efforts to improve and enhance this capability throughout the region. Rising fuel costs have passed the tipping point whereby rail is uncompetitive with road freight and increasingly firms are seeking rail linked opportunities to respond to cost and consumer green pressures. The focus suggested by the aviation strategy is consistent with provision of a complete intermodal capability in the region which has become a key site selection factor for occupiers of all sizes. Examples cited herein, and within the aviation strategy, which provide both freight and passenger rail links to airside should not be ignored as important parts of the network. Atisreal UK a BNP Paribas Company 98

99 Funding for this intervention is a medium to long-term investment to counter efforts being made elsewhere nationally and internationally and to ensure compliance with central government focus on reductions of carbon footprint. DMBC is likely to find that the support required locally is not entirely monetary but rather in the planning process and with grant application support. A key project that the study endorses is the FARRRS project which actively promotes the multimodal concept by connecting the M18, ECML and Robin Hood Airport Skills Though the previously recommended training programmes will boost the logistics sector and build towards a logistics sector there is also the scope for Doncaster to attract further investment that will boost the sector further. Skills for Logistics recently failed in an attempt to secure funding from National Government for the proposed National academy for logistics. The academies deliver training, adapted to the needs of the particular industry sector, to people mainly in the age group. Training is offered on site, online and at the colleges. There will however be a second round of funding and Skills for Logistics are examining the possibility of business sponsorship for the proposed academy. Should this proposal get off the ground, DMBC should monitor and examine the possibility of the National Academy for Logistics being delivered in Doncaster. This could be done as part of a regional effort incorporating the offerings of Sheffield Hallam University and Huddersfield University, all of whom provide logistics studies Reach Critical Mass By implementing a clear Logistics Strategy, including new & updated Infrastructure, delivering key schemes and developments and improving the skills sets of the local and regional labour force Doncaster will move towards an Advanced Logistics Sector and reach critical mass as discussed in section 6. Atisreal UK a BNP Paribas Company 99

100 7.3 Conclusions Repeating the original chart, some alterations can be derived from informed judgement such as: Motorway improvements which reduce congestion could bring the rating to a five. Enhanced rail capabilities such as an air link and additional intermodal terminal capacity could bring the area on par with the Golden Triangle itself which now has several running sites and others in development. Obviously as the labour challenge is at such a low starting point, this would be where the biggest wins would derive. An increase in skill base would have the knock on effect of improving availability across all tiers of logistics employment. An obvious commitment to fabric and skills improvement focused by a logistics oversight body would attract inward investment in the form of developers and other cluster stakeholders. A commitment to skills provision and transport alternatives would require local public sector funding but would in turn attract larger private investment in the long term. So although the Public Sector figure needs to rise initially, eventually the continuing increases in labour and private numbers would enable the public funding to decrease. Table 7.2: UK Logistics Regions Compared with strategy implemented. Area Highways Rail Connectivity Labour Availability Labour Skills Private Sector Invest Public Sector Invest Doncaster East Midlands Golden Triangle Manchester Liverpool Milton Keynes Peterborough Total Score As can be seen, an initial input which raises highways and rail brings the area on par with East Midlands. The development there is what we consider to be the largest danger competitor to Doncaster. Further labour and skills increases potentially bring the area on par with the Golden Triangle. At either point, a properly focused strategy which has then been executed and marketed with a foundation of higher skilled labour and commercially attractive development infrastructure will result in a self fulfilling cluster as we have witnessed in the many examples throughout this document. Table 7.3, overleaf, sets out our detailed intervention recommendations. Atisreal UK a BNP Paribas Company 100

101 Table 7.3: Logistics Strategy Intervention Aims Timescale Facilitator Outcome Monitoring Indicator (LAA Ref) Branding Logistics Coordinator Planning Design Development Structure Infrastructure Skills To Promote Doncaster as the area for best practice and advanced logistics opportunities Individual role to coordinate logistics stake holders, both existing and future targets. Ensure that new design and construction techniques are utilised. Ensure that appropriate parking and welfare facilities are provided. Improve links to Robin Hood Airport. Improve public transport to key logistics sites. Improve capacity on main arterial roads Increase training and skills in the logistics sector to provide a highly skilled workforce to logistics operators, both at shop floor level and management positions Short Term Should be appointed as an action in the short term but whose goals relate to the medium/long term Short term implementation, medium to long term benefits. Short term investigation. Implementation, medium to long term benefits. Short term implementation, medium to long term benefits. Short term improvements in public transport Short term implementation, benefits realised in the short, medium and long term DMBC/Logistics Coordinator (see below) DMBC or Doncaster Chamber of Commerce DMBC DMBC DMBC Local bus operators Highways Agency DMBC Doncaster College Skills for Logistics Train to Gain Doncaster seen as a primary logistics area in the UK Increased Logistics Investment in Doncaster Sustainable, environmentally conscious sites that provide community benefit. Alleviate impact of lorry traffic on local communities. Improved transport links for logistics operators and the staff who work in strategic warehouses Higher skilled workforce ensuring more advanced logistics jobs are created in Doncaster LAA 2 LAA 4 LAA 2 LAA3 LAA 4 LAA 4 LAA 27 LAA 4 LAA 27 LAA 2 LAA 7 LAA 27 LAA 1 LAA 2 LAA 10 Review timescale Annually after implementation Annually after implementation Annually Annually after implementation Annually Annually Atisreal UK a BNP Paribas Company 101

102 Table 7.3: Logistics Strategy Intervention Aims Timescale Facilitator Outcome Monitoring Indicator (LAA Ref) National Logistics Academy Partnership Multi-Modal Development Reach Critical Mass Schools Coordinator Should the proposed National Logistics Academy go ahead Doncaster should aim for this to be located in the area Establish links and programmes with other stake holder such as Wakefield first, Huddersfield University and East Coast ports Improve rail capacity, FARRRS Project Aviation Strategy Growth as an Advanced Logistics Sector Individual role to coordinate logistics stake holders, secondary & higher education. Short Medium term Medium to Long Term Medium to Long Term Medium to Long Term Short Term appointment, medium to long term actions DMBC Yorkshire Forward Skills for Logistics DMBC Logistics Coordinator DMBC Network Rail Highways Agency Robin Hood Airport All local Stakeholders DMBC or Doncaster Chamber of Commerce. Reporting to Logistics Coordinator Doncaster seen as a national centre for Logistics Excellence Collaborative effort, especially in relation to skills and training, will see greater opportunities in both Doncaster and the wider region with the creation of an advanced logistics sector A key factor in future developments will be their ability to link with different transport modes. By linking rail, with port operations and then to air freight and onward road transport Doncaster will become a true multimodal logistics hub LAA 4 LAA 2 LAA 10 LAA 4 LAA 2 LAA 10 LAA3 LAA 7 LAA 27 Increased awareness of opportunities LAA 1 LAA 10 Review timescale Periodically to monitor funding possibilities Annually By end of Strategy timeframe By end of Strategy timeframe Annually after implementation LAA 1 Reduce Worklessness & Financial Exclusion LAA 2 Stimulate Enterprise & Innovation in new and existing key business sectors LAA3 Maximise the potential growth of Robin Hood Airport LAA 4 Raise Doncaster s profile as a place to visit and invest in LAA 7 Improve Doncasters transport system to meet the needs of residents, businesses and visitors LAA 10 Build a Skilled and Diverse Workforce LAA 27 Reduce Carbon Emissions to protect the local and global environment. Atisreal UK a BNP Paribas Company 102

103 Appendix 1 Logistics Market Definition & Current Economic Contribution The key starting point for this element of the project was agreeing a definition for the logistics sector with Doncaster Metropolitan Borough Council (DMBC). Prior to this project the following definitions already exist from other logistics research for DMBC: Roger Tyms: Skills for Logistics 4-digit sub-sectors (excluding scheduled air transport (62.10), non-scheduled air-transport (62.20), other supporting air transport activities (63.23) and activities of other transport agencies (63.40)); other supporting land transport activities from the Go Skills footprint (63.21); labour recruitment (74.50) and packaging activities (74.82). (Note Roger Tyms used SIC 92 data from the ABI as opposed to the more recent SIC 03. According to Skills for Logistics, either classification is acceptable though there are slight differences in the figures. We recommend using data based on the latest SIC 03 classification) ARUP: All Skills for Logistics and Go Skills 4-digit sub-sectors (excluding national post activities (64.11) and courier activities (64.12)) and telecommunications (64.20), with each sub-sector adjusted by a range of factors from 0.56 to EKOS: Skills for Logistics 4-digit sub-sectors excluding wholesale sub-sectors ( ) and activities of travel agencies (63.40) The definition agreed for this work with DMBC is closest to the Roger Tyms definition. The only differences are: The inclusion of two additional Go Skills sub-sectors which are deemed relevant to warehouse shed jobs. These are other scheduled passenger land transport (60.21) and other passenger land transport (60.23); Our assumption that half of labour recruitment jobs are in logistics as opposed to all in the Roger Tyms definition; and We also include the self-employed. To the best of our-understanding Roger Tyms and EKOS only count employee jobs from the ABI. Oxford Economics estimate self-employment for Doncaster (and individual logistic sub-sectors) from the overall UK and Yorkshire & Humber self-employment figures from the LFS. Note the majority of Go Skills sub-sectors are not included as they largely represent passenger transport activities. Air transport sub-sectors are also not included as a separate study is being undertaken on the air sector and air transport has its own particular spatial requirements in Doncaster.

104 For purposes of clarity Fig 2.1 below summarises the definition of the logistics sector employed for this study. Fig 2.1: Oxford Economics/ DMBC logistics sector definition Sub-sectors included Sub-sectors not included Skills for Logistics footprint Wholesale sub-sectors Freight transport by road (shed) Cargo handling Storage and warehousing (shed) National post activities (shed) Courier activities other than national post activities (shed) Skills for Logistics footprint Scheduled air transport Non-scheduled air transport Other supporting air transport activities Activities of other transport agencies Go Skills footprint Other scheduled passenger land transport (shed) Other passenger land transport (shed) Other supporting land transport activities (shed) Go Skills footprint Transport via railways Taxi operation Transport via pipelines Sea and costal water transport Inland water transport Space transport Other supporting water transport activities Activities of travel agencies and tour operators Business services Labour recruitment and provision of personnel * Packaging activities Self-employed * Assume 50% of labour recruitment (temp workers) is in the logistics sector By way of comparison, Table 2.1 below compares estimates for logistics employment in Doncaster across the various existing definitions. To recap Oxford Economics total is higher than the Roger Tyms definition as we include other scheduled air passenger transport (60.21), other passenger land transport (60.23) and the self-employed, which more than offsets only including half of labour recruitment employee jobs. The EKOS total is much smaller as it excludes wholesale sub-sectors ( ), all Go Skills sub-sectors and the self-employed.

105 Table 2.1: Logistics employment in Doncaster comparison of definitions Ye ar Logis tics e m ploym e nt Oxford Economics (SIC 03) ,218 Roger Tyms (SIC 92) ,208 EKOS ,850 Source: Note: Oxford Economics, Roger Tyms Employment Land Study and EKOS LDF Employment Forecast Paper Roger Tyms figure is taken from a spreadsheet shared with us by DMBC Composition of Doncaster s logistics sector Fig 2.2 and Table 2.2 below show the composition of Doncaster s logistics sector by sub-sector in 2006 (latest year of official ABI employee data). The largest sub-sectors in employment terms are wholesale sub-sectors (wholesale of industrial machinery, hardware, meat, household goods and construction materials), freight transport by road, storage & warehousing and other supporting land transport activities. Self-employment is estimated to be 11 percent of the total, of which half are in freight transport by road. Shed sub-sectors account for two-thirds of total logistics employment. As shown in the next section, employee jobs in other supporting land transport activities jump in 2006 by over 2,000 jobs. ONS/ NOMIS explain this as due to one company undergoing a restructure and reporting a higher number of employees in Doncaster. Fig 2.2: Composition of Doncaster s logistics sector in employment terms (2006) Self-employment, 11% Packaging activities, 1% Wholesale subsectors, 21% Labour recruitment and provision of personnel, 8% Other supporting land transport activities (shed), 15% Freight transport by road (shed), 19% Other passenger land transport (shed), 1% Other scheduled passenger land transport (shed), 3% Courier activities other than national post activities (shed), 0% Storage and w arehousing (shed), 15% Cargo handling, 0% National post activities (shed), 6% Source: ABI and Oxford Economics

106 Table 2.2: Doncaster logistics sector employment 2006 Share Em ploye e jobs (SIC 03) 14,401 89% Wholesale sub-sectors 3,339 21% Freight transport by road (shed) 3,035 19% Cargo handling 0 0% Storage and w arehousing (shed) 2,500 15% National post activities (shed) 982 6% Courier activities other than national post activities (shed) 57 0% Other scheduled passenger land transport (shed) 438 3% Other passenger land transport (shed) 156 1% Other supporting land transport activities (shed) 2,365 15% Labour recruitment and provision of personnel 1,376 8% Packaging activities 152 1% Se lf-e m ploym e nt 1,818 11% Source: Total 16, % o/w 'Shed' sub-sectors 10,909 67% ABI and Oxford Economics Compared to the structure of the overall GB logistics sector (applying the same sector definition as agreed with DMBC), Doncaster s logistic sector is more dependent on freight transport by road, storage & warehousing and other supporting land transport activities, and less dependent on wholesale sub-sectors (Table 2.3 and Fig 2.3). (Wholesale sub-sectors dominate logistics in most areas of GB with limited other logistics activity) In this respect Doncaster shares some similarities to other logistic hub areas in GB though some differences are also evident (Figs ). Northampton has a particularly high share of employment in national post activities and North West Leicestershire in other courier activities. Milton Keynes though does have a relatively high share of logistics employment in wholesale sub-sectors similar to the GB average. Table 2.3: Structure of logistics sector employee jobs in logistic hubs Doncaster GB Northam pton Milton Keynes North We s t Le ce is te rs hire Wholesale sub-sectors 23% 45% 28% 43% 31% Freight transport by road 21% 11% 16% 13% 20% Cargo handling 0% 0% 0% 0% 2% Storage and w arehousing 17% 5% 9% 13% 14% National post activities 7% 8% 15% 7% 3% Courier activities other than national post activities 0% 3% 4% 3% 20% Other scheduled passenger land transport 3% 6% 2% 0% 1% Other passenger land transport 1% 1% 0% 0% 2% Other supporting land transport activities 16% 3% 0% 8% 0% Labour recruitment and provision of personnel 10% 16% 25% 12% 6% Packaging activities 1% 1% 1% 0% 0% o/w 'Shed' sub-sectors 66% 38% 46% 44% 61% Source: Note: ABI and Oxford Economics Cells shaded in blue indicate a share above 10 percent

107 Fig 2.3: Comparison of Doncaster and GB logistics sector composition (2006) Packaging activities Labour recruitment and provision of personnel Other supporting land transport activities Other passenger land transport Other scheduled passenger land transport Courier activities other than national post activities National post activities Storage and w arehousing Cargo handling Freight transport by road Wholesale sub-sectors -25% -15% -5% 5% 15% 25% Source: Doncaster share of logistics jobs minus GB share (2006) ABI and Oxford Economics Fig 2.4: Comparison of Northampton and GB logistics sector composition (2006) Packaging activities Labour recruitment and provision of personnel Other supporting land transport activities Other passenger land transport Other scheduled passenger land transport Courier activities other than national post activities National post activities Storage and w arehousing Cargo handling Freight transport by road Wholesale sub-sectors -20% -10% 0% 10% 20% Source: Northampton share of logistics jobs minus GB share (2006) ABI and Oxford Economics Fig 2.5: Comparison of Milton Keynes and GB logistics sector composition (2006) Packaging activities Labour recruitment and provision of personnel Other supporting land transport activities Other passenger land transport Other scheduled passenger land transport Courier activities other than national post activities National post activities Storage and w arehousing Cargo handling Freight transport by road Wholesale sub-sectors -15% -10% -5% 0% 5% 10% 15% Source: Milton Keynes share of logistics jobs minus GB share (2006) ABI and Oxford Economics Fig 2.6: Comparison of North West Leicestershire and GB logistics sector composition (2006) Packaging activities Labour recruitment and provision of personnel Other supporting land transport activities Other passenger land transport Other scheduled passenger land transport Courier activities other than national post activities National post activities Storage and w arehousing Cargo handling Freight transport by road Wholesale sub-sectors -25% -15% -5% 5% 15% 25% Source: North West Leicestershire share of logistics jobs minus GB share (2006) ABI and Oxford Economics

108 Economic contribution of logistics Methodology Oxford Economics typically quantify the economic contribution of industries (or individual businesses) in terms of: Direct contribution - such as the employment, output and fiscal contributions generated by the sector/ company itself Indirect contribution - employment and output supported by the sector/company via purchases from its supply chain Induced contribution - employment and output supported by the spending of those employed directly or indirectly by the sector/company A fourth economic channel sometimes considered is catalytic or spillover impacts - the extent to which the activities of the relevant sector/company contribute to improved productivity and performance in other sectors of the economy. Oxford Economics is at the frontier of global research into these catalytic economic impacts in a number of sectors, particularly aerospace and aviation. It is beyond the scope of this project to consider in detail catalytic impacts of the logistics sector, plus in any case the sector is largely made up of lower grade occupations with little R&D or innovation activity to spill over as productivity gains in other sectors. We do however consider a catalytic impact in the policy on scenario analysis in terms of a higher number of professional service office-based jobs. In brief the methodology employed is as follows: Direct contribution direct employment is based on ABI employee job data and our estimates of self-employment in the relevant 4-digit SIC 03 sub-sectors. Average GVA per job in each subsector is based on detailed UK ABI financial information at lower SIC 03 levels (which has data on GVA and employee jobs). Indirect contribution - estimated using the UK input-output table (i.e. which sub-sectors the logistics sector purchases from) and a standard multiplier approach (to convert value purchased from each sub-sector into jobs and GVA). Assumptions on where goods and services are purchased from (and consequently where indirect jobs are sustained) are based on the UK inputoutput table, responses from local logistic businesses interviewed by Atisreal and Oxford Economics professional judgement. Average GVA per job in each sector is based on Oxford Economics GB local authority economic model for Doncaster and the wider Yorkshire & Humber region (used for estimating the GVA of induced jobs as well). We also estimate the indirect impact of capital spending by direct logistics employment (note other methodologies often ignore the contribution of sectors/businesses capital expenditure). Induced contribution - represents the jobs supported by direct and indirect employees from the logistics sector using their income to purchase goods and services for their own consumption. This induced spending helps to support additional businesses (and so additional value added and jobs) in the industries that supply good and services for consumption. The induced impacts are based on income differentials of direct and indirect employee jobs by sector relative to average income levels for the whole UK economy (using ASHE weekly wage data at lower SIC 03 levels), spending patterns taken from the Family Spending Survey (to determine which sectors employees spend incomes on) and assumptions on where people spend (linked closely to where direct and indirect jobs are located and commuting).

109 Caveat - it is worth noting that support for indirect and induced jobs from logistics does not necessarily mean that these jobs would not exist in the absence of direct jobs in the logistics sector - they may still exist but at lower levels of productivity. What contributions are not included Public services job effect - there is also a potential public services job effect, reflecting the increase in demand for services created by the extra people in an area. We have not made any estimate of these as the link between jobs in a specific sector and population numbers (i.e. migration flows) is difficult to determine. The extent to which the people would remain residents but not work in the logistics sector for example is difficult to ascertain. Furthermore the net effect on population flows across regions is difficult to make reliable assumptions on. Tax contribution - the direct, indirect and induced effects would all have tax impacts in the form of corporation tax, PAYE etc. No attempt has been made to measure tax impacts as this is beyond the scope of the project. Capital/ investment spending by indirect and induced sectors the capital spending from direct logistics employment is factored in to our modelling but not for induced and indirect jobs. Headline economic contribution facts Direct contribution 16,200 employment within Doncaster in 2006 (employee jobs and selfemployed). By their nature direct jobs are all located within Doncaster. This equates to 12.3% of Doncaster s total employment 1, placing logistics third behind retail & distribution and health & social work in terms of overall largest employment sectors in Doncaster (Fig 2.7). The direction contribution of these jobs to GVA (wages and profits) is estimated at 564m in constant 2003 prices, which represents 14.9% of Doncaster s total GVA in Logistics contribution to GVA is higher than its employment contribution as at national level, the logistics sector has higher productivity than the economy average (Fig 2.8). There are however large differences in productivity within logistics, ranging from high productivity sub-sectors such as cargo handling and wholesale to low productivity sub-sectors like other passenger land transport. Note ABI financial information at 3-digit and 4-digit SIC level is not available by region or local authority. We therefore explicitly assume the same productivity profile of logistic sub-sectors for Doncaster as for GB as a whole, adjusted for differences between Yorkshire & Humber and GB productivity. Follow up interviews with individual logistic businesses in Doncaster would be required across a range of sub-sectors to test how robust this assumption is. 1 By way of comparison, the East Midlands Strategic Distribution Study by MDS Transmodal Limited estimates that the logistics sector in the East Midlands accounts for 9% of total employment, although the sectoral definition used is more narrow than our definition.

110 Fig 2.7: Doncaster economic structure in employment terms (2006) 25,000 Sector total employment (2006) 20,000 15,000 10,000 5,000 Source: Note: 0 Health & social work Retail & distribution (all) Logistics Construction Manufacturing Business services Education Other personal services Hotels & restaurants Public admin & defence Financial Services ABI and Oxford Economics Figures scale to Yorkshire & Humber totals in Oxford Economics regional model Fig 2.8: Productivity in selected UK sub-sectors and sectors (2006) Hotels & restaurants 6023 : Other passenger land transport 6411 : National post activities Retail 6021 : Other scheduled passenger land transport 7450 : Labour recruitment and provision of personnel 6024 : Freight transport by road 6312 : Storage and w arehousing Other personal services 6412 : Courier activities other than national post activities Whole economy 7482 : Packaging activities Business services Manufacturing Transport Wholesale sub-sectors 6311 : Cargo handling Communications Air transport 6321 : Other supporting land transport activities Source: Note: Nominal GVA per employee ( 000s, 2006) ABI Nominal GVA divided by number of employees from ABI financial information. Logistic sub-sectors shaded in white. Whole economy shaded in black Indirect contribution the logistics sector within Doncaster indirectly supports the employment of a further 17,200 jobs, with indirect employment concentrated in the transport & communications and financial & business services sectors (note indirect employment in the transport and communications logistic sub-sectors within Doncaster is excluded to avoid double counting, as is labour recruitment for the logistic sector in business services) We estimate that 2,000 of these indirect jobs are located in Doncaster and a further 4,000 in other parts of Yorkshire & Humber. The remaining jobs are located in other UK regions and outside the UK. The indirect supplychain employment multiplier for logistics is around 1.1. For every ten jobs directly supported by logistics within Doncaster, another 11 jobs are created in the supply chain. This is based on

111 multiple round effects as opposed to simply first round effects. i.e. logistics buy from one sector (first-round), which then buys from another sector (second-round) etc. (Note indirect jobs supported through capital expenditure are additional to this see Table 2.4) This indirect employment of 17,200 jobs supports a contribution of 620 million of value added further down the supply chain, 47 million of which is generated in Doncaster. (Capital expenditure by supplychain firms supports an estimated 3,500 indirect jobs and 120m of value added, though the majority of this impact is outside Doncaster) Induced contribution the logistic sector s induced effect, from direct and indirect employees spending incomes, is estimated at 360 million in value added and 8,700 jobs in A high share of induced jobs is in consumer sectors based on the Family Spending Survey (retail, other personal services and hotels & restaurants). Induced jobs are located in areas where direct and indirect jobs are located (with an adjustment for commuting as people will spend more of their incomes closer to where they live than work) so there is a sizeable induced contribution outside Yorkshire & Humber. As Fig 2.9 shows, average wages in logistic sub-sectors, like productivity, range significantly. While several of the sub-sectors have wage levels above the economy average, this may over-estimate wage levels in logistics as we do not control here in Fig 2.9 for differences in full and part-time working. (ASHE 4-digit data is to the best of our knowledge only available for all employee jobs) The share of part-time working in logistics is lower than the economy average (retail s high part time share explains part of why average wages in the sector are low). Fig 2.9: Average wages in selected UK sub-sectors and sectors (2007) Hotels & restaurants Retail 7450 : Labour recruitment and provision of personnel 7482 : Packaging activities Other personal services 6023 : Other passenger land transport 6412 : Courier activities other than national post activities Whole economy Wholesale sub-sectors Wholesale 6411 : National post activities 6312 : Storage and w arehousing Business services 6021 : Other scheduled passenger land transport 6024 : Freight transport by road Manufacturing Communications 6311 : Cargo handling Air transport Utilities 6321 : Other supporting land transport activities Source: Note: Median w eekly w ages all employees (2007) ASHE Gross weekly median all employee jobs. Logistic sub-sectors shaded in white. Whole economy shaded in black

112 A summary of the economic contribution of Doncaster s logistic sector in 2006, in employment and GVA terms, is presented in Table 2.4 below. Em ploym e nt Table 2.4: Economic contribution of Doncaster s logistics sector in 2006 Doncas ter Res t York shire & Hum ber Rest UK Outside UK Total Direct contribution Employee jobs 14, ,401 Self-employment 1, ,818 Total direct jobs 16, ,218 Total employment in area 132, % total employment in area 12.3% Indirect (supply-chain) contribution Transport & communications 55 1,857 2,786 1,238 5,936 Financial & business services 592 1,321 3,303 1,321 6,537 Other sectors 1, ,429 1,179 4,750 Total indirect jobs 2,022 3,945 7,519 3,738 17,224 Indirect (supply-chain capital spend) contribution Total indirect jobs 329 1,230 1, ,515 Induced (em ployee spending) contribution Retail & distribution 1, , ,740 Hotel & restaurants Other personal services 1, ,331 Other sectors ,613 Total indirect jobs 3,565 1,436 2,495 1,187 8,683 Catalytic contribution Total catalytic jobs GVA ( m constant 2003 prices ) Direct contribution Total GVA in area 3, % total GVA in area 14.9% Indirect (supply-chain) contribution Indirect (supply-chain capital spend) contribution Induced (employee spending) contribution Catalytic contribution Source: Oxford Economics

113 Recent trends and market baseline forecast for logistics employment Recent employment trends in logistics We generate a time series for logistics employment in Doncaster back to 1991 using the Annual Employment Survey and ABI and Oxford Economics estimates of self-employment in the logistic subsectors. At an aggregate sector level, logistics employment in Doncaster has doubled from the early 1990s, though growth slowed in the second half of the 1990s before picking up again (Fig 3.1). Much of the increase in logistics employment in recent years occurred between 2005 and 2006, due almost entirely to sub-sector other supporting land transport activities which jumped from 134 jobs to over 2,500 jobs (Fig 3.3). The aggregate performance of the sector however masks divergent trends within subsectors. Shed sub-sectors, which are of the main areas of interest of this research for estimating land requirements, have been growing particularly strongly in recent years, specifically freight transport by road and storage and warehousing (Fig 3.3). This will include the activities carried out by B&Q, NEXT and IKEA. Employment in other shed sub-sectors has been relatively stable (Fig 3.3). In contrast employment in one of the main logistic sub-sectors, the group of wholesale sub-sectors, has fallen by roughly 1,000 since 1998 (Fig 3.4). These job losses have occurred mainly in wholesale of construction materials and industrial machinery, with the latter likely to be linked to the decline in manufacturing employment. Fig 3.1: Logistics employment in Doncaster ( ) 18 Fig 3.2: Logistics employee jobs and selfemployment in Doncaster ( ) 18 Logistics total employment (000s) Source: AES, ABI and Oxford Economics Note: Includes employee jobs and self-employed Logistics employee jobs and self-employment (000s) Self-employment 8 Employee jobs Source: AES, ABI and Oxford Economics Logistics total employment (000s) Fig 3.3: Logistics shed employment in Doncaster ( ) 5,000 4,000 3,000 2,000 1, Other scheduled passenger land transport Other passenger land transport Courier activities other than national post activities Freight transport by road National post activities Storage and w arehousing Other supporting land transport activities Fig 3.4: Logistics other sub-sector employment in Doncaster ( ) Wholesale subsectors Labour recruitment and provision of personnel Packaging activities To set the recent growth of logistics employment in Doncaster in context, we compare below growth in 0 0 other sectors of the Doncaster economy over the period Only the public sector created more jobs than logistics over the same period, though the logistic percent rate of growth was highest. Source: AES, ABI and Oxford Economics Source: AES, ABI and Oxford Economics Note: Includes employee jobs and self-employed Note: Includes employee jobs and self-employed Table 3.1: Doncaster growth in employee jobs by sector ( ) Logistics total employment (000s) 5,000 4,000 3,000 2,000 1,000

114 Source: Change % change Public services 25,282 35,524 10,242 41% Logistics 8,964 14,399 5,435 61% Financial & business services 11,507 14,843 3,336 29% Construction 6,289 9,501 3,212 51% Retail & distribution and hotel & restaurants 26,583 27, % Other personal services 4,458 4, % Transport & communications 11,347 11, % Agriculture and fishing % Utilities % Manuf acturing 18,537 12,325-6,212-34% ABI and Oxford Economics Comparing Doncaster s workplace logistic employee job growth to other logistic hubs, we see that Doncaster s growth, in per cent terms, has kept pace with other hub areas. Though as Doncaster s logistic sector is starting from a smaller base (most of these areas are of a similar size in terms of total employment), its absolute change in logistic jobs is less than in Northampton and Wakefield. Source: Note: Table 3.2: Logistic growth in employee jobs across hub areas ( ) Change % change Total jobs Doncaster 8,964 14,399 5,435 61% 117,000 Milton Keynes 17,295 21,105 3,811 22% 131,000 Northampton 14,120 21,889 7,769 55% 124,000 Wakefield 12,044 20,535 8,491 70% 132,000 North West Leicestershire 4,220 8,994 4, % 49,000 ABI and Oxford Economics Based on a consistent definition of the logistic sector Market baseline forecast Forecasts and various scenarios 2 already exist for the Doncaster economy and specifically the logistics sector. These are presented in the EKOS LDF Employment Forecast Paper (January 2008) and Roger Tyms Employment Land Study (December 2007). We understand there is considerable overlap between these two reports with both referring to Experian forecasts developed for Yorkshire Forward, although the same definitions (logistic versus warehouse jobs) and time periods are not consistently quoted. There are several important reasons to at minimum revisit the logistic/ warehouse employment forecasts: 1. EKOS logistic definition is narrowly defined (see section 2.1) and does not included selfemployment in logistics. Consequently growth forecasts for logistics employment do not capture all sub-sectors of interest for land requirement planning 2. The EKOS base scenario, to the best of our understanding, receives little attention as it reproduces past trends of low growth. 3. The EKOS report itself points out that logistic employment forecasts across all scenarios are modest given Doncaster s competitive advantages and recommended that DMBC pursue a more ambitious policy on scenario. 2 Three alternative scenarios are (1) Base forecast (Experian econometric/ trend-based forecast developed for Yorkshire Forward); (2) Realising economic potential scenario (links employment projections to potential strengths and policy opportunities); and (3) housing led forecast (adapted by EKOS from Roger Tyms work, linked to forecast housing growth and increase in jobs required if Doncaster s employment rate is increased).

115 4. The Roger Tyms/ Experian forecasts cover the period Much of the growth in logistics / warehouse employment between 2001 and 2021 (8,300) has already been realised in recent years (5,500 between according to official ABI data and almost 8,000 based on DMBC s estimates using the square footage of new strategic distribution units completed). This opens up the argument that Doncaster has a zero land requirement for logistics as all predicted jobs have already been provided for. 5. There is a large yet unexplained difference between the Roger Tyms warehouse employment forecasts under scenario 2 and scenario 3. It is not clear either from a commercial or policy perspective why well over 5,000 more logistic jobs would be created in the housing led scenario 3, or whether the new population in the housing led scenario would have the appropriate skills to work in the logistics sector or would indeed be willing to work in the sector. There is therefore a clear rationale for providing updated and independent logistic employment forecasts to 2026, taking into account recent developments, and translating these into revised land use requirements. In this report Oxford Economics produce two forecasts for logistics employment in Doncaster, a market baseline forecast and policy on scenario as recommended in the EKOS report (see next section). The figures and charts for the Oxford Economics market baseline forecasts are presented below alongside the EKOS and Roger Tyms forecasts for ease of comparison (Figs and Tables ). The baseline forecast is given the term market to reflect market desire to locate in Doncaster for competitive reasons. This is as opposed to the more aspirational policy on scenario. Oxford Economics approach to producing baseline forecasts is a mixture of art and science, entailing the following: While historical trend performance matters to a degree, the overarching UK and Yorkshire & Humber employment forecasts for wholesale and transport matter much more (from Oxford Economics suite of UK industry and regional models), which themselves are driven by a variety of domestic and external economic variables The forecasts incorporate regional and local knowledge on constraints and opportunities at subsector level. For example the forecasts assume that as per the RES, an increasing share of logistic jobs in Yorkshire and Humber will gravitate to Doncaster and Wakefield. In addition higher than otherwise growth is assumed in sectors with specific growth opportunities such as storage and warehousing (as advised by Atisreal). Both of these factors are built into our forecasts. Oxford Economics market baseline forecast for logistics employment in Doncaster over the period is: Employment growth of 188 per annum (173for shed sub-sectors in total). This compares to 83 pa in EKOS scenario 3 and 415 pa in Roger Tym/ Experian s scenario 3 (though much of this growth has been realised since 2001 and this is an aspirational scenario as opposed to a baseline). Reflecting Doncaster s competitive advantage, logistics employment growth is forecast to be led by storage & warehousing and freight transport by road (Fig 3.7). While this market baseline forecast is slower than recent years (average of 1,000 jobs pa ), the rate of growth is still higher than employment growth forecast for the whole Doncaster economy and the recent rapid growth cannot be sustained indefinitely.

116 Fig 3.5: Logistics employment in Doncaster ( ) market baseline scenario Logistics total employment (000s) Source: Note: AES, ABI and Oxford Economics Includes employee jobs and self-employed Fig 3.7: Logistics shed employment in Doncaster ( ) market baseline scenario Logistics total employment (000s) 6,000 5,000 4,000 3,000 2,000 1, Other scheduled passenger land transport Other passenger land transport Courier activities other than national post activities Freight transport by road Storage and w arehousing Other supporting land transport activities National post activities Fig 3.6: Logistics employee jobs and selfemployment in Doncaster ( ) market baseline scenario Logistics employee jobs and self-employment (000s) Source: Self-employment Employee jobs AES, ABI and Oxford Economics Fig 3.8: Logistics other sub-sector employment in Doncaster ( ) market baseline scenario Logistics total employment (000s) 5,000 4,000 3,000 2,000 1, Wholesale subsectors Labour recruitment and provision of personnel Packaging activities Source: AES, ABI and Oxford Economics Note: Includes employee jobs and self-employed Source: AES, ABI and Oxford Economics Note: Includes employee jobs and self-employed

117 Table 3.3: EKOS Doncaster forecasts ( ) Change Annual change Annual % change Scenario 1 Logistics (EKOS definition) 4,850 4, % Other relevant sectors Retail & distribution and hotel & restaurants 30,603 32,588 1, % Transport & communications 10,449 10, % Financial & business services 14,063 14, % Office-based 15,748 16, % Total 134, ,112 10, % Scenario 2 Logistics (EKOS definition) 4,850 6,199 1, % Other relevant sectors Retail & distribution and hotel & restaurants 30,603 39,115 8, % Transport & communications 10,449 13,355 2, % Financial & business services 14,063 17,640 3, % Office-based 15,748 19,981 4, % Total 134, ,446 29,228 1, % Scenario 3 Logistics (EKOS definition) 4,850 6,431 1, % Other relevant sectors Retail & distribution and hotel & restaurants 30,603 37,819 7, % Transport & communications 10,449 13,854 3, % Financial & business services 14,063 18,695 4, % Office-based 15,748 20,860 5, % Total 134, ,713 34,495 1, % Oxford Economics market baseline Logistics 15,078 18,650 3, % o/w Shed 10,909 14,188 3, % Other relevant sectors Retail & distribution and hotel & restaurants 29,899 33,829 3, % Transport & communications 14,020 19,379 5, % Financial & business services 16,109 20,740 4, % Office-based Total 132, ,681 17, % Source: Note: EKOS LDF Employment Forecast Paper Key figures for annual average forecast change in logistics employment are shaded in blue

118 Table 3.4: Roger Tyms/ Experian Doncaster forecasts ( ) Change Annual change Annual % change Change Annual change Annual % change Scenario 1 Warehousing 8,200 na 9,300 1, % Other relevant sectors Wholesaling 7,337 7,385 7, % % Transport 4,937 7,897 7,006 2, % % Business services 10,117 9,232 9, % % Total 110, , ,189 18, % 5, % Scenario 2 Warehousing 8,200 na 10,000 1, % Other relevant sectors Wholesaling 7,337 7,466 7, % % Transport 4,937 7,983 7,519 2, % % Business services 10,117 9,333 9, % % Total 110, , ,655 27,854 1, % 13, % Scenario 3 Warehousing 10,800 na 19,100 8, % Other relevant sectors Wholesaling 7,364 7,401 8,645 1, % 1, % Transport 4,999 7,567 9,373 4, % 1, % Business services 8,956 11,987 14,513 5, % 2, % Total 113, , ,281 42,264 2, % 25,997 1, % Oxford Econom ics m ark e t bas e line Logistics 10,576 16,218 19,722 9, % 3, % o/w Shed 5,362 10,909 14,522 9, % 3, % Source: Note: Other relevant sectors Retail & distribution 20,973 23,320 25,642 4, % 2, % Transport 7,759 14,020 20,270 12, % 6, % Business services 10,909 12,702 18,133 7, % 5, % Total 112, , ,699 40,419 2, % 20,307 1, % Roger Tyms Employment Land Study Key figures for annual average forecast change in logistics employment are shaded in blue

119 Policy on scenario analysis Logistics employment forecast As recommend in the EKOS LDF Employment Forecast report, Oxford Economics also run a policy on scenario as part of this research. This is more aspirational than the market baseline scenario and sits within a policy approach as set out in the RES and RSS and Sheffield CRDP etc. This policy context and development priorities are extensively covered in chapter 2 of the Roger Tyms report and hence we do not consider it necessary to repeat the detail here. It is worth however briefly picking out some references relevant to Doncaster. For example the RSS aims to support towns as hubs and as service centres and recognises that Doncaster is rapidly developing as a logistics centre of regional and national importance because of its strong relationship to the national rail and motorway network. The RES notes that Doncaster has one of the most promising logistics interchange in England and goes into detail on how to achieve stronger cities and towns. Lastly the Sheffield CRDP also recognises the importance of capitalising on the City Region s pivotal position in relation to economic hubs and Hull and Humber Ports. Our interpretation then of what a policy on scenario means in practice is Doncaster advancing its role to become one of the premier GB logistics hubs. While Doncaster s logistic sector is already fairly well-developed (rank 28 of 408 GB local authorities Table 4.1), it is still not as large as benchmark areas of similar economic size (e.g. Northampton, Wakefield and Milton Keynes). In addition with its joint road and rail connectivity, Doncaster also potentially offers a greater logistic opportunity over the next years than more traditional logistic hubs, such as Milton Keynes where recent growth has slowed. Our approach therefore to setting a policy on scenario is to: Look at sub-sector employee job levels in Doncaster relative to comparator hub areas and to pick out those sub-sectors which could be larger given Doncaster s competitive location and infrastructure advantages Sizing how much higher employment in each sub-sector could be from a demand perspective. (Also factoring in that by 2026 employment levels in hub areas will have risen) Note we assume Doncaster will develop enhanced critical mass across these sub-sectors as opposed to specialism in just one sector. Specialism (or having the highest employment) across all sub-sectors would be unrealistic. 4.1: GB logistic hubs (2006) Rank (no. logis tic em ployee jobs) Local authority Total logistic em ployee jobs Wholesale sub-sectors Freight transport by road (she d) Storage and w arehousing (shed) National post activitie s (s hed) Courier activities other than national post activities (shed) Other s upporting land transport activities (shed) Econom y s ize (total em ployee jobs ) 1 Birmingham 43,448 19,486 2, ,720 1,188 2, ,841 2 Westminster, City of 41,952 15, , , ,605 3 Leeds 37,171 18,083 2,740 1,749 3,143 1, ,255 4 Manchester 31,683 11, , , ,066 5 Glasgow City 27,290 10, , ,837 6 Camden 22,343 7, , ,850 7 Sheffield 22,110 9,051 1,577 1,015 3, ,584 8 Northampton 21,889 6,030 3,465 1,902 3, ,635 9 Bristol 21,884 9,869 1, , , , Milton Keynes 21,105 9,161 2,820 2,701 1, , , Wakefield 20,535 7,363 2,256 6,064 1, , Doncaster 14,399 3,318 3,032 2, , ,655 Source: ABI and Oxford Economics Note: Figures refer to employee jobs

120 In consultation with Atisreal, the following logistic sub-sectors have been identified as having potential for additional growth above the market baseline, given Doncaster s competitive advantages and the aspirational policy context in place: Wholesale sub-sectors (wholesale of electrical household appliances, pharmaceutical goods, other household goods, computer equipment and other electronic parts). While the wholesale sector generally locates on traditional employment sites closer to town centres using smaller to medium-sized sites (as opposed to larger shed sites along motorway corridors), the number of wholesale jobs in Milton Keynes indicates the scope of opportunity for Doncaster in this sector. It may be worth counting some of the additional wholesale jobs as shed jobs for estimating specific shed land use requirements Freight transport by road Storage and warehousing; and Courier activities Table 4.2 below sizes the assumed higher level of employment in 2026 in each of these sub-sectors for the policy on scenario, relative to Oxford Economics market baseline forecast for each of the four subsectors. Note higher growth in employee jobs in these sub-sectors will feed through to higher selfemployment in these sub-sectors and higher growth in labour recruitment. We retain the market baseline forecasts for the other logistic sub-sectors. Table 4.2: Sizing the policy on scenario (employee jobs) (m ark e t bas e line s ce nario) 2026 ('policy on' s ce nario) Be nchm ark 2026 Be nchm ark are a Source: Note: Wholesale sub-sectors 3,339 2,841 5,000 11,185 Milton Keynes Freight transport by road 3,035 3,895 5,000 4,231 Northampton Storage and w arehousing 2,500 5,634 6,500 7,404 Wakefield Courier activities Milton Keynes ABI and Oxford Economics 2026 policy scenario employment targets are approximates Oxford Economics policy on forecast for logistics employment in Doncaster over the period is: Employment growth of 547 per annum (522 for shed sub-sectors in total) or 10,937 jobs over the next 20 years (10,442 for shed sub-sectors). This compares to 188 pa in Oxford Economics market baseline forecast, 83 pa in EKOS scenario 3 (more narrow logistics definition) and 415 pa warehousing jobs in Roger Tym/ Experian s scenario 3. For land use planning, it is important to provide some clarification of how this forecast should be interpreted. For example the Roger Tyms forecast provision for 8,300 logistic jobs between 2001 and 2021 has already been close to realised. This could be interpreted to mean that all predicted jobs have been provided for and Doncaster has a nil requirement for logistic employment land over the next years. However the Oxford Economics demand-driven forecast show a potential need to provide land for 3,571 net additional logistic jobs over the next 20 years in the market baseline scenario or 10,937 net additional logistic jobs in the policy on scenario which is consistent with the vision for Doncaster in the RES and RSS. Given that economic forecasting can sometimes trail what is happening on the ground (as official employee data can be two-three years behind), it is important to consider both the quantum of additional jobs predicted over the entire forecast period, as well as the predicted

121 average number of jobs pa. If actual job creation overshoots the predicted average number pa in the early years of the forecast, it becomes important to review the forecast and consider whether land use requirements for the entire long-term planning period need to be reviewed. Ultimately to what extent a growing logistic sector is supported to continue growing exponentially will depend on (1) opportunity costs of alternate land use and the extent to which logistics crowd out other sectors, (2) environmental impacts and (3) the economic implications of an increasingly dominant logistic sector on Doncaster s wider economic targets (employment rates, wage levels, output gap, commuting etc). Other supply-side factors would need to be considered such as having the appropriate quantity and mix of skills, a significant proportion of which may need to come from migrants. Table 4.3: Policy on scenario employment forecast ( ) Annual Annual % Change change change Source: Logistics 15,078 26,015 10, % o/w Shed 10,909 21,350 10, % Oxford Economics Fig 4.1: Logistics employment in Doncaster ( ) policy on scenario Logistics total employment (000s) Source: Note: Policy on scenario Market baseline scenario AES, ABI and Oxford Economics Includes employee jobs and self-employed Logistics employee jobs and self-employment (000s) Fig 4.2: Logistics employee jobs and selfemployment in Doncaster ( ) policy on scenario Source: Self-employment Employee jobs AES, ABI and Oxford Economics Fig 4.3: Logistics shed employment in Doncaster ( ) policy on scenario Logistics total employment (000s) 7,000 6,000 5,000 4,000 3,000 2,000 1, Other scheduled passenger land transport Other passenger land transport Courier activities other than national post activities Freight transport by road Storage and w arehousing Other supporting land transport activities National post activities Catalytic professional services impact Source: AES, ABI and Oxford Economics Note: Includes employee jobs and self-employed Fig 4.4: Logistics other sub-sector employment in Doncaster ( ) policy on scenario Logistics total employment (000s) 6,000 5,000 4,000 3,000 2,000 1,000 Source: Note: Wholesale subsectors Labour recruitment and provision of personnel Packaging activities AES, ABI and Oxford Economics Includes employee jobs and self-employed

122 Doncaster currently has an under-developed professional services/ office sector (rank 294 of 408 GB local authorities Table 4.4). Other logistic hubs and economies of similar size have significantly larger professional service sub-sectors (Milton Keynes, Northampton). At UK level professional services have been and are forecast to continue to be the strongest growing sector of the economy. Professional services also offer export potential and tend to be graduate hungry. Table 4.4: Concentration of professional services employment in selected areas (2006) Rank (conce ntration profe s s ional s e rvice jobs ) Local authority Profes s onal s e rvice e m ploye e jobs pe r 1,000 total jobs Profe s sonal s e rvice e m ploye e jobs Econom y s ize (total e m ploye e jobs ) 26 Manchester , , Nottingham , , Milton Keynes , , Northampton , , Sw indon , , Luton ,811 86, Stockport , , Leicester City , , Derby City , , Bradford , ,965 Source: 294 Doncaster , ,655 ABI and Oxford Economics The opening of Robin Hood airport, together with rail links to London, will likely provide a stimulus to Doncaster s professional services sector by opening up the area and making it easier to do business both regionally and internationally from a Doncaster office base. Given that we are not considering here air-related developments, the key question is to what extent growth in the logistics sector (our definition excluding air) under the policy on scenario will have a catalytic impact on professional services above and beyond the indirect effect on the sector from supply chain linkages. Fig 4.5 below shows a slight positive relationship between the number of logistic jobs per 1,000 total jobs and the concentration of professional service jobs. Of course this says nothing about causality, i.e. does the presence of logistic jobs attract professional service jobs or are other factors at work? A better way to look at this is to compare growth in logistic jobs against growth in professional service jobs across all GB local authorities (Fig 4.6). This relationship is also relatively weak with performance in the logistics sector appearing to bear no influence on growth in professional service employment. Establishing the catalytic link between logistics (excluding air-related activities) and professional services obviously requires more research which is beyond the scope of our remit. However based for now on the evidence below, we do not propose to include a catalytic impact from the policy on scenario on professional services employment beyond indirect effects. Indeed we assume, based partly on actual logistic business procurement patterns, that much of the indirect demand for professional services from logistics is for firms located outside Doncaster with limited local impact. If we were to include air transport, there would be a much stronger case to build in such a catalytic impact. Given that professional services at local level largely export to areas outside their boundary, local economic structure matters less than factors such as the presence of university campuses and nearby airports, rail links, an attractive urban core, a suitable office accommodation offering and appropriate skills.

123 Fig 4.5: Relationship between logistics and professional services employee job concentrations across GB local authorities (2006) Professional service employee jobs per 1,000 total employee jobs 1, y = 0.303x R 2 = Fig 4.6: Relationship between change in logistics and professional services employee jobs across GB local authorities ( ) Professional service employee jobs growth y = x R 2 = ,000 35,000 15,000-15,000-10,000-5,000-5, ,000 10, Logistics employee jobs per 1,000 total employee jobs Source: ABI Source: ABI -25,000 Logistics employee jobs growth Economic contribution of logistics Table 4.5 below sets out how the economic contribution of Doncaster s logistic sector will change over the next 20 years under both the market baseline and policy on scenario. Direct contribution 26,300 logistics jobs by 2026 in the policy on scenario compared to 20,300 in the market baseline scenario, generating an additional 220m GVA ( 1,285m minus 1,063m). Indirect and induced contribution an additional 7,400 indirect and induced jobs in the policy on scenario, of which 1,600 are assumed to be in Doncaster (including the indirect capital spend effect). Other impacts it is beyond the scope of this work to model additional impacts on for example population/migration, housing demand, commuting and traffic flows (and associated carbon footprint) and closing the output gap, though Oxford Economics could in principle cover each of these areas having undertaken similar modelling for other areas. We do however say something on where additional labour is likely to come from in the next section.

124 Table 4.5: Economic contribution of Doncaster s logistics sector in 2026 Doncas te r Re s t York s hire & Hum ber Rest UK Outside UK Total Market baseline scenario Em ploym ent Direct contribution 20, ,316 Total employment in area 157, % total employment in area 12.9% Indirect (supply-chain) contribution 2,887 4,889 9,219 4,477 21,473 Indirect (supply-chain capital spend) contribution 498 1,876 1,157 1,004 4,535 Induced (employee spending) contribution 5,510 1,361 2,570 1,248 10,689 Catalytic contribution (professional services) GVA ( m constant 2003 prices) Direct contribution 1, ,063 Total GVA in area 6, % total GVA in area 17.5% Indirect (supply-chain) contribution ,170 Indirect (supply-chain capital spend) contribution Induced (employee spending) contribution Catalytic contribution (professional services) Policy on scenario Em ploym ent Direct contribution 26, ,335 Total employment in area 163, % total employment in area 16.1% Indirect (supply-chain) contribution 3,316 5,931 11,272 5,442 25,960 Indirect (supply-chain capital spend) contribution 555 2,076 1,324 1,144 5,099 Induced (employee spending) contribution 6,689 1,651 3,142 1,517 12,998 Catalytic contribution (professional services) GVA ( m constant 2003 prices) Direct contribution 1, ,285 Total GVA in area 6, % total GVA in area 20.8% Indirect (supply-chain) contribution ,410 Indirect (supply-chain capital spend) contribution Induced (employee spending) contribution Catalytic contribution (professional services) Diffe re nce Em ploym ent Direct contribution 6, ,019 % total employment in area 3.2% Indirect (supply-chain) contribution 428 1,041 2, ,487 Indirect (supply-chain capital spend) contribution Induced (employee spending) contribution 1, ,309 Catalytic contribution (professional services) GVA ( m constant 2003 prices) Direct contribution % total GVA in area 3.3% Indirect (supply-chain) contribution Indirect (supply-chain capital spend) contribution Induced (employee spending) contribution Catalytic contribution (professional services) Source: Oxford Economics

125 Appendix 2 Atisreal Survey of Local Businesses Atisreal undertook a survey to feed into the study and also the work by Oxford Economics. The web based survey was designed using the Survey Monkey website and was hosted at the following address: The Survey Questions were are follows:

126 n

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