Bank of England

Policy Shifts and Market Volatility

Jun 9, 2025 | , ,

As the freight and logistics sector navigates a complex global landscape, the coming week marks a period of significant policy recalibration.

From fiscal reforms in the UK and US to central bank updates and ongoing geopolitical tensions, the external environment is shifting and with it, the operational and strategic considerations for logistics providers worldwide.

UK Spending Review 2025: A Reset for Public Investment and Infrastructure
The UK’s 2025 Spending Review, delivered by Chancellor Rachel Reeves on 11 June, represents a pivotal moment in the government’s fiscal strategy. It is the first multi-year review since 2021 and is being conducted under a “zero-based budgeting” approach, meaning all departmental budgets are being rebuilt from the ground up, rather than adjusted incrementally.

For the freight and logistics industry, the review carries several key implications:

  • Infrastructure Investment: The government has committed to a 10-year infrastructure strategy, with capital spending plans extending to 2029–30. An additional £113 billion is earmarked for capital infrastructure over the next five years. Logistics operators should closely monitor how this funding is allocated, particularly for road, rail, and port projects, which are critical to freight efficiency and network resilience.
  • Skills and Labour: A new construction skills package aims to train up to 60,000 additional workers, addressing chronic labour shortages in logistics-adjacent sectors. This may ease pressure on warehousing and construction timelines while supporting the development of new logistics hubs.
  • Public Procurement and Regional Development: The review is expected to shape procurement strategies and regional investment priorities. With a renewed focus on productivity and value for money, logistics firms engaged in public contracts or operating in economically underdeveloped regions, may see new opportunities or face tighter scrutiny.
  • Sustainability and Net Zero: While full details are pending, the review is likely to align with the UK’s broader decarbonisation goals. This may include funding for green transport initiatives, clean energy infrastructure, and incentives for low-emission freight solutions.

The Spending Review also comes amid a challenging economic context, shaped by inflation, global trade disruptions, and rising borrowing costs. Freight operators should prepare for a policy environment focused on efficiency, resilience, and long-term value creation.

Compounding these challenges, UK exports fell sharply in April, with a £2 billion decline in goods exports—driven primarily by new US import tariffs. This marked the largest monthly drop on record in exports to the United States and affected most categories of goods. Manufacturing output also fell, notably in the automotive and pharmaceutical sectors, as businesses scaled back production in anticipation of higher tariffs. After months of strong performance, export activity was further disrupted by firms pulling forward shipments earlier in the year to avoid newly imposed US levies.

US Tax Reform: A New Era for Trade and Investment?
In the United States, President Trump’s proposed “big, beautiful” tax bill is advancing through Congress. The legislation includes sweeping corporate tax cuts and incentives for domestic manufacturing, which could accelerate re-shoring trends and alter trade patterns. For logistics providers, this may result in:

  • Increased Domestic Freight Demand: As US-based production expands, demand for domestic transport, warehousing, and last-mile services is expected to rise.
  • Cross-Border Complexity: Changes to trade incentives and tariffs may shift the flow of goods between the US, Mexico, and Canada, requiring agile route planning and customs expertise.
  • Capital Investment Shifts: New tax incentives may drive clients to invest in automation, fleet upgrades, or new distribution centres—creating knock-on effects across the logistics value chain.

The new tariff regime is also contributing to global trade volatility. In the UK, the economic impact of the US tariffs is already being felt, with export volumes contracting and trade-dependent sectors seeing reduced investment activity. This highlights the need for logistics providers to stay alert to evolving bilateral trade risks and respond with adaptive planning.

Central Bank Updates: Currency and Credit Market Impacts
Both the Bank of England and the US Federal Reserve have held key monetary policy meetings. The Fed is expected to update its economic outlook, while the BoE continues balancing inflation control with economic stability. The implications for logistics include:

  • Currency Volatility: Exchange rate movements can affect international freight pricing, fuel costs, and contract margins.
  • Interest Rate Sensitivity: Higher borrowing costs may influence fleet financing, infrastructure investment, and client demand—particularly in capital-intensive sectors such as construction and manufacturing.

As ever, the geopolitical landscape offers little certainty for confident decision-making. In this climate, Metro can help drive your business forward by:

  • Diversifying supplier and route networks to reduce exposure to geopolitical and trade risks
  • Enhancing supply chain resilience and responsiveness through our advanced MVT platform

EMAIL Laurence Burford, Chief Financial Officer, today to explore how Metro can support your business through ongoing global disruption.

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A Quiet Week in finance…

Mar 17, 2025 | ,

When we sit down to discuss the latest article on recent happenings in the financial world and their impact on the supply chain and the businesses that operate in this sector, we find no shortage of topics.

We could discuss the upcoming changes to Employer NIC rates, where the amount paid on behalf of employees increases from 13.8% to 15%, as well as the reduction in the secondary threshold from £9,100 to £5,000 per year, leading to higher payroll costs soon to be borne by companies.

We could also discuss the upcoming Bank of England meetings set to be held on March 20, May 8, June 19, and August 7, with further meetings in September, November, and December. Whilst economists tell us several interest rate cuts may happen throughout 2025, the next cut is reportedly unlikely to happen at the upcoming meeting on March 20. Economists predict the BoE will likely reduce rates in May, with further cuts later in the year.

If time and space allowed, we could discuss the return of a familiar face in Mark Carney as the Prime Minister of Canada and the immediate challenges he faces, including a trade war with the US. Carney aims to pursue fiscal responsibility and social justice while forging new trading relationships, leveraging his crisis management experience to counter Trump’s hostilities.

Trade wars and tariff discussions are not limited to Canada. At the time of writing, Trump has introduced a 25% tariff on all steel and aluminium imports from around the world, as well as 25% tariffs on other imports from Mexico and a 20% levy on Chinese goods.

Retaliation has followed, with the EU targeting US goods worth a reported £22bn. These tariffs, covering products ranging from boats to bourbon to motorbikes, will start on April 1 and be fully in place by April 13. It is reported that American distillers are rushing to ship as much whiskey as possible to the EU before the above 50% tariff takes effect.

On the other side of the Atlantic, we could discuss Europe’s anticipated defence spending, which could provide an economic boost and reduce the need for the ECB to provide financial support. If we had time, we could also discuss the strengthening of the EURO, which is currently one of the top performers among G10 currencies. Increased fiscal spending and the potential end to the Ukraine war, alongside uncertainty in the US, where renewed recession fears have emerged, have led to improved sentiment toward both the EUR and GBP, causing the swift rise back to 1.29.

There are lots of things we could write about in this forum, or you could reach out to us on any specific topic, and we can discuss how any of the above may impact you and your business specifically.

EMAIL Laurence Burford, Chief Financial Officer.

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The Roller Coaster Ride Continues

Feb 19, 2025 | , , , ,

The foreign exchange (FX) market has always been highly sensitive to political and economic events, and 2025 has been no exception. Recent data releases on both sides of the Atlantic have fuelled fluctuations in the GBP to USD exchange rate, making for a volatile start to the year.

Over the past few weeks, GBP/USD has oscillated between periods of relative stability and significant movement. As of the time of writing, the exchange rate stands at approximately 1.26 USD per GBP, a notable rebound from the early January lows of 1.21, with some vessel exchange rates even dipping to 1.19 or lower.

The Fall: Early January 2025
Several factors contributed to the pound’s decline against the dollar in early 2025:

  • US economic strength: Strong job growth and retail sales supported the USD, increasing investor confidence and driving dollar appreciation.
  • Interest rate policies: The Federal Reserve’s decision to maintain interest rates, alongside a more cautious stance from the Bank of England, weighed on the pound.
  • Weak UK economic data: Lower-than-expected GDP growth and disappointing retail sales figures further eroded confidence in the pound, leading to increased pressure on GBP/USD.

The Rebound: Post 18th January 2025
A reversal in fortunes saw GBP/USD recover from its lows, supported by a shift in economic and political dynamics:

  • Improved UK economic indicators: Better-than-expected GDP growth and strong retail sales provided a much-needed boost to sterling.
  • Mixed US economic data: A slowdown in US retail sales and concerns about weakening consumer demand cast doubt over the sustainability of the dollar’s strength.
  • US political uncertainty: The shifting political landscape in the US, particularly discussions around fiscal policies and trade relations, increased market uncertainty. Trump’s renewed focus on reciprocal tariffs has raised concerns over trade disruptions, denting investor confidence in the USD.

Navigating Volatility
The recent GBP/USD fluctuations illustrate how tariff speculations, economic releases, and political developments can significantly impact FX markets. While trade concerns remain a major driver of sentiment, broader macroeconomic conditions and monetary policy decisions are also playing a crucial role in shaping currency movements.

Investors and traders will continue to monitor key data releases, central bank signals, and policy announcements to navigate what remains an uncertain and fast-moving market.

Market Outlook
Looking ahead, the GBP/USD exchange rate is likely to remain highly sensitive to economic data, political shifts, and central bank policies. The interplay between economic fundamentals and policy decisions will continue to drive currency volatility, with no signs of simplification in sight.

Staying ahead of exchange rate movements can make all the difference to your business and while no one can predict the future of FX movements, at Metro we continuously monitor market trends, trade policies, and economic shifts to help businesses mitigate risks and seize opportunities.

By closely tracking currency fluctuations and global trade indicators, we provide insights that empower you to make the informed, strategic decisions that will protect your supply chain.

EMAIL Laurence Burford, Chief Financial Officer, for personalised insights and recommendations.

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Seven supply chain shocks in seven weeks

Feb 19, 2025 | , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Just seven weeks into 2025, global supply chains have already faced a whirlwind of challenges.

From industrial action to trade barriers and shifting alliances, businesses must stay agile to navigate ongoing disruptions. Here are seven of the most impactful developments so far this year.

1. US east coast port strike averted (8th January)
A major disruption was narrowly avoided as the International Longshoremen’s Association (ILA) and United States Maritime Alliance (USMX) reached a tentative six-year agreement. The deal, approved on 7 February, prevented a strike that could have crippled US east coast ports for months. A final vote on 25 February will confirm its ratification.

2. Uncertainty over Suez Canal return (19th January)
Despite a fragile ceasefire in Gaza, container ships will not be returning to the Red Sea anytime soon. Carriers remain cautious, fearing renewed instability and prioritising the established Cape of Good Hope diversions. Even if ships do resume transit, severe disruption is expected, with schedules taking up to two months to stabilise.

3. Trump’s trade policies spark concerns (20th January)
Following his inauguration, President Trump swiftly reignited trade tensions, threatening tariffs on Colombia, China, Canada, and Mexico. Proposals include a 25% levy on steel and aluminium from Canada and Mexico, with reciprocal tariffs also being considered for UK imports. The potential trade war could have widespread consequences for global supply chains.

4. US air cargo demand under threat (1st February)
Trump’s decision to impose a 10% tariff on all Chinese imports and temporarily suspend the de minimis exemption for low-value Chinese shipments has sent shockwaves through the air freight sector. While the exemption was reinstated, changes to eCommerce regulations could significantly disrupt air cargo flows into the US, which is expected to receive 1.4 billion eCommerce packages this year.

5. New Asia shipping alliances reshape trade (2nd February)
The long-anticipated shift from three major container alliances (Ocean, THEA, 2M) to four key players (Ocean, Premier, Gemini, MSC) is now in effect. Asia-North Europe scheduled liner capacity will shrink by 11%, yet the number of weekly sailings will increase from 26 to 28. These changes will reshape global shipping networks for years to come.

6. European road freight rates stabilising (4th February)
After three years of decline, European road freight spot rates may have hit their lowest point. According to the European Road Freight Rate Benchmark, spot rates fell just 1% year-on-year in Q4 2024. While demand remains weak, cost pressures have kept rates 15% above pre-pandemic levels, with short-term volatility expected.

7. Carriers cut sailings to stabilise rates (14th February)
Shipping lines are aggressively blanking sailings to ease the transition to new alliance schedules and sustain freight rates. Between 17 February and 23 March, 51 sailings have been cancelled across key east-west trade routes, with February’s cancellations rising to 133 from 104 in January. Further capacity withdrawals and a general rate increase (GRI) could follow if demand fails to recover.

With trade disputes, shipping realignments, and geopolitical instability shaping global supply chains, the first quarter of 2025 has already presented significant challenges.

Staying ahead requires proactive strategy adjustments to mitigate risks and build resilience. That’s why we share these insights and why your Metro account management team is always by your side, ready to provide expert advice, share knowledge, and develop bespoke solutions tailored to your supply chain needs.

For high-level support, EMAIL Andrew Smith, Managing Director.

Category: Currency

4PL | Currency | Economics | International Trade | United States

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