Friday 28th Oct 2016 - Logistics Manager

Jam today: jam tomorrow (probably)

When the government – perhaps influenced by the gremlin-plagued German automated “Maut” system for truck road user charging – decided to put LRUC in the too-difficult basket, at least for the foreseeable future, the two main industry associations, the Freight Transport Association and the Road Haulage Association acted quickly to set up the Burns Enquiry.

The Burns Enquiry is just about wrapping up its programme of hearings up and down the country.
Two salient facts have already emerged that competition for business from foreign operators is a serious problem in pockets of the country, chiefly in and around major seaports and that foreign operators are costing the UK around £195 million a year in wear and tear, which they currently do not pay for.

Burns enquiry participants have suggested some sort of daily charge should be levied on foreign trucks coming into the UK, to compensate for the fact that foreign operators do not pay either road taxes or the UK’s high levels of duty. On the face of it, this is a workable idea – the Germans, Belgians and Dutch used to make hauliers from other countries pay for a vignette tax sticker before the electronic Maut system was introduced.
Other than this idea, the only other hope on the horizon are some faint glimmers from Brussels, with transport commissioner Jacques Barrot’s confirmation in October that the EU would have another look at harmonising commercial diesel duty in early 2006, though it must be remembered that fiscal harmonisation among EU members is notoriously difficult to achieve and that an earlier attempt to do much the same thing in 2002 has just been included in the recent cull of ‘problem legislation’.

However, this is at best a long-term aspiration, even if it finally makes it onto the statute book. It will be a long time, if ever, before that elusive level playing field is achieved. In the meantime, the foreigners will become a fact of life in many sectors of the haulage industry. Already, the Brits are a smallish minority in their own international haulage market with a share of around 25 per cent or so and, if the early soundings of the Burns Enquiry are to be believed, foreign operators are even making inroads into domestic cabotage markets in some areas of the country.
The Burns Enquiry found that one immediate effect of foreign competition was instability in the haulage market. Customers were no longer willing to sign up long-term contracts, preferring instead to take their chances in the ‘spot’ market in case of a cheap offer from a foreign operator.
With traffic heavily skewed in favour of imports into the UK, often from East and central European countries, such export loads as there are may often be entrusted to foreign operators looking for a return load – not necessarily to their home country but to somewhere along the way.

As if all this was not enough, the industry is beset on all sides but what can only be termed ‘stealth’ taxes as more local politicians decide that charging vehicles to come into certain places at certain times is a good idea. The London Congestion Charge, introduced in 2004, is already being extended both in terms of the basic charge and the area it covers. Soon, all vehicles – barring a very limited number of exempted low emission types – will be paying a basic £8 to enter an area stretching from Kensington in the West to the eastern fringes of the city of London.
True, truck operators are not being singled out for the Congestion Charge, but unlike car drivers who have the choice of switching to bus, train or taxi, most truck operators have no choice but to enter the central zone, many of them on a daily basis. Transport for London, instigator of the C-charge, says that operators have gained from reduced congestion and shorter journey times, but it is very hard to quantify this one way or the other.

It is in fact very hard to separate the exact effect of the London congestion charge from the many other factors that affect business, despite the protestations of some retailers like John Lewis that it has discouraged car-borne shoppers. It’s also unlikely that the charge will have a direct effect on business location decisions, if only because most businesses do not directly operate transport themselves. Arguably, also it is only one of many other aggravations of running a transport business in London – draconian parking regulations or slow and unpredictable traffic, for example. However, given the industry’s poor record in passing on cost increases to customers, it could squeeze margins and push a few haulage operations out of business.

The counter-argument, according to Transport for London chief Peter Hendy, is that the freight industry has most to gain from reduced congestion.

In many ways, the congestion charge has though been as a success in terms of cutting general congestion and pollution and the worry for the freight industry is that other cities might be tempted to follow suit. Although no other cities have firm plan yet, there have been suggestions for a Greater Manchester scheme, for example. The nightmare scenario must be for a patchwork of different congestion charges – all with slightly varying operating times and rules and regulations.

The proposed London Low Emission Zone is another idea that could end up being emulated outside the capital – especially as one of its effects may to be to push older, more polluting vehicles out of Greater London (the LEZ would cover a much larger area than the C-Charge, basically the entire area within the M25) into other areas – tempting other urban areas to introduce their own LEZs to prevent a sudden influx of old, dirty vehicles displaced from London.

Arguably, the London LEZ is a bit of a paper tiger – it’s only the older, more polluting lorries that would be caught. However, nobody knows this for certain, as the fine details of the scheme are still being negotiated, even though the LEZ is now barely two years away
Trucks that do not conform to the LEZ limits will still be allowed to operate within the zone, but at a price.
No one is sure what the charge will be for non compliant trucks, though some of the figures suggested have been pretty alarming – perhaps £200 a day or more.

But operators cannot be certain – everyone is expecting a jolt to the pit of the stomach but no-one can tell when or how it might arrive.