Memorandum by The Cold Storage and Distribution
Federation (RH25)
INTRODUCTION
The CSDF is a trade federation representing the interests
of companies throughout the UK who are primarily engaged in the
storage and distribution of temperature controlled food products.
That said, over the past three years, the CSDF's interests have
widened to encompass the entire food distribution network and
has included a considerable amount of work with the Department
of the Environment, Transport and the Regions in developing Key
Performance Indicators (KPIs) for the Industry. The following
submission focuses on the food distribution network which accounts
for over 15 per cent of all road haulage in the UK. However, many
of the points made relate equally to other road haulage sectors.
THE ROAD
HAULAGE INDUSTRY
The Road Haulage Industry is today an indispensable
element of the UK economy without which the entire business infrastructure
would simply collapse. The aspirations and quality of life of
the general public is now wholly reliant upon the ability to move
and distribute raw materials and finished products in sufficient
quantities to meet demand and to ensure that they are at the right
place at the right time. Whilst other modes of transport, particularly
rail and air, have their role, they could never provide the same
flexibility and responsiveness as road haulage. That said, it
is certain that the road haulage industry has not created historically
an effective public relations image for itself with either the
Government or the general public. There are numerous reasons why
this has been the case including complacency and even the perception
that, as an indispensable element of the economy, image was unimportant.
In recent years, the lack of effective public relations effort
has added to the difficulties and may well have heightened the
industry's vulnerability as a target for undue Government attention.
However, we believe that, of late, collaborative work with Government
department such as the CSDF projects on KPIs has started to reverse
this trend.
Whilst it must be accepted that the environmental
impact of road haulage is significant, the private car is a polluter
of much greater proportions and, in a high percentage of instances,
the private car journey is not essential. The road haulage industry
is far from perfect with waste, unnecessary journeys, inefficient
route planning and old equipment still in evidence. However, in
recent years there have been major advances in efficiency, largely
driven from within the industry itself, with the commensurate
environmental benefits. It must be underlined that these have
only rarely been generated by Government measures, particularly
increased taxation, but by a whole range of commercial pressures.
LEVELS OF
FUEL DUTY
AND VEHICLES
EXCISE DUTY
Initially, the industry was pleased when the
Chancellor announced the automatic 6 per cent fuel escalator was
to be abandoned. However, the possibility that it could be re-introduced
has produced a situation of uncertainty, undermined confidence,
effected future planning and capital investment in new equipment.
The year on year effect of the escalator has produced a situation
where derv costs in the UK are over 20 per cent greater than on
the Continent or in Ireland. This has presented a major competitive
advantage to European transport companies who can offer rates
that, to their UK counterparts, would create a significant loss.
Although to date this trend has represented only a small percentage
of overall road transport activity, any road user will be well
aware of the dramatic increase in the last two to three years
of foreign trucks on UK roads. In 1999 alone, we believe that
there was a 25 percent increase in such traffic. In the food sector,
some of the major retailers are now storing imports in bulk on
the Continent and distributing them throughout the UK using foreign
distribution companies. Again, this only represents a very small
percentage of the overall market but it is very attractive in
cost terms and could grow. The flagging out of UK vehicle fleets
has only been seen in a small number of cases thus far. However,
there is evidence to suggest that this trend could grow significantly
once more experience has been gained. All of these factors are
creating a lack of confidence within the UK road haulage industry
and this generates an automatic reluctance to invest. Both the
UK economy and the environment suffer under these conditions.
Vehicle Excise Duty (VED) continues to cause
concern throughout the road transport industry. The reduced levels
of VED for vehicles with a greater number of axles has some logic
in terms of reducing pressure and, therefore, wear on the country's
road surfaces. However, it totally ignores the fact that additional
axles increase payload, they also increase both the gross weight
and fuel consumption. In many sectors, volume is the material
factor and not payload; the food sector is a case in point. Consequently,
distribution companies are forced to order vehicles which have
an excessive payload specification for their needs and use more
fuel in order to attract substantially lower rates of VED which
can amount to over £25k over the life of the vehicle.
A more proactive and flexible approach to VED
is required that takes into account factors such as the type of
operation and the vehicle specification (Euro 2, 3, 4). The structure
of the tax needs to positively encourage the use of equipment
and operating profiles that reduce both particulate and carbon
dioxide emissions.
REGULATIONS GOVERNING
THE INDUSTRY
In this area we wish to focus attention on the
current discussion within the European Community regarding mobile
workers, particularly HGV drivers, and the moves to bring these
workers within the Working Times Directive. Historically, drivers
have been controlled by the Driver Regulations which legislate
for driving time, rest periods etc but do not control working
time. Whilst we support the view that mobile workers, including
drivers, should be incorporated into the Working Time Directive
we contest the approach taken by the European Commission that
this should be on more restrictive terms than non mobile workers.
The Commission's proposals to impose greater restrictions on night-time
working for mobile workers and provide no mechanism to opt out
cannot be justified in terms of improving road safety or driver
effectiveness. Certainly such restrictions would impose major
operational limitations forcing an increase in the number of drivers
required and unnatural shift patterns. Whilst an increase in driver
numbers might, at first sight, be seen as a benefit to the employment
statistics, the reality is that there is already a significant
shortage of HGV drivers in the UK and the forecast is for this
to deteriorate even further in coming years.
For drivers to be subject to the same Working
Time Regulations as their non mobile colleagues is acceptable
but to be penalised because they are drivers is discriminatory
to both the driver and his employer alike and would provide nothing
in the way of safety, environmental, economic or employment benefits.
CHANGES TO
GOVERNMENT POLICY
We believe that improvement in efficiency in
the road transport industry is the key to benefiting both the
economy and the environment. However, efficiency is finite and
cannot be managed until or unless it has been measured. As mentioned
earlier, the CSDF has been conducting a considerable amount of
work over the past three years, sponsored by DETR and in collaboration
with Heriot-Watt University in Edinburgh, to establish Key Performance
Indicators for the food distribution sector. The KPIs, based on
operational data, provide factual evidence of the average standards
being achieved in the core activity areas. It is against these
that companies can judge their own efficiency and competitiveness.
A brochure describing the process and detailing the survey results
is enclosed[28].
To take the concept forward, work is now underway in other sectors
to follow the same approach and develop KPIs specific to sectorial
operations and, thereby, reflect the actual needs of each sector.
In the future we see the KPI becoming the benchmark
by which taxation is levied on transport companies. Certainly
VED and fuel duty could be abandoned in favour of a taxation system
based on a company's performance in relation to the KPIs set for
its particular sector. Clearly, the rate of tax would be on a
sliding scale centred on the KPI as the average. This approach
would produce positive incentives for companies to improve their
efficiency and, where this was not forthcoming, a tax penalty
would be imposed.
Clearly, such as approach would rely heavily
on accurate, auditable and up to date data. Although not practical
at present, with the emergence of automatic data collection technology
through telematics, we foresee that within five years such an
approach to taxation in road haulage would become viable. The
potential benefits to industry, the environment, the general public
and the Government are self evident and without any of the many
drawbacks presented by the simplistic punitive approach to taxation
of the road transport industry that has been the mindset of successive
Governments for over 30 years.
We trust that the above gives the Committee
some food for thought.
J Hutchings
Chief Executive
February 2000
28 Energy Consumption Guide 76-Benchmarking Vehicle
Utilisation and Energy Consumption-published by The DETR Energy
Efficiency Best Practice Programme. Available from the EEBPP Helpline
0800 585794. Back
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