Road Haulage Association

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Turnover is vanity – profit is sanity…

… I suspect that many people have heard that saying – it’s been around for years. I also suspect that many might think that profit is difficult if not impossible in the current climate, with fuel prices at record levels and customers very reluctant to accept rate increases that pay the higher diesel bills or, for that matter, other cost increases such as wages and insurance.

Having said that, the published accounts for some firms in the industry make interesting reading, with decent levels of profit being reported in quite a few cases. The trade press also publicises success stories as well as the spectacular failure of some high-profile and well-known names. We are now something like 30 months into recession, with no clear and substantial evidence of recovery, so demand for our members’ services is probably at an all-time low, but the number of vehicles available, and the number of businesses competing for the work, have both declined.

We eagerly anticipate the publication of the Traffic Commissioners’ annual reports, as they will show how much of a decline there has been. We know there was a drop of some 3.6% in vehicle numbers from 2009 to 2010, although the drop in restricted licensed vehicles was higher than in standard licences. But how big has the drop been in the past 12 months? In the last six months, my visits to RHA council meetings suggest we are reaching a stage where there are real shortages of certain types of vehicle and, in some markets, bringing supply and demand for haulage into a better balance than has been the case for some years.

Perhaps we are now in the situation where real negotiation can take place rather than customers offering work to operators desperate for business on the basis of ‘that’s the rate, take it or leave it’. Perhaps we are even in the situation where RHA members are able to ‘leave it’, because they know there is enough work out there, and there is no need to accept whatever a customer might be willing to offer.

But, despite being in a stronger position, it is no use getting plenty of work at rates that might seem very attractive if the customers pay when they feel like it. A member once said to me that things were so bad that even the customers that don’t pay had stopped giving him work!

We are not in that position now, but it goes without saying that getting paid is absolutely central to making a profit. It is clear that some members are better at this than others. Get the basics right: agree terms in writing, invoice promptly, chase up overdue payments and check the credit rating of every customer regularly so you get fewer nasty surprises. This is common sense, but is it common practice?

The All Party Parliamentary Road Freight Group

This meeting, Chaired by Rob Flello MP, considered a number of current issues, starting with a proposal for the insurance industry to make the Motor Insurance Database available to the Police at the site of crashes. The Police could then contact the insurer who would ensure that an operator’s preferred recovery company is called out whenever possible, and would deal with such issues as special loads including livestock or dangerous goods. The insurer would also be able to contact the insured – if not at the site – allowing a claim to be opened much quicker than normally. The insurance company would then be better place to limit any additional costs that would inevitably be passed on to the operator. This could have real benefits for hauliers, as it may reduce the cost of recoveries and storage.

The meeting then went on to discuss the issue of foreign vehicles and steps that might be taken to address the imbalance between the UK and other EU countries’ vehicle operating costs. It is clear that the Government are keen to make some progress with the Coalition’s aim to tackle the issue of unfair competition from foreign hauliers, but that the scope for action is limited. Previous efforts to design an effective Lorry Road User Charging Scheme proved unsuccessful so the DfT is now looking at a time-based scheme that will impose charges on a daily, weekly, monthly and annual basis. The RHA has always maintained that any scheme must be simple to operate and cost neutral as far as UK companies are concerned. We expect formal consultation on the Government’s proposals to start this summer.

Finally, the meeting discussed the challenges that result from the Olympics next year. This massive event – and the associated events such as the Queens Diamond Jubilee and the Paralympic Games – will bring significant disruption to the streets of London for several months next year and trade and industry must start planning now to deal with it. A large number of issues were addressed, including the limited road space that will be available because of the Olympic Route Network, the substantial number of temporary and amended loading and access restrictions that will apply, the need for consignees to be aware of limits that the delivery industry will be subject to and the difficulties that recovery companies will face in getting to incidents. Transport for London, who are now responsible to making the transport network work during this period, have assured RHA that they are aware of the concerns being expressed and will be working very hard to resolve them as soon as possible.

VOSA Chief Executives’ Meeting

This meeting concentrated on VOSA’s Business Plan for 2011/2012. This is based on four “pillars” – Testing and Inspection, Licensing and Authorisation, Enforcement and Supporting Industry. RHA is pleased to see strong emphasis on VOSA’s three main roles: we are keen to see improvements to the HGV Testing scheme and proper consideration being given to operators’ needs when taking forward the plan to open more Private Testing facilities whilst at the same time closing their Test Stations.

The RHA strongly supports the Operator Licensing system in the UK, believing that it has produced one of the safest haulage industries in the world. A central element of O’ Licensing is the independent Traffic Commissioners (TCs), and, whilst we recognise the need to ensure efficiency and good service from the administrative support that VOSA provides, it is essential that there is ‘clear blue water’ between VOSA and TCs. The plan also includes a reference to a Service Level Agreement with the Traffic Commissioners, which has not yet been signed off and is a cause of some concern because of the potential for a clash of interests within the TCs’ system. The third ‘pillar’- Enforcement – is an absolutely essential part of VOSA’s work, so the emphasis that the Business Plan puts on this area is welcome. The Plan sets out to identify “…drivers, operators…” against whom it may be appropriate to take action for non-compliance, describes how they will do that and what sanctions might result for those who are found to be offending.

The fourth ‘pillar’ – Supporting Industry – includes five work streams, each of which has some significance for the industry. The first is enforcement and this complements the enforcement issues mentioned above by seeking to identify trends in non-compliance in order to produce a plan to educate those most likely to fail to comply. VOSA are looking into some form of accreditation for the many and varied quality assurance systems that are used across the industry, the trade bodies, including RHA are exploring with VOSA how we might promote higher compliance standards in those areas identified as above and a communication plan is being developed to encourage higher compliance standards. Finally, work is being done to ensure that the statistics that are produced by VOSA are relevant and can be used to identify why some operators are less inclined to comply with the vast range of regulation that affect us all.

The meeting concluded with a brief discussion about the potential for a Compliance Forum that would bring together the full range of bodies involved in maintaining and improving standards in the industry. This is in the early stages of development and RHA was asked to come forward with affirm proposal as to how it might work.

Trade Association Forum – Chief Executives’ Lunch

RHA Chief Executive, Geoff Dunning recently attended a private lunch for some 12 people with the Minister of State, Department for Energy and Climate Change (DECC), Charles Hendry.

DECC lead on this area, but RHA also works closely with DfT. Interestingly, the DECC’s wide ranging carbon study makes quite a lot of reference to transport in general and freight in particular, mention is made of “eco-driving”, but there is no reference to modal shift, with long distance freight being referred to as a potentially significant user of bio-fuels as a way of reducing CO2 emissions.

Deliver UK: long list of concerns

The price of oil and the high level of duty continue to cause high fuel prices in the UK, which bring many challenges for RHA members. With RHA support FairFuel UK will continue to campaign, building on the substantial foundations established in the first three months of this year.

A key element of the success of that campaign was the significant number of MPs (over 140) who signed up to support our aims and it was very encouraging to hear that quite a few RHA members had written, e-mailed or met their MP. The next step is to build on that by consolidating the contact made and widening the agenda to cover the many other issues that the road haulage industry wants to see addressed.

In broad outline, and in no particular order, our campaigning is being taken forward in respect of standards and enforcement, vehicle utilisation and efficiency, roads and congestion, customer and modal choice, parking and security, carbon measurement and reporting and reducing red tape. The detail takes up many pages, but these are all issues that must be addressed if the commercial and regulatory environment in which we operate is to be improved.

One encouraging point is the sympathetic hearing we are receiving from the government. Across departments, particularly the Departments for Transport and Business Innovation and Skills, we are gathering clear evidence of the problems and explaining practical solutions that address concerns in both industry and government. We are not going to get our own way in every case, but well constructed arguments supported by established facts can and will win the day.

With that in mind, it was a pleasure to welcome Mike Penning, the Minister for Freight, who accepted an RHA invitation to attend the recent Commercial Vehicle Show at the NEC and to visit a number of exhibitors. The show was a great success, with a substantial increase in exhibition space and visitor numbers compared with last year’s CV Operators’ Show.

It was also a real pleasure to see so many members on our stand and to chat with them about their concerns and views. We also welcomed a wide range of people, including a small delegation from Australia, including the chief executive of the Victorian Trucking Association and the organiser of the International Truck Trailer and Equipment Show, which takes place in Melbourne. They were very impressed by everything they saw and heard: a real compliment from genuinely independent observers. It was a great three days and we really look forward to next year.

Five pence relief – the war on fuel duty goes on

The price of fuel you are buying today is five pence per litre lower than it might have been due to the campaigning work of the RHA and its partners through FairFuel UK.

This saving is because of the cancellation of the ‘escalator’ of one pence, the postponement of an inflation rise of three pence and the reduction in duty level of one pence. It is a great victory for the industry.

It has to be said, though, that the price of fuel is still high and might go higher, and the rate of duty in the UK is still much higher than most of Europe, so this represents the winning of a battle – the war on fuel duty goes on.

One central feature of the FairFuel UK campaign was the number of MPs who signed up to support us (more than 140) and that was largely as a result of individuals contacting their MPs demanding action. The government clearly felt enormous pressure which led them to act. Having built this firm foundation of support in Parliament, we must build on it and keep the momentum going. RHA members are rightly sceptical about letters to MPs, but I have an excellent example of why this is so important. At the height of the campaign to canvas MP support, I wrote to an MP who I know has an interest in the road haulage industry setting out the RHA’s concerns. His reply was: “I’d be happy to reply in detail about my views on this (or any other issue for that matter) to any member of the RHA who lives in [the constituency]. The best way to get answers from MPs is not for us to receive emails like the attached but to hear directly from our constituents.” Needless to say, we have arranged for a number of his constituents to write to him.

It is also important to stress that any members willing to put pressure on their MPs will get full support from the RHA. Our staff will help members, including attending meetings and preparing briefing papers. You are not alone and the combined strength of the RHA and its members can become a powerful political voice in Whitehall and Westminster.

Yes, the price of fuel is still high and causing problems for many members and their customers. Yes, the level of fuel duty is still too high, and is the primary cause of the high price of diesel in the UK. And yes, the price of fuel is not the only issue the RHA must tackle, but at long last we have implemented a concerted and effective, industry-wide campaign and ensured that the government doesn’t just listen, it acts. The fight goes on!

April 2011  RHA Chief Executive – Geoff Dunning

Our plea to the Chancellor

The RHA will be taking part in the presentation of a petition to 10 Downing Street on 2 March and I hope that you have signed up to the FairFuel UK campaign, which is also supported by the FTA and a number of other organisations.

In addition to the petition, we have been working with these organisations to increase pressure on the Chancellor to cancel the planned 1 April duty increase announced last year, which is subject to confirmation in the March Budget Statement.

This increase is not 1p – as has been regularly and mistakenly reported in the press – but is planned to be Retail Price Index (RPI) linked, plus 1p. We all know that this measure of inflation has been rising steadily and reached 5.1% on 15 February. Duty is currently 58.95 pence per litre, so a 5.1% inflationary increase will be 3p – plus the 1p extra, making a total of 4 pence per litre! Needless to say, if inflation carries on rising, as many forecasters expect, the hike in fuel duty will be even more.

RHA action has included a massive amount of media coverage, with large numbers of RHA members and staff being interviewed by the press, ranging from national TV stations to local newspapers. To every single one of you who has got involved in this work, please accept my gratitude. Your help is a great example of cooperation.

Now is also the time for members to contact their MPs, telling them how important it is that fuel duty does not rise by any more. I am often told that members have been in touch with MPs who know little about our industry: that is all the more reason for you to write, setting out how many voters are involved in your firm and how important your business is to the economy in their constituency.

The Chancellor will make his Budget statement on 23 March and we hope it will be good news. We know that the government is in a very difficult position and it has to mend the nation’s finances. We are equally sure that massive increases to the price of fuel when the economy is so fragile puts at risk the economic recovery that the UK so badly needs and threatens growth in the private sector which will pay the taxes required to balance the books.

It is not too late to help prevent yet more increases in fuel duty – especially critical at a time when diesel is already at record prices because of high crude oil prices caused by pressures in the global markets and by the sterling/dollar exchange rate.

The RHA wrote to the Chancellor before Christmas asking him to reconsider the increase. A great deal has happened since to persuade him to change his mind. I hope he does.

March 2011

RHA and members: a powerful team

As I write this, the price of fuel is very close to the all-time high of £1.09 pence per litre plus VAT reached in January 2008. Oil prices have risen in the last two weeks, so it is likely that the price of diesel will have risen further by the time you read this.

The RHA has joined with the FTA in supporting FairFuelUK, a campaign that is intended to press the government to drop plans to increase duty by about three pence per litre in April – the actual increase is one pence plus inflation, whatever that might be at the time – and to introduce some sort of mechanism that brings stability to fuel prices. Some may argue that we are fighting a losing battle, as the government is in severe financial difficulty and needs every penny of tax that it can get, but we do not agree.

Our position is based on the fact that the haulage industry needs to be recognised for the key part it plays in the UK economy and that pushing our costs higher and higher, through both oil price increases and fuel duty rises, simply adds to the problems that the economy faces, making recovery less likely and slower.

We all know that the price of fuel is not the only problem we face. If the diesel price was to drop dramatically, customers would quickly be calling for rates to be reduced – as some contracts do automatically. Some sectors of the haulage industry already face severe competition against the many foreign trucks that travel our roads, who do not pay a penny towards their development and maintenance, and use fuel that is not taxed to anywhere near the same level as that sold in the UK. And we all know there are far too many hauliers who are even now prepared to slash rates in a desperate attempt to keep their wheels moving, and even to keep their business afloat for a bit longer before the inevitable insolvency.

The RHA has never lobbied, and will never campaign, solely on the subject of fuel prices, but this issue is at the top of most people’s agenda now, so we make no apology for trying to persuade the government that an ever-increasing price for diesel will damage the UK. We have been urging politicians and officials to respond and wrote to the Chancellor of the Exchequer before Christmas drawing this issue to his attention and looking for action.

What can you do? Please go to website: http://www.fairfueluk.com and sign the online petition. Please ask all your friends, family and business contacts to do the same. Also, please get in touch with your MPs and tell them just how much damage the high price of fuel will do to your business and to the economy. Together, the RHA and its members have a very powerful voice and now is the perfect time to make it heard.

FEBRUARY 2011

Working with government

It was a real pleasure to see the Secretary of State for Transport visiting our offices in Weybridge. As our local MP, we had already met Philip Hammond at a constituency event, but his acceptance of an invitation to visit the RHA and to be interviewed for ROADWAY gave us an opportunity to question one of the key decision-makers for our industry.

One refreshing aspect of his comments was the way that he readily acknowledged an old-fashioned view of the industry when he took up his post. More important was his recognition, having met hauliers, that ours is an industry which is often cutting edge and sophisticated and plays a key role in the UK economy. Such a change in opinion only comes from exposure to the realities of the modern road haulage industry, and we were delighted when he made the point that getting in touch with local MPs is a very effective way of lobbying.

This is why the RHA is developing Deliver UK, which will encourage members to get involved in a comprehensive programme designed to change the attitude of MPs and government.

The Transport Secretary made it very clear that the industry must embrace the concept of being “green”. Given that the vast majority of CO2 emissions in our sector come from using diesel fuel, there is little doubt that the “greening” of road haulage can be a win-win situation: burning less diesel means cost savings as well as producing less CO2.

We have seen some of the big players in the industry claiming to be green, and their contracts often impose similar obligations further down the supply chain. But how much of this is window dressing? How many times do so-called green companies force hauliers into inefficient operations for their own convenience? How many loads are shipped when the vehicle is well below capacity for spurious health and safety reasons? How many times is the transfer of freight from road to rail a glorified publicity stunt, which actually produces more CO2, not less?

We know there is a need to produce less CO2, but please can we have a degree of common sense? Can we have less box-ticking and more real action that genuinely does see the win-win situations that benefit hauliers as well as their customers?

Finally, it was also reassuring to hear that Mr Hammond is progressing with plans to level the playing field when it comes to foreign trucks. We hope that such a scheme does not affect the huge sections of our industry that do not face foreign competition. We also hope that the government does not overlook the fact that the compliance standards of foreign firms often falls way behind the UK operator. That is just as important to the level playing field as a road-user charge.

DECEMBER 2010

Awards Lunch is great success

The RHA’s first Awards Lunch was widely regarded as a great success. We had more than 250 people in the Grand Connaught Rooms to hear a wide-ranging speech from our chairman, listen to the new Logistics Minister Mike Penning, and find out who had won each of our five new awards. RHA chairman Andy Boyle pulled no punches in reminding our principal guest of the industry’s concerns, focusing on the very poor state of much of our road network. He described our roads as “crumbling before our eyes” and very few of those present would have questioned that.

I would like to say how pleased I was that the day ran so smoothly and was so well received by those who attended. Congratulations to Chris Seaton, Kate Gibbs and Peter Shakespeare for their achievement in bringing the awards lunch together and making it so enjoyable for everyone who attended. I know times are very hard in the industry at the moment, but it is good to let our hair down sometimes, and the fact that so many people came along made it more than worthwhile.

You will find the list of award winners on page 12 and, while it might seem unfair to single out one for special mention, I do want to congratulate Val Smith on winning the Unsung Hero Award. Val chaired the RHA from 2003 to 2005 and anyone who knows her will agree that she is one of the most unassuming, charming and bravest “movers and shakers” in the industry.

In the opinion of the judges, much of what she has done for the industry has not received the recognition it deserves. When campaigning publicly for a better deal for her local members in Northern Ireland, she did so at considerable personal risk. She has given selflessly of her time to the RHA for many years, all while running and growing her haulage business, Bondelivery. And everything she has done for the haulage industry, especially in Northern Ireland, was achieved while bringing up a young family.

For many of those who attended, the highlight of the day was hearing from Mike Penning who, as Minister for Logistics, is without doubt one of the most important people for our industry. It is he who will make the significant decisions on new and changed legislation, so it was particularly interesting to hear what he had to say. The Minister’s speech covered a wide range of subjects, and we were very pleased that he chose our event to make the formal announcement that the Driver CPC regulations would not be ‘gold-plated’. That is a welcome sign that the government is listening, as was the clear commitment to tackle the issue of unfair competition from foreign hauliers. We await further details of their plans with great interest.

NOVEMBER 2010

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