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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.


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)

Training Conference 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.

Digital tachos: retrofit now!

I would strongly advise members to consider the views aired in the September edition of ROADWAY concerning the differences between the first and second-generation digital tachograph.

When the digital tachograph was first introduced in May 2006, the European Union issued clear guidance about the relationship between the way analogue and digital tachographs record driving time and how enforcement by member states should reflect this. I refer to Guidance Note 4 to Regulations EC 561/2006 and EEC 3821/85.

The guidance note points out that drivers involved in frequent or multi-drop or stop/start operations may be faced with higher records of driving time when using the (first generation) digital tachograph than would be the case with an analogue tachograph. Compensating for the differences, the EU said that member states could allow up to 15 minutes tolerance over a 4.5-hour block of driving time, provided such claims could be supported by evidence.

At the time the EU said this was because the digital tachograph recorded driving time more accurately than the analogue. We all know that it was because it rounds up driving time to the next whole minute.

The introduction of the second-generation digital tachograph means that the operators of large commercial vehicles now have the opportunity to redress the balance. Operator tests, run in conjunction with the tachograph manufacturers, have proved that there is a profound difference between the way the old and new digital tachographs record driving time. The second generation only records the activity that accounts for the larger part of a minute and there are significant productivity gains to be had, as was illustrated by the trial conducted by RHA member Smith’s of Denny. Operators can retrofit the new tachograph now and, according to the tachograph manufacturers, the cost of doing so should be recouped in a relatively short time. All newly-registered vehicles must be fitted with version two from 1 October this year.

A major aim of the EU’s “Social Legislation in Road Transport” – the legislation behind all of this – was to harmonise conditions of competition between operators. The existence of the second digital tachograph raises the distinct possibility of competing operators being in a position where one would be prosecuted while another does not breach the regulations for the same working practices. As driving time recorded on an identical journey by both types of tachograph can vary up to as much as an hour – favouring the second generation unit and by even more if it is true multi-drop work – there could be legal challenges in the pipeline.

Unfortunately the RHA’s view is that there is very little prospect of VOSA or the DfT being minded to change its policies on enforcement. Currently, the official view is clear: the driver has driven the number of hours that the tachograph fitted to their vehicle says they have driven.

At some point the EU will no doubt issue guidance on this, but that will take some time and will need member states to lobby for it. So our advice to members is retrofitting is the best way to address the current imbalance.

Prepare for new O-licence rules

On 4 December there will be a significant change to the rules regarding operator licencing, with new regulations on admission to the occupation of road transport operator coming into force.

This major development in the industry will be covered in detail at the RHA Roadshows which are running from September to November (see page 9 for details) and members should attend these events to hear how their licences will be affected. We are grateful to transport lawyer Lucy Wood, of Rothera Dowson, who has assisted the RHA in preparing for these events.

The regulations replace the European directive that brought the transport managers’ CPC, rules on financial standing, and the concept of good repute to the UK: the original directive was one of the first pieces of legislation that the UK adopted after joining the Common Market.

As far as professional competence is concerned, the National CPC examination ends and all entrants will sit a combined National and International examination. Existing CPC holders who gained their qualification by examination will retain their certificate but holders of ‘Grandfather Rights’ certificates will have to demonstrate they have either been a transport manager on the same O-licence continuously for 10 years prior to 4 December 2009, or provide signed declarations from previous operators that they have worked for and been a named transport manager during the required 10-year period. Exemptions for holders of certain other professional qualifications will continue.

The new rules for financial standing will require operators to demonstrate that they meet the specified conditions in one of three ways, including annual accounts certified by a properly qualified person. The accounts must follow a specified form and content, including a balance sheet, profit and loss account, and notes on the accounts.

A new business without access to accounts will require a statement by a properly qualified person setting out assets and liabilities or an opening balance also certified by a properly qualified person.

The third type of evidence that will be acceptable is a financial guarantee of some sort, ranging from an overdraft facility to an invoice finance agreement. Please note that the ‘properly qualified person’ will need to include a statement giving personal details and their qualifications.

As far as good repute is concerned, the new regulations allow the Traffic Commissioner (TC) to take direct regulatory action against transport managers who no longer meet the requirement of good repute or professional competence and the TC must declare the transport manager ‘unfit’.

Such a declaration would remain in place until the TC determined good repute or professional competence was restored and the TC would establish what rehabilitation is required for the transport manager to regain his good repute or professional competence.

This could affect companies who use external transport managers because the loss of good repute due to an issue with one company would prevent them from being the transport manager for any others with whom they have a contract.

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.

Road Haulage and Distribution Training Council

A meeting of RHDTC Trustees recently discussed the ongoing schools project that is being funded by the residuary funds held by that body.

So far, the programme has produced:

  • Careers brochures for Scotland and the East Midlands
  • Careers brochures have been circulated and used extensively by 800 schools and colleges within those areas
  • The first comprehensive and independent review of UK careers materials related to the logistics sector
  • The Delivering your future brand and brand guidelines
  • Delivering your future careers website, which has the functionality to become a fully bilingual resource.
  • 40,000 flyers to promote the website.  30,000 printed in English and 10,000 bilingual (English / Welsh)
  • The Made in Chinamaterials, which consist of 3 separate and distinct resources for teachers and students:
    • a Maths resource for 14-16 year olds
    • an Enterprise activity for 14-16 year olds and
    • a careers resource, featuring case studies from the industry.
  • Direct involvement of 79 schools and over 90 teachers.
  • The establishment of a supportive steering group comprised of 9 employers, CILT UK and educationalists
  • The creation of an advisory group consisting of over 70 stakeholders from across the UK
  • Involvement of over 50 logistics companies in the work of the programme

This work is now being taken forward through the development of new case studies and other material, and the promotion of the two websites. The project is being managed by Skills for Logistics (SfL) and has produced some very good material that is being used in schools and the focus has now shifted on to ensuring that the benefits of the programme are carried forward.

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.

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.