Memorandum from the Freight Transport
Association (FTA) (FT 33)
KEY MESSAGES
— The effectiveness, availability,
reliability and cost of freight is a vital determinant of UK economic
competitiveness.
— Freight transport is constantly improving
its environmental performance and has already achieved substantial
gains—though as always more can be done.
— There is an increasing need for international
movements due to the restructuring of the economy.
— National HGV movement levels are
now stable—it is private car use that is expected to increase
in the years ahead.
INTRODUCTION
The FTA
1. The Freight Transport Association represents
the transport interests of companies needing to move goods by
rail, sea, road and air. These include retailers, exporters, pharmaceutical
companies and others. FTA members consign over 90% of the freight
moved by rail and over 70% of sea and air freight. They also use
over 200,000 goods vehicles—almost half the UK fleet.
Contents of Evidence
2. This written evidence responds to the questions
set out by the Committee in their press release announcing the
inquiry into freight. Firstly, we have set out our view on the
broad policy context freight is operating in. Then, to help explain
how the logistics industry works and the issues affecting it we
set out an analysis of issues in the three aspects of the supply
chain: international, national and local. Finally we address the
remaining issues raised by the Committee that are not dealt with
elsewhere in the document.
FREIGHT: THE
POLICY CONTEXT
3. Several major reports are currently the setting
the guiding principles for freight policy.
4. The Eddington Report sets out the crucial
role for transport in broader economic context. The Report underlines
the restructuring of the UK's economy in recent years and the
resulting off-shoring of manufacturing to Asia. These changes
have led to re-engineering of UK distribution and supply chain
patterns—and thus the increased need for international gateways.
The needs of business for improved inter-urban routes for freight
movements were also highlighted. The Report indicated that efforts
should be focused on incremental improvements rather than grand
new schemes.
5. Eddington referenced, and was influenced
by, the Stern Review on the Economics of Climate Change. This
report identified relative economic costs of measures aimed at
managing the transition to a low-carbon economy. The Review took
the view that the priority in transport is to bring down the costs
of low CO2 technologies so that they are competitive with fossil-fuel
alternatives.
6. The Barker Review set out proposals for reforming
the English planning regime to promote infrastructure investment.
The restrictions in the planning system were one of the factors
identified in Eddington restricting the UK's international competitiveness.
The proposals set out in the Government Planning White Paper implement
the proposals of Barker, including allowing the conclusions of
Stern to be a core part of co-ordinated plans on the UK's infrastructure
needs going forward.
Facts and Figures
— UK industry spends £70 billion
per year on transporting goods by road and rail.
— 45% of every thing we spend on transport
is spent on moving goods rather than people.
— Just over a quarter of a million
people in the South East of England are either directly or indirectly
employed by logistics.
— ONS Annual employment survey for
2006 shows that distribution and transport (all modes as well
as supporting activities such as cargo handling and warehousing)
employs almost 1 million workers in the UK. This represents 5%
of all UK jobs.
— Approximately 309,000 people currently
work as lorry drivers and 212,000 as van drivers.
— Skills for Logistics estimates that
there are 15,000 unfilled lorry driver vacancies.
(sources: ONS Annual Survey of Hours
and Earnings 2006, Skills for Logistics).
7. Finally, the recent Commission for Integrated
Transport (CfIT) report Transport and Climate Change sets out
a package of measures including cost efficiency, fiscal and best
practice to meet the challenges of climate change. For freight,
the report sets out how the use of best practice and practical
regulations can achieve significant reductions in transport's
emissions levels—helping achieve the goals of Stern without
compromising the ambitions of Eddington.
8. As can be seen, these four key reports are
integrated with each other, and FTA is in the happy position of
supporting all of them. Through these measures the UK's economic
competitiveness can be improved, whilst at the same time delivering
substantial reductions in pollution.
Facts and Figures
— Overall carbon dioxide emissions
from HGVs have been broadly stable since 1995.
— HGV fuel consumption (km/l) has improved
by 11% since 1990, this whilst vehicle manufacturers have been
meeting mandatory air quality improvements set by Europe.
— Freight fuel efficiency (measured
in tkm/l between 1990 and 2005 has improved by 22%. This indicator
captures improvements in vehicle fill, vehicle payload and reductions
in empty running.
(source: DfT Transport Statistics GB).
9. FTA commends these documents to the Committee,
and urges that they form the basis of public policy in the years
to come.
ASPECTS OF
THE SUPPLY
CHAIN
1. The International Supply Chain
10. As set out above, Eddington underlines the
vital role the international supply chain is playing in the UK
economy. Off-shoring of production is generally anticipated to
increase further in the future, enhancing the importance of this
aspect of the supply chain to the competitiveness of the UK economy.
11. There are three ways for goods to reach
the UK: sea, air and now land—the Channel Tunnel.
12. Sea continues to be the dominant mode for
the UK's international trade—amounting to around 95% of
the UK's visible trade. The priority for the future economic competitiveness
of the UK is "unitized" freight—ie containers.
The UK is increasingly relying on imported manufactured goods
which are overwhelmingly moved in this form. This is especially
true of imports from the Far East. The priority ports for these
services are located in the Greater South East of the UK (Southampton,
London and Felixstowe) as these are the potential "Ports
of Call" for ships coming from the Far East. The UK is currently
experiencing severe congestion at its container ports. Short sea
container trade with Europe is also crucial—this utilises
ports such as Dover as well as others more widely across the UK.
It is also an alternative (though inferior) supply line for goods
from the Far East through "feeder" services from continental
ports.
13. Freight traffic through the Channel Tunnel
accounts for about 4% of UK trade. The use of the tunnel for freight
has remained static in recent years due to unsustainably high
fees for rail freight movements.
14. The volume of freight travelling by air
is very small—around 0.5%[42]
of the total. However, it has a high value—about 25% of
the UK's trade by value.[43]
Air freight has a disproportionate importance as it serves industries
which are core to the UK's economic future as a service economy.
These include the key industries such as electronics, telecoms,
financial and business services. Air freight also serves industry
where urgency is a key factor—pharmaceuticals and biotech
industries as well as food products are heavy users of air freight.
Reliability and predictability are also key aspects for such industries.
Due to the increased sourcing of goods from abroad use of air
freight will increase—this will be key to the UK future
economic prosperity as outlined in the Eddington Report. The majority
of air freight is carried in the belly-hold of passenger aircraft,
rather than on dedicated freight services.
Facts and Figures
International freight:
— The GB consumer is increasingly reliant
on imported goods. Between 1983 and 2003, the volume of international
freight (imports and exports carried by international sea and
air freight) lifted increased by 50% whereas the volume of domestic
freight lifted within the GB (road rail water and pipeline) increased
by 20% over the same period.
— The volume of imports moving through
GB ports has increased by 60% and the volume of exports has increased
by 20%.
(source: DfT Transport Statistics GB
and Maritime Statistics).
Air freight:
— One fifth of all UK exports (by value)
are carried by air but only accounts for 0.5% of international
tonnes lifted.
— 2.37 million tonnes of freight were
loaded and unloaded at UK airports in 2004, this compares to 1.59
million in 1994—an increase of 50%.
— Growth in air freight is constrained
by the availability of capacity on passenger flights. The majority
of air freight and parcels (around 70%) is carried in the baggage
holds of passenger aircraft rather than on dedicated freight planes.
— Two thirds of the volume of UK air
freight is handled via Gatwick and Heathrow alone, accounting
for 80% of total air freight value. All London area airports take
75% of the UK's air freight although this has declined from 82%
in 1994 as a result of more use being made of regional airports
such as Manchester and Prestwick.
(sources: Civil Aviation Authority, DfT
Transport Statistics Great Britain).
Issue: Port capacity
15. The UK's major container ports are current
severely congested due to continuing growth in international containerised
trade. This is resulting in increased costs through lack of competition,[44]
and severe delays on both the ship and land side of ports.
Recommendation: Planning Reform. FTA recommends
the Committee supports the proposals set out in the Government
Planning White Paper. These reforms are vital for the UK to get
the international gateways it will need in future. These proposals
would be a significant step forward to providing the UK with the
transport infrastructure it requires for the "free movement
of goods".
Recommendation: Government support for inland
infrastructure. The UK Government is highly unusual in not funding
100% of inland connections for ports[45]
and this makes investing in the UK's ports a less attractive option
than it would otherwise be. The Committee should recommend that
the Government use their final Ports Policy Review document to
set out their commitment to funding rail and road connections.
Issue: Security measures
16. Increased security measures for sea and
air freight post September 11th have caused delay and increased
cost to international trade. Whilst safety is the highest priority,
some security measures can add high costs without sufficient benefit.
The US's requirement for 100% screening of all incoming cargo
and in the UK the Home Office's Border Management Programme both
add disproportionate costs to the activities of port operators,
forwarders and shippers without achieving notable security benefits.
Recommendation: Assessment of cost/value of
security measures. The Committee should urge the Government to
constantly assess security proposals for real security achieved
verses cost to trade. The UK should lobby internationally as measures
taken by foreign governments impact UK trade.
Issue: Air freight and the environment
17. Whilst air freight is an economically vital
service for the UK economy, it is also carbon intensive. FTA strongly
supports measures to manage and reduce the environmental impact
of transport. There is currently a debate about the provision
of airport facilities given the polluting nature of this activity.
Restricting infrastructure development is an economically inefficient
way to achieve climate change objectives. Measures aimed at targeting
specific environmental performance and facilitating the most economically
efficient method of reducing the UK's total carbon footprint (not
just within the transport or freight industries) should be adopted.
Any unilateral measures taken by the UK would merely reroute air
freight to European hubs such as Charles de Gaulle, Paris or Frankfurt.
Goods would then be shipped to the UK by truck.
Recommendation: Market based regulation. The
Committee should recommend the UK Government should continue to
participate in EU discussions to involve aviation within the carbon
trading regime and use such market based methods as the tool to
reduce total emissions levels. Restricting airport capacity should
not be supported as it is a blunt and inefficient tool to manage
air freight.
2. The National Supply Chain
18. Goods tend to move from international gateways
or sites of production to distribution centres across the UK.
Exceptions to this would include products such as coal or aggregates
which would move direct to their site of use. Distribution centres
can be either national or regional, depending on the business
model. They are placed to ensure that within constraints (eg drivers
hours rules) they can be received and redistributed to customers"
bases in the most economically effective method. That tends to
place distribution centres close to transport infrastructure such
as motorways, trunk roads and multi modal freight facilities.
19. Road: The dominant mode of transportation
within the UK is road, accounting for 82% of all goods lifted.
The amount of goods moved by road has increased by 75% since 1980,
but appears to have been stabile since 1995.[46]
This is due to improved performance by the freight industry in
areas such as vehicle utilisation and vehicle weights. This has
resulted in a decoupling of freight traffic from growth in GDP.
Users of transport services are placing greater emphasis on agile
supply chains that are responsive to customer and consumer needs
and can provide door to door services—demands which trucks
and light vans are well equipped to respond to. Sectors adopting
this approach to supply chain management, such as manufactured
white goods, drink and foodstuffs, have become much more significant
to the UK economy.
20. Rail: Rail freight, after a long decline,
has seen a growth in the share of UK freight movements since the
mid 1990's. This has been due to a reduction in rail freight costs
through reduced Track Access Charges, the increased need for container
service as production has been outsourced internationally, and
improved rail freight services, resulting from competition in
the rail freight market since privatisation. Increased unreliability
of road services has also been a factor. The traditional market
for rail is bulk commodities such as coal and aggregates, but
the significant growth area is container traffic—of both
industrial and consumer goods. The main strategic routes in the
UK for container services are from the major container ports to
the West Midlands and London, and north-south for domestic services
from the Scottish central belt to the Midlands. These are the
lines with the potential for growth.
21. Water: Water also provides an alternative
means for domestic freight movements in the UK. Of this, costal
short sea shipping forms the larger part, with inland waterways
playing a small role for domestic movements.
Facts and Figures
Road:
— Every lorry load of goods arriving
at a supermarket will be taken away by approximately 400 cars.
— Despite its dependence on the road
network, lorries are not the biggest road users. 63 cars are registered
for every goods vehicle over 3.5 tonnes.
— Only 1 in 18 vehicles on Britain's
major roads is a goods vehicle over 3.5 tonnes, and only 1 in
9 is a van.
(sources: DfT Transport Statistics Great
Britain, Society of Motor Manufacturers and Traders).
Rail freight:
— Rails share of GB freight movements
has remained broadly stable over the last 20 years (8% of total
tonne km); this compares to a 30% market share in 1960.
— Rail is used for movement of bulky
freight such as coal and coke. In 2004 82% of coal and coke moved
by rail compared to 53% in 1980. For other commodities such as
agricultural products, road dominates; 86% of total was moved
by road in 2004 (this share has remained fairly constant over
the last 20 years).
— The movement of international containers
by rail is also an essential element in the UK industry supply
chain. The number of containers coming into UK ports has increased
by 46% between 1993 and 2003. The number of goods vehicles coming
into GB ports on ro-ro ferry services has increased by 59% over
the same period.
— Rail freight volumes on services
through the Channel Tunnel have declined by 45% since 2000.
(sources: DfT Transport Statistics Great
Britain, Channel Tunnel)
Issue: Road Congestion and Journey Reliability
22. Rising demand for road space creates congestion
and decreases reliability. Road congestion is already costing
UK industry £20 billion[47]
per year in delays, equivalent to £800 per year for every
household in the UK. The problem of network reliability is most
acute on industry's key trade routes, which are the UK's motorway
and trunk road network. The UK needs a mixture of policy measures
to address congestion. Further investment in road capacity is
necessary, but FTA would also accept there is a need to better
manage demand. We would therefore support proposals for a vignette
on international HGV movements, as well as, depending on the details
of any scheme, the use of road pricing. Any scheme would need
to show clear benefits for the freight industry.
Recommendation: Selective Road Widening. Available
funding such as the Transport Innovation Fund (TIF) should, for
road transport, be focused on widening congested parts of the
UK's key trade routes. This is not required to facilitate increased
freight traffic. HGV journeys are in fact expected to remain stable
in the medium term; increased road congestion is anticipated to
come from increased private car use. The aim should be to reduce
congestion levels and improve reliability at key points in the
logistics network. The key routes are: M25; M4 (London to Reading);
M1 (London to Leeds); M6 (Midlands to Manchester); M62/M60 (Manchester
to Leeds). (see appendix: Freight Future for sources and further
details).
Recommendation: Improved management and information
regarding road incidents. The provision of reliable information
for the freight industry on the state of the road network is an
important provision. The Government should work with the Highways
Agency to ensure the timely communication of such information,
as this is an important operational tool for the whole of the
freight industry. Police should demonstrate that they are using
methods that lead to early restoration of important routes and
that a robust system of diversions is developed for planning purposes.
Issue: Rail infrastructure restrictions
23. Rail infrastructure for freight is insufficient
at present and holding back growth. Network Rail is unable to
provide the seven day a week service modern distribution systems
require. Costs continue to be high due to insufficient gauge clearance
on strategic routes—restricting what loads can be moved
and requiring expensive special rolling stock to allow containers
to be moved easily. The Government have proposed in the Rail White
Paper developing a "Strategic Freight Network"—this
must be developed into a service standard of use to the industry.
It will, as the Government acknowledges, require funding beyond
the amount announced in the White Paper—both in amount and
time-frame.
Recommendation: Guided public investment. The
Government and Network Rail have done good work through the Freight
Route Utilisation Strategy, TIF and now the awarding of £200m
to develop a Strategic Freight Network in the Rail White announcements.
Available funding streams (including TIF) should be targeted at
providing a seven day a week, low cost service offering to rail
freight operators on strategic national routes, with commitment
to further funding being made available in the longer term. (See
appendix: Freight Future)
3. The Local Supply Chain
24. The final leg of the supply chain is the
local delivery:
— Deliveries to shops, shopping malls,
restaurants, public houses, markets and retail parks;
— Fuel to garage forecourts;
— Equipment and supplies to offices
and commercial premises;
— Raw materials and finished goods
to and from manufacturers/wholesalers;
— Supplies to hospitals, schools, municipal
and other public buildings;
— Building materials to construction
sites;
— Refuse collection and disposal, street
cleansing and maintenance; and
— Domestic deliveries and furniture
removal.
25. Lorries play an indispensable role in this—servicing
our towns and cities. The lorry's unique ability to move freight
literally from door-to-door determines its pre-eminent role in
distributing goods at this level.
26. The Government has made clear its policies
about the need to regenerate and revitalise our urban areas. Such
policies are coupled with those which aim to reduce reliance on
the private car, primarily by improving public transport and encouraging
alternative modes such as walking and cycling. However, such measures
are irrelevant to the movement of goods as industry's reliance
on the lorry for urban freight movement will remain undiminished
for the foreseeable future. If policies to regenerate our towns
and cities are to succeed, the importance of efficient and reliable
access and movement for freight via the lorry must not only be
recognised, but promoted at both national and local level.
27. The increasing use of home delivery of internet
purchases is creating greater need for freight services to individual
residencies. In the longer term this will logically create different
local freight patterns.
28. Reconciling the need for access for goods
and services with local social and environmental concerns is vital.
Industry takes these issues seriously and has taken significant
steps to minimise local nuisance when undertaking delivery operations
in order to reduce the environmental impact.
29. For industry, forging links with individual
local authorities is vital to facilitate good local supply chains,
and Freight Quality Partnerships (FQPs) have been a key means
of achieving this. FTA analysis shows that over 100 local authorities
have either set up an FQP or expressed an intention to. As we
would expect FQPs have achieved a mixed range of results with
some more successful than others. Practical initiatives by various
FQPs include:
— Production of commercial vehicle
drivers' atlases/maps for individual regions or local authority
areas providing information on height, weight and access restrictions;
— Reviews of lorry signage to key industrial
locations; and
— Improved loading/unloading facilities
in specific urban locations.
30. The effect that FQPs are having could be
seen as limited but this is possibly because expectations for
them are set too high. Quick wins, such as those outlined above,
assist in the movement of freight which benefits both industry
and the general public. However, FTA's experience is that local
authorities are hamstrung when it comes to freight improvements
due to a lack of resources—in personnel and funds to distribute.
Local authority transport officers are keen to promote freight
but struggle to overcome political obstacles because locally elected
members will always tend to prioritise passenger transport.
Issue: Night-time Deliveries
31. Existing night time restrictions in urban
areas have made the process of delivering goods and services to
towns and cities increasingly difficult thus creating additional
congestion during peak hours of the day which has further implications
for the environment and economy. Such restrictions increase operating
costs for industry and ultimately, the consumer. FTA has worked
with DfT to produce tool kits for industry and local authorities
work together on this issue to improve regulation and performance.
These documents, entitled Delivering the Goods, are supplied
as appendices. (Not printed)
Recommendation: Reviews Of Existing Night-time
Restrictions. Industry accepts that restrictions were put in place
for understandable reasons and that the total removal of "curfews"
is neither practical nor appropriate. However, due to advancements
in vehicle/engine technology and best practice, industry believes
that there is now a widespread case for greater flexibility in
delivery times and calls for Government intervention to call upon
local authorities to fully review all existing night-time delivery
restrictions. In particular FTA would call for curfew periods
to end earlier, allowing early morning deliveries.
Issue: Use of congested urban road space
32. Where bus priority measures use existing
road space, goods vehicles are often accorded the same low priority
as the private car. However, the problem of congestion affecting
commercial vehicles has knock-on effects on local businesses and
retailers with urban congestion leading to increased journey times,
missed delivery slots and increased lorry miles. The urban economy
and environment suffer.
Recommendation: Essential User Lanes. Essential
user lanes are an efficient and proven measure for giving priority
to essential vehicles (ie buses and lorries) in congested urban
areas. Essential user lanes can improve journey times and reliability,
make best use of road capacity and reduce lorry traffic on alternative
routes. A review of existing bus lanes to identify locations where
an "essential user lane" would make better use of road
space, without impeding bus services, should be undertaken.
Other Issues raised by the Committee
33. FTA has addressed most of the questions
raised by the Committee in their call for evidence in the body
of this response. Our views on the remaining issues are as follows:
UK Government: influencing EU policy
34. The UK Government has taken a very positive
leading role within the EU—shaping policy relating to freight
in a constructive direction. EU policy has become more aware of
competitiveness issues (through the Lisbon agenda) and the complexity
of transport operations, so that a light touch approach has been
adopted towards regulation. This is a change from policy initiatives
in the 1990s, and the UK Government can take a large part of the
credit for this. This has been seen in measures such as the review
of the EU White Paper on Transport policy. The UK Government has
also generally adopted EU regulations into UK law in a flexible
and workable fashion, avoiding unnecessary burdens on industry.
Safety
35. Statistically the UK has the best safety
record in Europe, and British registered HGVs are the safest vehicles
on our roads. However DfT statistics illustrate that the condition
of visiting foreign vehicles and their drivers' non-compliance
with drivers' hours rules presents a significant road-safety risk.
FTA has campaigned for many years to increase enforcement resources
and has long supported the now imminent introduction of graduated
fixed penalties and a deposit scheme that ensures sanctions against
non-compliant foreign drivers using unsafe vehicles on our roads.
FTA welcomed The Government's announcement of an additional £2
million pound per annum funding to support increased targeting
of foreign vehicles by VOSA. It is essential that limited resources
should be used efficiently and VOSA's OCRS (Operator Compliance
Risk Scoring) scheme that effectively targets those operators
with a history of non-compliance is a model that FTA believes
should be adopted as best practice throughout the EU.
36. Fatal accidents involving HGVs have fallen
by 23% since 1996. All severity accidents fell by 17%. HGVs all
severity accident rate of 39 vehicles involved per 100 million
vehicle kilometres compares to a car rate of 67.[48]
37. FTA supports the Government's ongoing efforts
to export the UK's safety record and governance of road transport
to the rest of the EU.
Government and Logistics Programmes
38. Government schemes such as the Sustainable
Distribution Fund are generally effective in helping establish
services that reduce climate change emissions. This effectiveness
is restricted however due to the time limits placed on such schemes
by EU state aid rules. Particularly for rail this emphasises the
importance of infrastructure investment to allow rail to be competitive
with road with a minimum of Government support.
39. Other Government initiatives such as Freight
Best Practice programme (www.freightbestpractice.org.uk) are highly
successful in helping industry improve environmental and economic
performance through changes to working practices. This approach
holds the best prospect of improving the industry's performance
in this area.
42 DfT Focus on Freight, 2006 Back
43
Ibid Back
44
See charges such as Vehicle Booking Systems, Infrastructure and
Security Surcharges at Felixstowe and Southampton Back
45
See appendix: UK Port Development Back
46
DfT Focus on Freight, 2006 Back
47
Source: CBI Back
48
Source: Road Accident Statistics Great Britain 2006 Back
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