Road Haulage Association

Haulage Industry News

Haulage rates…Unreasonable penalty charges and getting paid!

 

There has been a fair amount of coverage in the trade press recently relating to major haulage users who unilaterally extend payment terms, effectively using their transport suppliers as banks.

This is totally unreasonable and we urge members to resist this sort of action. As if that is not bad enough, there are also more and more cases of delivery and collection sites imposing charges of up to £1,000 because of the alleged failure of the carrier to be there on time; present a load in sound condition or some other issue such as the driver having a bad haircut.

Again, we urge members to resist having to make these payments unless there is a reasonable case for doing so and there is a similar arrangement when the third party causes delays to your vehicle.

For far too long we have simply accepted unreasonable impositions that add cost without any compensation in the form of increased haulage rates. But now we are getting more and more examples of a shortage of vehicles, with customers – increasingly acting through clearing houses – having to ring round to find someone with vehicles available. Do not accept rates that you are not happy with and do not accept unreasonable penalty charges unless there are clear and documented arrangements for payments when there are delays to your vehicles.

Returning to the issue of getting paid, there is a little light at the end of the tunnel, in the shape of moral support at least, from the Government, which recognises that many large customers do not treat their suppliers reasonably and are trying to encourage a prompt payment culture. There is a Bill in Parliament – the Small Business, Enterprise and Employment Bill – which includes provisions that directly apply to large public sector contracts and will require larger companies to make a declaration about their payment performance. It has been the case for some time that Government contracts include a prompt payment arrangement but that approach rarely cascades down the supply chain beyond the prime contract holder. There is now some hope that we will see that change, with hauliers involved in work related to major public contracts getting paid promptly. The other provision – regarding companies reporting their payment performance does not guarantee quicker payment but it should help to develop a new payment culture. We certainly hope so. The fact is that a large proportion of your costs have to be paid out long before you receive payment from your customer – with fuel and wages being obvious – and delaying these payments is not an option.

Clearly the decisions to accept any given rate or payment period is a commercial one, and one that has to be left to individual operators, but bear in mind the fact that the cost of financing your business will increase if your customer takes longer to pay and that increased cost should be reflected in the haulage rates that you charge. Supply and demand is such that there are opportunities to stick to your guns on rates – don’t accept anything less than you believe to be the right rate for the job.

 

Geoff Dunning

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