Examination of Witnesses (Questions 160
- 179)
WEDNESDAY 15 MARCH 2000
MR RICHARD
TURNER, MR
JAMES HOOKHAM,
MR DAVID
BROWN AND
MR ANDREW
PARKHOUSE
160. But you do understand that I am actually
giving you a proper quote here, that we are the very best. If
we are the best, how does that exist in quantifiable terms and
why is it that we think foreign operators would not be able to
do just as well? Mr Turner, do you want to give an opinion on
that?
(Mr Turner) We believe that we are the best because
of the quality of our logistic system and we are recognised worldwide
as world class. There is no question, as you travel the world
and talk to companies in different parts of the world, that the
management expertise and the way that we operate is recognised
as world class and cherished by other companies in other parts
of the world.
Mr O'Brien
161. We have received a substantial amount of
evidence of hauliers going out of business because of the increase
in fuel costs. To what extent has that applied throughout the
industry?
(Mr Turner) It does not apply throughout the industry.
Unquestionably, there are parts of the industry that are doing
extremely well and the economy is doing very well. We have a very
benign—I think that is the word the economists would use;
that is the most exciting thing economists can say about the economy—economy
and therefore we have a slow, steady growth. Parts of the industry
are working very well and doing very well, as you would expect,
but other parts of the industry, particularly the small haulier,
are suffering enormous unfair competition from foreign operators
who have a low tax regime and can undercut the rates substantially,
well in excess, in some cases, of 10/15 per cent.
(Mr Brown) In our experience, generally speaking,
the smaller operator has a major problem in his commercial position,
often working at the end of a chain of associations. He does not
always have the ability to recover cost increases from his client
base.
162. To what extent has the recent fuel crisis
been influenced by taxation and fuel costs? That is, the increase
in the price of oil. To what extent has that applied? Prices of
fuel compared to taxation?
(Mr Hookham) I think the increase in the world price
of oil which has been a feature of the past 12 months or so has
only added to the misery that smaller businesses have had to endure.
That of course is a factor that has applied across all countries
and we have seen similar difficulties being experienced by similar
sized haulage companies, not just in the rest of the EU but even
in North America now, where clearly they are experiencing and
needing to cope with those same price increases. Our principal
case is that the recent action of the government in the Fuel Duty
Escalator policy has only compounded the problem of moving commodity
prices. It is a double whammy in that respect. It is an additional
burden which has had to be borne.
163. Are you saying that the influence of oil
prices is the same in France as it is in the United Kingdom?
(Mr Hookham) The commodity cost, yes. It is a world
market and we in the United Kingdom use spot market prices that
arise on the Rotterdam market. That commodity price is something
that everybody has to cope with, certainly in the EU. What is
clearly different—and we have tabulated this in our evidence—are
the levels of fuel duty which are apply in each Member State of
the EU.
164. In view of the fact that the question of
fuel costs and the rise in fuel duty has had an influence, has
that been part of the influence for Exel's decision to move from
providing haulage and distribution services to concentrating on
solutions and consultancy?
(Mr Brown) No, it has not. The decision for us to
operate much more in a supply chain sense was made about five
or six years ago. To be fair, the actual escalation in fuel costs
is not a determinant in that policy.
165. Finally, it has been suggested that the
industry is looking for priority lanes on motorways for HGVs.
Are you aware of that? Is it something that you believe in?
(Mr Turner) The future in the United Kingdom is congestion.
We are facing increasing congestion and one of the ways of solving
congestion, as far as the industry is concerned, is to give the
industry some form of priority on the motorway network.
166. How would you see it applying in view of
the fact that there is this question of congestion created by,
in the main, HGVs? How would you see the priority application
applying?
(Mr Turner) I do not think I would like to accept
that congestion is caused by HGVs. I imagine you expected me to
say that. The lorry fleet is very small, fewer than 500,000 vehicles,
compared with the car fleet, which is over 23 million vehicles.
The lorry fleet in fact is smaller than it has been in recent
years.
Chairman
167. If you ever travel on the M6, you would
have a little difficulty in sustaining the argument that the lorry
fleet does not constitute at least quite an element in congestion.
(Mr Turner) I agree with you, on the motorways, and
is that not exactly where we want the lorries to be, not through
our towns and cities?
Mr Bennett
168. Reversing one of your members' big lorries
into some of the properties in our urban areas does not exactly
make the traffic flow.
(Mr Turner) Absolutely not. That is a very good point,
getting lorries in and out of city centres in a way that is compatible
with the environmental needs of that area, and often there is
no point in the lorry going if you are going to destroy the area
by making it uncomfortable for people to shop, because presumably
that is often why the lorry is going. I would like my colleague,
James Hookham, to mention some of the work that we are doing to
try and solve those problems in urban areas.
Chairman: Can we come back to that? I think
you will find that you will not escape quite as lightly on the
question of congestion.
Miss McIntosh
169. Now that cabotage has been opened up, would
you make an estimate of the amount of United Kingdom haulage which
is carried by foreign, non-British, European carriers on our roads?
(Mr Turner) It is not a question that we have a detailed
answer to. It is something which is currently being surveyed by
the DETR to try and find an answer to that question. One in ten
of the heaviest vehicles on our roads today is a foreign vehicle.
Chairman
170. What are we talking about? What was the
fleet number you just gave us?
(Mr Turner) There are about 70,000 of the heaviest
vehicles.
171. You are saying one in ten of those?
(Mr Turner) One in ten of those on the roads is a
foreign vehicle. There are 4,000 vehicles a day coming into this
country, across the Channel.
Miss McIntosh
172. Are they concentrated in one particular
area or is it spread across the country?
(Mr Turner) There are more in the south-east and the
south, as you would expect, because that is where most of them
come across, but they do extend right up into Scotland.
173. Would you say it was two-way traffic, that
they were going from this country, plying cabotage routes in other
European Union countries?
(Mr Turner) We do not know the answer to that question.
There is cabotage carried out by our operators but the extent
of that is something we do not know.
(Mr Parkhouse) We operate both in the United Kingdom
and in Europe and we have companies in most of the countries in
Europe. Cross-Channel traffic is not something we do very much
of. We do very little of it but we tend to operate fleets in the
regions that we are talking about.
Chairman
174. Would you give us an example? You have,
what, a subsidiary company in France and one in Germany?
(Mr Parkhouse) We have Exel in France, Germany, Spain
and Portugal.
175. Are these self-sufficient companies with
a holding company at the head?
(Mr Parkhouse) Yes.
176. I do not mean this in a pejorative sense,
but would you in effect have access to the amount of business
carried out by those subsidiary firms that was cross-border business?
(Mr Parkhouse) We could certainly look into it for
you.
(Mr Brown) The reality is that in nearly every country
that I have had experience of, which is certainly Benelux, through
France, into Spain, the vast majority of our operations are single
country operations and they are nearly always with long established
commitments with smaller hauliers. We are not in the business
of awarding the spot hire, general haulage sort of business to
incoming hauliers.
Miss McIntosh
177. Have members of either Exel or the FTA
considered flagging out? Is there any evidence that there has
been substantial flagging out?
(Mr Brown) We rejected the idea almost on day one.
(Mr Turner) Flagging out is one of the issues that
has possibly been one of the biggest wastes of time in the industry
in recent months because it has proved to be legally difficult
and operationally difficult, apart from a few selected companies.
As far as we are concerned, it is not a productive avenue to follow.
178. Can I put a question to Exel and ask them
to help the Committee to understand the difference between logistics
and haulage?
(Mr Parkhouse) When we did our basic research about
four years ago, we researched the market and asked them what they
understood by "logistics" and by "supply chain
management". There was huge confusion over the use of the
word "logistics", which seems to mean anything to everybody.
You see vehicles which are literally market gardeners with their
single vehicle with "Fred Bloggs Logistics" on the side
these days. The difference is between haulage and supply chain
management—in brackets "logistics"—where
that is dealing with the whole of the supply chain from the start
right through to the end. It begins with the raw material and
it helps to manage that raw material until it gets to the final
point of sale. That is the supply chain as a whole. That is the
management of it and that is what "logistics" originally
meant.
Mr Bennett: Does that mean you can actually
make money out of things not moving as opposed to moving?
Chairman: Do not be tempted down that road.
I want to move on.
Miss McIntosh
179. Is there a concern by either Exel or FTA
that eastern European drivers are plying the road haulage trade
in this country, perhaps for British companies, and is there any
evidence, if they are, that they are trained to different standards
to British drivers?
(Mr Brown) On behalf of Exel, we do not have any experience
of that.
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