Profitability, compliance, sustainability

 

The RHA’s Board of Directors recently confirmed a new five-year strategy for the Association. We will focus on three priorities for the industry: profitability, compliance and sustainability – and we make no apology for putting profit first.

We know that our members are in business to make a profit, and we will be working very hard during 2013 to support companies in that aim. As part of that work, our Board recently decided to cancel the membership of any business that reaches a formal agreement with its creditors and to look extremely closely at their trading patterns in the months or even years prior to the agreement before accepting any application to have the membership re-instated. The issue of ‘phoenix’ companies has long been a thorn in the side of the industry, and that is why the RHA will be discussing the performance of directors of insolvent companies with the Senior Traffic Commissioner as the year develops.

Compliance remains a key issue, and the UK should be rightly proud of the generally good safety record that British-operated trucks have demonstrated over the years. Our view is very simple: as long as there are those who deliberately or repeatedly flout the law, the attention of the enforcer (VOSA) and the regulator (the Traffic Commissioners) should be focussed on the non-compliant, leaving those operators who put a great deal of effort into getting it right to go about their business without being distracted. Needless to say, our industry and our operations are technically complex, so occasional contraventions may occur, but it should not be difficult for a reputable firm to demonstrate simply and quickly a culture of compliance that will be acceptable to both VOSA and the TCs.

Sustainability is high on the government’s agenda and therefore is important to the industry, but we have a good track record of managing carbon dioxide output – even though we talk in terms of fuel consumption. Our priority for 2013 is to show the legislators this is our way of tackling the issue, even if it doesn’t fit with their language.

I hope that everyone has the dates 10-12 April in their diaries for a trip to the Commercial Vehicle Show at the NEC in Birmingham. An excellent event is expected, with wide-ranging representation from all aspects of the industry and, at the time of writing, we have over 350 exhibitors who have taken space.

The Euro 5 versus Euro 6 argument will no doubt be high on many people’s agenda; and operators will be deep in conversation with manufacturers about lead times, fuel consumption and, of course, prices. We are also delighted to see trailer manufacturers well represented at this year’s show and there is bound to be interest in progress with the longer semi-trailer trial. Last year’s show saw a few of the first examples, so this year we will be able to compare notes and experience.

 

Geoff Dunning
Chief Executive

 

If it doesn’t pay, walk way!

In the November edition of ROADWAY I highlighted the dangers associated with the very low haulage rates currently, and regularly, being offered in the UK.

I recently attended the first Commercial Vehicle Forum. Organised by the CV Show Partnership, much of the debate focussed on unsustainable haulage rates and one statistic stuck in everyone’s minds. Motor Transport’s latest analysis (July 2012) showed that the average ratio of profit to turnover in the top 100 UK haulage companies is down to a frightening 1%. Two panel members – Wincanton and ABE Ledbury – confirmed that getting customers to pay sustainable haulage rates was a real problem for both large and small hauliers.

Long-term RHA member and author of the RHA Cost Tables, Brian Fish of DFF International, says that obtaining higher rates is, without doubt, the most critical issue facing the haulage industry today. One of his, and my, biggest concerns is a culture of ‘one-rate-fits-all’ that has become the accepted norm and is used widely by operators when quoting for work. Brian says: “There is no such thing as a ‘fits all’ rate per mile. Rates should be calculated by determining: the time required (wages and overheads) covered by a standard cost per hour; the distance covered at a standard cost per mile (fuel, tyres, R&M and lubricants); any job-specific costs, such as subsistence and tolls; plus a margin of profit.

“These costs mix together in infinitely varying proportions, leading to rates per mile which depend on miles covered in a given period of time.” (See table)

I am fully aware that the gulf between calculating sustainable rates and actually getting the customer to pay is often massive. In France, following tariff deregulation in 1987, the haulage industry went into meltdown as the drivers’ unions took action over working time and pay. The deregulation led to excessive internal competition, which squeezed haulage rates and pay. So is there a place for a national minimum haulage rate in the UK?

To get rates back up to sustainable levels – and we must do before more haulage businesses go to the wall – something has to change. I believe the industry must adopt a common approach when calculating and agreeing rates. At the Commercial Vehicle Forum, Andy Boyle (AEB Ledbury) said on the subject of rates: “Dare I say, maybe the time has come to adopt the mantra of if it doesn’t pay…walk away!” Now that is a challenge if ever I heard one. But if you all did it, the buyers of haulage would soon get the message.

The motorway and trunk road network provides the haulage industry’s delivery and collection routes and the efficient operation of that network is essential to the industry. However, it is plagued by delays and disruption, as every morning’s traffic news demonstrates. Each morning there is a list of traffic jams caused by accidents, roadworks, adverse weather or simply the number of vehicles that use the road. In fact, there are many locations where congestion is such a fact of life that it doesn’t even merit a mention on the bulletins.

We all know there isn’t enough cash available to build roads which can cope with the peaks we see across the country but there are dozens, probably hundreds, of places where relatively modest investment could bring dividends in the shape of reduced jams and delays. To name a few: the M6/M1/A14 junction has caused massive delays for years and only recently has the government re-issued proposals to improve this junction; the A43/M40 junction is laid out in such a way that delays are inevitable, forcing the northbound and southbound A43 flows generated by the M40 to cross. This is madness, but there are no plans to improve it.

I am sure members have their own ‘hit list’ of locations which are crying out for improvement, so the government’s apparent intention to publish a consultation document soon on what the network should look like and how it will be funded is welcome. But I’m not holding my breath.

Geoff  Dunning
Chief Executive

Roadway November 2012

On the first page of November’s ROADWAY operator profile (pages 46 – 49) our intrepid reporter, Bob Tuck, assures readers that the magazine isn’t getting on its soapbox about the green agenda.

Talking about one of the key drivers behind the success of a Bootle-based bulk tanker operator he says: “Terms like ‘reducing our carbon footprint’ have come more into vogue and, while initially they may have been mooted by the politically correct ‘global warming’ fraternity, the idea is something the logistics world should not only adopt, but also champion.

“This isn’t ROADWAY getting on its high horse but simply an echo of the beliefs of Steve Granite, MD of Merseyside-based Abbey Logistics Group.” Granite goes on say: “If you are more environmentally friendly, then you are more cost effective. Cut out waste and you cut down on cost.”

Very wise words I hope you will agree. I didn’t intend to make this edition of the magazine all about reducing: the amount of energy we consume; the amount of pollutants we produce and the number of empty miles we run. But as you read our reports about: The IAA Commercial Vehicle Show; the road test of Daf’s XF105 460 ATe 40 tonner; the Abbey Logistics Group profile; the Clayton/Don-Bur twin cargo semi-trailer and Michelin’s latest tyre offering, you should begin to realise that our industry has gone green.

If you missed that particular boat, I suggest you get paddling and catch it up quickly, because if you don’t you will not be able to compete in the brave new world of road transport and logistics. Thinking back to Bob Tuck’s thoughts about ROADWAY and soapboxes…he was wrong. We are on one.

But ‘Going Green’ isn’t just about climate change or stopping the Maldives from disappearing beneath the waves. These considerations are none the less important – I don’t want to loose my favourite holiday destination – but what ‘Green’ means to you is using fewer resources, working more efficiently and ultimately spending less to achieve more. And that equals remaining competitive, generating bigger profit margins, growth and securing your future. Things many hauliers have been struggling to do over recent years. Yes lobbying for a fairer deal from government also has its place, but the clever time and money is being invested in the new technologies, which can help hauliers and logistics companies – not just in the UK, but also across the globe – tackle the biggest challenge…spiralling fuel costs.

But as ever there is a spanner in our works. And it isn’t the obvious one. It is the UK’s Annual Investment Allowance, or AIA. Reduced from £100,000 to £25,000 in April, Jack Semple expertly points out (on pages 26 and 28) that small to medium sized enterprises (SMEs) in our sector have dramatically reduced the amounts of capital they are willing to invest in their companies. For example, rather than buying new ‘Green’ fuel-efficient trucks they are renting to cover shortfalls or to avoid replacing fleet. This in turn means fewer older trucks are being taken off the roads and the expected pull forward of Euro 5 truck orders prior to the Euro 6 implementation in December 2013 has not happened…yet. And unless SME hauliers can change their approach they could miss the boat while the rest of Europe grabs all the production slots.

The RHA is calling for the government to do something to stimulate the SME sector and help it invest in its future.

Returning to the theme of ‘Going Green’ it is in this area where the investments should be made. SMEs are the backbone of this industry and the economy. If they miss that boat we are all in trouble.

Peter Shakespeare
RHA Publications

We must have ethical supply chains

This is not an easy column to write and many people might feel uncomfortable with the content. But there is an elephant in the room that the road freight sector ignores at its peril.

Everyone in the supply chain has a responsibility to ensure that loads are carried by operators who take their obligations seriously and they must understand that, should the worst case happen and a vehicle be involved in a fatal crash, the role of original consignor and every contractor in the chain will be investigated. How many organisations choose to turn a blind eye to the way that loads are carried in their name? How many organisations take the necessary steps to ensure that fully-compliant operators carry all the loads that are carried in their name?

The trade press has recently featured a number of items referring to comments from various quarters about very low haulage rates which are currently – and regularly – being offered. Through the RHA’s four councils around the country, I hear such reports at almost every meeting. This is an issue that is neither new nor surprising, but what it represents should concern every customer and every haulier in the country, large or small – RHA member or not. The fact is that the levels of some rates being offered mean that the work these relate to cannot be done legally if it constitutes the majority of work that an operator is doing.

We all know that jobs which are below cost are sometimes justified because they, at least, reduce the cost of re-locating a vehicle: operators have to make a judge-ment call about such work. The problem is that some operators appear to rely on this kind of work and are therefore running at below cost most, if not all, of the time. 

In such cases the operator is faced with the unpalatable choice of going bust or cutting corners by operating illegally and, regrettably, some choose the latter. This should of course be kept in proportion, and I am not suggesting for a second that such behaviour is commonplace – far from it.

The vast majority of operators in the industry make strenuous efforts to operate legally, but the fact is that a small minority
of operators who do cut corners deliberately put both road safety and the survival of other, reputable businesses at risk.

VOSA and the Traffic Commissioners have roles to play here: VOSA should be identifying the serially non-compliant and giving the Traffic Commissioners the evidence they need to take these people
out of the industry and the RHA will campaign for more effort to be devoted to such action. But customers must understand that compliant haulage has a price and the industry must also do all it can to put its own house in order. If it doesn’t pay, walk away.

Geoff  Dunning
Chief Executive

Staff skills levels: What do you expect?

Any company, large or small, relies heavily on its staff. Every employee can affect the performance of the business – its profitability and relations with customers in particular. So what do expect from your staff? Obviously, you will expect personal qualities such as honesty, punctuality and reliability, but what about skills?

Skills for Logistics (SfL) is going to try to answer this question through a number of groups which were launched in London recently. I have been invited to chair the Drivers’ Group, and a number of RHA members have already volunteered. I have also asked the Freight Transport Association and the Chartered Institute of Logistics and Transport to nominate people to help with this vital work.

The first meeting will take place on 4 October and we will welcome volunteers. If you are interested please contact Vicki Ball at SfL on: vicki.ball@skillsforlogistics.org

The work will also cover the full range of occupations within our sector with groups including warehousing, fleet management and international operations. Each group will be chaired by a different organisation in the industry. Again, please contact Vicki if you are interested in occupations other than drivers.

SfL has changed significantly in recent years, with government funding now being handed out on a project-by-project basis, as SfL – like all sector skills councils – is expected to be self-funded in future. You may have heard of some of the projects it is currently dealing with, such as the development of a Logistics Academy and a Logistics Guild.

The Academy is a unique partnership between logistics companies, government and other key stakeholders, including logistics training and skills development specialists. Being a one-stop-shop, service will be key to the Academy’s success by ensuring that employers can quickly find relevant training solutions to meet their business needs.

The Academy will help employers to develop solutions to address skills which are unique to the logistics industry, and will tackle many of the long-term problems the sector faces in maintaining a skilled workforce and continued business success. In addition, the national network of Academy Licensed Partners will provide high-quality, demand-led solutions that meet employers’ requirements.

The Logistics Guild will be launched shortly and is designed to attract, retain and develop new entrants, helping people to identify what sort of jobs require their skills, so they can map career development and help employers find the people they want for their businesses. Like all the projects that SfL has been commissioned to carry out recently, they are designed to be self-funding in future: driven by employers and delivering what employers want.

The RHA is indirectly involved in SfL’s work, as the majority of the organisation’s contact is directly with employers. For more information see: www.skillsforlogistics.org

Geoff  Dunning
Chief Executive

Fuel Alarm Bells Ringing

The combination of a planned fuel duty increase in August and inflated crude oil prices – resulting from tension in the Middle East – has set the alarm bells ringing…Again.

Headlines warn that fuel prices could hit £1.65 a litre within weeks, with the potential of a three pence duty increase to follow in August.

The price of crude oil has been pushed up thanks to our beloved financial types, gambling on the price of a barrel increasing further. The problems in the Gulf with Iran could mean that our ‘friendly’ supplies could be curtailed because of Iran’s influence over the Strait of Hormuz. 20% of the world’s oil passes through the 53km wide seaway. The speculators and hedge funds are buying up crude like there is no tomorrow; in the hope they can profit once the price increases further. That causes shortages, which inflates the price. Have you seen all the oil tankers parked off the coast of South West England and Wales? All full of oil waiting for the price to go up. What this means to you and me is for every £1.26 increase in the price of a barrel of crude, we pay an additional one pence per litre at the pumps. A far more volatile influence than planned duty increases.

Almost 60% of the pump price in the UK goes to the Chancellor and your association, along with FairFuelUK has been doing a great job lobbying to ensure he doesn’t get any more.

But the problems facing diesel and kerosene consumers are far more wide- ranging than gambling city types and a government in love with easy revenue from fuel duty.

But there is another and possibly more significant threat. You all know that there is a noticeable price difference between petrol and diesel. In the main it is to do with refining capacity. Even if we can get our hands on the crude oil, Europe and the UK’s ability to turn it into diesel cannot match demand. And the major oil companies simply aren’t interested in changing that. Why? Because while it costs us more to buy imported diesel, it costs them less if it is produced and refined outside Europe, enabling them to make bigger margins.

40 years ago the UK and Europe was fuelled largely by petrol. Our North Sea crude is perfect for producing it and so our refineries were built to service an overwhelming demand for it. Since then diesel has become the fuel of choice for 50% of car and 100% of commercial vehicle users and we simply don’t have the capacity to refine the quantities required. A new crude oil cracking tower costs around £500 million and as there are limited margins in refining, the oil companies and refinery owners either aren’t prepared to, or can’t afford to invest.

Add to this the fact that oil refineries are closing – Europe lost several in January as a result of the collapse of Petroplus – and matters just get worse.

Whether the government can do anything about it is a moot point. Yes it could soften the impact of inevitable fuel price increases over the next few years by reviewing the amount it taxes the sale of fuel; after all there has to be a limit how much it can and should take. But many would argue that the damaging increases – in diesel prices especially – would not be a result of a government’s actions, but from global influences and an acute lack of domestic refining capacity.

Thanks to the slow down in the U.S and European economies the demand for diesel has fallen. The BRIC nations are using up the global surplus to fuel their rapidly expanding economies. But once the demand for diesel returns in the West to pre-recession levels – which it eventually will – this combined with increased demand elsewhere in the world will result in shortages, compounding our problems even further.

Maybe the government can come up with a way to combat this threat. I hope so because by the end of the decade running a diesel powered vehicle in Europe could quite feasibly become the preserve of the rich. And everything we buy will be much more expensive or even unavailable because of the cost of delivering it.

Charging Heavy Goods Vehicles

The above headline is the title of a recently published consultation document in which the DfT puts forward its proposals to impose new charges on all heavy goods vehicles in excess of 12 tonnes GVW. It is a key part of the government’s commitment to take steps to level the playing field between UK and non-UK hauliers and is therefore welcome.

The charges will be graduated according to the existing bands for Vehicle Excise Duty (VED) purposes, ranging from £85 to a vehicle in band A to £1,000 for vehicles in band G (these are typically 2+3, maximum weight artics). The rate for a 3+3, six-axle artic will be £640.

Most importantly, the consultation document spells out the government’s commitment to ensure that any HGV user charge imposes no additional cost overall for the greatest possible number of UK road transport operators. In doing so, they have to work within the legal framework imposed by European Union (EU) rules. The proposal suggests that in introducing the new charges for all trucks over 12 tonnes GVW, the current rates of VED for UK trucks will be reduced to at, or just above, the minimum levels dictated by the EU. By linking the new charge to the existing system of VED, it will minimise the administrative burden on UK operators by allowing the application and payment processes for both to be aligned.

The RHA has been concerned for some years about the impact of foreign trucks on the UK haulage industry, has repeatedly drawn government attention to the volume of foreign trucks on our roads, and has drawn both public and political attention to the fact they contribute little or nothing to the cost of providing and maintaining our road network. This unfairness has continued for far too long and the proposed new charging regime is a welcome first step. But it is no more than a first step which will impose some charges of non-UK trucks and will therefore add to the costs of our foreign competitors, while not adversely affecting our members.
In considering this proposal, we are mindful of the EU’s Transport White Paper: Roadmap to a Single European Transport Area – Towards a competitive and resource efficient transport system which proposes wide-ranging changes which could result in compatible road charging systems, harmonised EU rules and a restructuring of fuel taxes, as well as seeking the abolition of all restrictions on cabotage and improvements to the core network of principal routes across Europe. Such moves are controversial to say the least, but they are the way the European Commission is thinking.
Needless to say, the RHA is monitoring progress on these proposals very carefully and will be seeking government support if we see measures being brought forward that will disadvantage our members.

Filling the gap for Trainers and Instructors

Filling the gap for Trainers and Instructors

Would you be interested in a unique opportunity for Instructors and Trainers from across the industry to attend their own conference at a central location?

There is currently no national venue for Trainers within the Transport industry to gather and hear the latest news and views on related topics. We aim to fill that gap!

2012 is the year that DCPC “comes of age”. After all the gossip and guesswork, those who have been delaying involvement are now waking up to the reality that this is an ongoing requirement. This year presents an unequalled opportunity for the Training sector to build on its successes.

Much has been written about the few “rotten apples” that have latched on to the latest Training requirements, but very little has been publicised about the many successes. Hard working Trainers who have honed and developed their skills to ensure their delegates and customers gain the full benefit of structured, worthwhile training deserve to have their voices heard.

The conference will accentuate the positives gained and discuss ways to achieve continued improvement.

Continued Professional Development is an essential element of a successful Trainer’s progress and the conference will provide an excellent opportunity for Trainers to acquire further knowledge of trends and developments.

The conference is open to In Company Trainers, employees of major training companies and small operations who wish to keep abreast of the changes and developments in the training field ,with a particular emphasis on Driver CPC and anyone who has a genuine interest in professional training developments.

What are the subjects being discussed? (Subject to speaker availability)

• Driver CPC and O Licence Compliance (Traffic Commissioner)
• HSE’s view of the importance of Driver Training (Nick Ratty – Head of Transportation unit HSE)
• Driver CPC progress review and future plans  (Liz Heaton – Senior Post Test Operations Manager DSA)
• Some facts, figures and trends  (Guy Chamberlain – Head of Post Test Op’s DSA)
• Importance of Driver training/Driver CPC’s long term future (Government spokesperson)
• A case study of successful DCPC implementation (Chris Watcham – Health & Safety Director, Mobile Mini UK)

RHA National Training Conference

Commercial Vehicle Show 2012

2012 is going to be a big year for UK hauliers. You will be the ones who, quite literally, will be delivering the 2012 Olympics. Not just to the nation’s capital, but to all the other venues around the country which will be hosting events.

And if you’re not involved with or affected by the Olympics, life will still go on. Road haulage has always been a very accurate economic barometer for the rest of UK plc because if manufacturers are producing the goods, farmers are growing crops, retailers are selling products, or builders are constructing houses or offices, we are meeting the vast majority of their freight transport needs.

Road transport is always going to be high on everyone’s agenda and top of the list for those involved in road freight transport has to be the Commercial Vehicle Show 2012 and Workshop 2012, which will be held at Birmingham’s National Exhibition Centre from 24 – 26 April 2012.

As chief executive of one of the show’s partners – the others being the Society of Motor Manufacturers and Traders (SMMT) and the Institute of Road Transport Engineers (IRTE) – I am particularly proud of the Commercial Vehicle Show.

On that basis, I am delighted that bookings for the 2012 show have already surpassed expectation. We now have 260 exhibitors booked: that’s a 48% increase compared with this time last year and equates to 23,000m² of exhibition space booked. Again, that’s up 43% year on last year.

This is great news for us as the only UK trade association focusing solely on road freight transport; and also for the industry on which the rest of UK plc is almost totally reliant.

However, the Road Haulage Association won’t just be at the 2012 CV Show for fun.We have a responsibility to be there, for our members in particular and for the industry as a whole. We shall be fielding a team of experts on every aspect of running a haulage business from training and tachograph analysis to fuel savings and insurance. From employment issues to technical matters, there is no area of the industry that we can’t cover.

In 2011 Transport Minister Mike Penning accepted my invitation to visit the CV Show to meet RHA members and also see the vast range of products and services supplied by the exhibitors. Such was the success of his visit that I have already invited him as my guest to this year’s show and, although I am waiting for official confirmation, I am very hopeful that he will be joining us once again.

The strength of the RHA comes from its staff and its membership. We take great pride in our ability to help and advise members on any issue or aspect of their particular operation. So please, if you come along to the show, make sure you visit us on stand 3A40. Even if it’s just to say hello, it will be great to see you.

Challenging but rewarding year

This year has been interesting and challenging, but once more the RHA has been particularly effective in representing its members.

It is a pleasure to list just some of our achievements. In no particular order, there is no doubt that we established effective liaison with Transport for London (TfL) in promoting our sector in the run-up to the Olympics and we have developed a much improved relationship with the Department for Transport (DfT) and a better working relationship with the Deputy Senior Traffic Commissioner and VOSA.

We were delighted with the Commercial Vehicle Show’s success and were equally delighted to show Transport Minister Mike Penning around as our guest. Furthermore, Penning’s decision to allow full service truckstops on motorways was a direct result of our campaigning. We also persuaded the DfT to introduce extensive relaxations to the enforcement of drivers’ hour’s rules because of last winter’s severe weather.

It was a pleasure to see the inclusion of several RHA lobby points in the DfT’s road safety strategy, including reducing the time the police take to investigate serious accidents on motorways. We have also been pushing the case for recovery operators to be able to use red lights and hope this will bring results early in the new year.

Other positive news from the RHA’s work representing the industry include raising the profile of fuel theft in the press and other media, and successfully arguing against the introduction of mandatory carbon reporting as a requirement of haulage contracts with large aggregates companies.

One area where we have seen real success is in our objections to four Operator Licence applications, including one of Ireland’s largest hauliers. The RHA stands out in having a policy of exercising our statutory right to object in the public interest and this is something we will continue to pursue whenever we have clear evidence that can support a formal objection.
We continue to develop the many services we provide to members and expand the benefits that members have simply because they have joined our Association. Our new-look website is a great improvement on what was already a great asset to the RHA and one feature of the site – the Find-a-Load section – is being improved.

We also launched RHA Smart Safety, which has been well received by those members who have taken advantage of the service, and our new Red Flag credit checking facility –  which offers exceptionally good value for money – includes a number of checks which are free for RHA members. RHA Training continues to offer the very high quality service for which it has become known and in 2011 I was delighted when we completed ISO9002 accreditation for that aspect of our activity.

Finally, a review of 2011 would not be complete without reference to FairFuel UK. As a result of our campaigning in early 2011, every litre of fuel bought since 1 April has been five pence cheaper than it would have been, and we have just seen Parliament unanimously agree that fuel price increases must be avoided.

The year started with one success on fuel duty. Now we have another and pledges of infrastructure investment on deregulation. Your RHA helped to achieve this.