It's one of the country's pivotal industries and it faces enormous challenges. Derek Broomfield, head of Braintree, (Essex) based Transport Training Group, Novadata and a leading expert on all aspects of the road haulage industry has outlined his growing concerns for the future of the UK road transport industry. He predicts that this will be the year when the current difficulties it is experiencing, including the constant stream of new legislation coupled with the recent austerity measures, will really hit hard.
"It's going to be tough, really tough. The position of the road haulage industry is that irreparable damage is being inflicted on its members by the government's transport taxation policies, in particular on fuel and vehicle excise duty (VED). The transport industry is the backbone of the economy. Efficient distribution of goods and services is absolutely central to the success of the UK economy. If it's not moved it can't be sold."
Road freight is the dominant form of transport in the UK domestic market: it accounts for 68% of freight moved and 83% of total tonnes lifted. 95% of road freight is transported by large goods vehicles, which are those over 3.5 tonnes gross vehicle weight.
It is an industry both diverse and fragmented, ranging from the owner drivers with a single lorry to specialist hauliers of, for example, bulk liquids, to large fleets with the well known names. But road transport impacts on every industry sector; every company depends on the industry for its supply chain.
In total there are just over 50,000 businesses and between them they operate around 425,000 vehicles. There are approximately 90,000 holders of operating licences, whereas in 2008 there were over 98,000.
Although there are a number of very large companies, until very recently it was an industry sector in which the small company predominated. According to the Road Haulage Association (RHA) the vast majority of businesses - have five or fewer vehicles. Just over half (57%) have only one vehicle. Back in 2000-2001, the average fleet size was 3.7 vehicles.
The number of UK haulage firms has fallen far below levels recorded in 1999 and is continuing to decline with the amount of goods being carried falling significantly. This fall derives from the difficult economic climate the UK has experienced during the past two years. The downturn has caused a large decrease in LGV activity across the UK and is clearly linked with the lowered output suffered by the manufacturing and construction industries. In addition, reports indicate that during 2009/10 there were fewer UK hauliers travelling to Europe, while the number of foreign vehicles on UK roads increased substantially. Recently published statistics show that over the past ten years there has been a 20% loss to foreign road transport businesses. The lowest number of UK registered LGVs since 1992 were recorded last year, 'a worrying statistic', says Broomfield.
He also points out that there will be major changes in the next five years which will further increase the burden on hauliers. Prime amongst these will be the introduction of tolls on motorways to control congestion. The London congestion and low emission charges were the first of a whole series of new tolls and charges that will eventually be introduced across the country. Road user charging could well be the end point and this would hit firms in this sector extremely hard.
The road transport industry is also understandably facing pressure to become more environmentally friendly. Greener vehicles, greener practices and fuel efficiency will make a positive difference to pollution but their implementation will place even more financial strain on operators.
The Landscape
The haulage sector has repeatedly had its profits squeezed by significant margins, as a result of increasing diesel costs and fuel duty. Fuel costs and taxes now amount to up to 35% of the running costs of a haulage business. Just recently, outraged hauliers revealed they were planning a possible protest blockade against the new price rises, which have seen the cost of diesel, soar past 133p a litre at some garages. 132p a litre is the equivalent of £6 a gallon. Further increases now seem immanent.
LGVs are not cheap in themselves (£65,000 to £90,000), insurance costs are substantial, and vehicle excise duty (VED), operators' licence fees and associated ongoing training all lower any profit margin.
In the UK, jobs in the sector suffer from a negative image, and as a result many firms find it difficult to recruit staff, despite the fact that driving is not badly paid. The average salary is around £24k. The demand for qualified drivers is pushing labour costs upwards. Inevitably, this will have repercussions for hauliers who will have to pass on the increase in overheads to the commercial sector.
Meanwhile, the demographic of employees is changing. The average age of the qualified LGV driver is 55 and rising. This is resulting in a shortage of trained drivers which looks likely to increase as we move towards 2014. To address this situation the industry is attempting to encourage school leavers/ 18 year olds to pursue a driving career.
However, the inescapable truth is that this critical industry is failing to attract new young recruits. It is seen as an unattractive career path; professional drivers feel undervalued in the UK and believe that their status is low as far as public perception is concerned. There remains little understanding that the 21st Century professional driver faces a vehicle jam-packed with the very latest technology, designed to be used by experts with a high level of proficiency. This, along with knowledge of the complexities of Drivers Hours' Law requires a constant training and updating schedule. Today's drivers also have to be highly skilled in all the techniques required to manoeuvre a vehicle in confined spaces as well as driving long distances on motorways.
Sadly, drivers feel underpaid and receive little if any recognition of the conditions in which they are forced to work. If you compare work situations, how many employees would be prepared to work a 9 hour day whereby after 4.5 hours, you have to stop and take a break, where due to the nature of the work, this break is often taken as one driver explains: 'in urine sodden lay-bys with no facilities'. They believe, expectations of people's tolerance are far too high; many drivers feel it's an insulting/degrading situation. It is hard, but highly responsible work.
Licensing Legislation
The other factor frequently ignored is the added burden of new and what is often considered excessive legislation. The Driver Certificate in Professional Competence (Driver CPC) is one of the biggest changes in the transport industry since the LGV driving test was introduced in 1969. It was brought in after the introduction of the digital tachograph five years ago.
These successive changes have further undermined driver confidence and deter new recruits.
In future, just holding a vocational driving licence will not be sufficient for someone who wishes to drive such vehicles for a living. Employers now have a legal responsibility to ensure all new drivers they employ hold the correct certificate and licence.
The EU Directive 2003/59 that introduced the Driver CPC came into force across all European Union member states on 10 September 2008 for bus and coach drivers and 10 September 2009 for lorry drivers. Its implementation heralds yet another sea-change for the transport industry. The new qualification involves drivers undertaking 35 hours of periodic formal driver training - effectively five full days - over a five-year period. In order to maintain their Driver CPC, all category C and D licence holders will be required to undertake 35 hours Periodic Training every 5 years.
Derek Broomfield opines: "The Driver CPC is a major challenge for the transport industry. Whether a firm operates one vehicle or 100 this new legislation will affect their business. It has been estimated that the Driver CPC will impact on 750,000 drivers in the freight industry alone and will require around 5,000,000 training hours annually."
After September 2014 those who don't hold the qualification will not be able to drive. Figures recently released by the DSA show that only 296,000 of the estimated 750,000 vocational drivers have started any Driver CPC training. Operators who fail to carry out a proper validation check can be, and have been, prosecuted for 'causing and permitting'. Traffic Commissioners can also call them to task over what is considered to be a matter of repute. Employers also have legally enforceable responsibilities for the training and actions of their drivers. Understanding and implementing the law is a joint responsibility and failure to do either can result in prosecution and/or the suspension/loss of the Operating Licence.
In a recent survey carried out by Commercial Motor, 36% of operators said all, or nearly all, of their drivers have undertaken their first 7 hours, while nearly a third (32%) said none of their drivers has undertaken Driver CPC. With regard to the second 7 hours, the percentage reporting none doubled to 64%. Only 11% reported that more than half their drivers have undertaken their second batch of CPC training. What also emerged was that hauliers in agriculture were the least engaged group with legislation.
Broomfield explains: "Although existing drivers will not need their CPC until 2014, it's inevitable that there will be a rush for Driver CPC training towards the end of the first period of five years. Training remains competitively priced at present but this will not be the case by 2013/2014. And thus he warns: "We anticipate demand for training rising rapidly as the 2014 deadline draws closer with inevitable consequences in terms of supply and costs."
For new drivers the situation is even more demanding. They have to take attain an initial Driver Certificate of Professional Competence in 4 modules.
1. Theory & hazard perception - 2.5 hours (100 multiple choice questions -19 hazard perception clips).
2. Case study - 1.5 hours (7 case studies - 50 questions).
3. Driving practical test - 1.5 hours.
4. Driver CPC practical test - 30 mins (5 topic areas - must score 80%).
Broomfield points out that frequent new legislation causes confusion within the industry. For example, many companies are unaware that some of the goods they are transporting now fall into the dangerous goods category and that they should have a Dangerous Goods Safety Advisor. There is also lack of understanding regarding compliance.
Penalties
Road checks used to be a random process. Now, largely due to the information revolution, the Vehicle and Operator Services Agency (VOSA) provides a range of licensing, testing and enforcement services with the aim of improving the roadworthiness standards of vehicles ensuring the compliance of operators and drivers, and supporting the independent Traffic Commissioners. VOSA enforcement teams are armed with highly sophisticated computer technology which allows them to instantly view information. Number plates can be viewed electronically etc. VOSA issue graduated fixed penalties which work as effective sanctions.
But here, as elsewhere in the economy, the pressing issue for the industry is competition from Eastern Europe. The UK market is highly regulated, with organisations such as the RHA constantly updating their monitoring of the industry. In contrast, companies from the EU's new member countries - who also benefit from lower fuel and labour costs - are almost entirely unregulated.
Many UK freight operators allege that increasingly foreign operators enter the country with vehicles not always meeting the proper road safety standards and thus fall through the net of surveillance and monitoring. Drivers do not always comply. Problems can range from unrectified mechanical defects, the falsifying of records and repeat offenders being let off. UK Operators are subject to an Operators Compliance Risk Score which involves VOSA recording every infringement which in due course can impact on the Operator Licence. This doesn't affect Operator Licences issued in another country. Hence many argue that compliance by British operators is much higher. And that means more cost.
Drivers need to prove that at the start of every working day they have ensured:
Vehicle is not overloaded
All the appropriate documentation needed for the journey is in place
Driver has undertaken a walk round check.
The Future
In July 2008, a Transport Select Committee report warned that ministers must do more to help British hauliers compete against lorry drivers from the Continent. The report highlighted the discrepancies in fuel costs with UK haulage firms paying thousands of pounds more for fuel than their European counterparts. The report also said that the government was too slow to help road hauliers. It called on ministers to produce a clear plan which would be good for both the environment and the industry.
Broomfield concludes: "Increasingly, there is an alarming trend for individual owner operators to simply move out of the industry, as it faces one of the toughest times ever. Whilst other trades can change strategy, haulage contractors have to sit and suffer.
"Importantly, Driver CPC is focussing the industry's thoughts on how to get the best from a legal necessity. Designed to encourage safer and more fuel-efficient driving, we believe the new qualification will continue to raise standards and help to bring an improved professional and positive image to the industry. We hope it will turn a spotlight on professional drivers and underline their ongoing commitment and dedication to improving road safety.
"While budgets across the public sector are being slashed and money remains tight in the private sector, organisations should continue to invest in effective training and digital technology to maintain professional development of skills and compliance. If investment is axed they will find they become less efficient and costs actually escalate. The best thing for us is hearing from our customers how our training has made a real positive difference to their operations and profitability."
To this end, a sustainable, modern, and efficient transport industry that accepts the competitive challenges under fair and equal conditions and therefore makes a significant contribution to the growth of our economies by providing mobility is indispensable.
It is now urgent for the government to produce an environmentally-aware and business-friendly freight strategy that will work for the national economy.