Memorandum from Professor Alan McKinnon
(FT 35)
Is the Department's investment in logistics programmes—including
the Sustainable Distribution Fund—good value for money and
meeting the objectives?
The Department for Transport should be commended
for its pioneering work in the field of sustainable logistics.
Its Freight Best Practice (FBP) programme is particularly innovative
and few other countries have initiatives of comparable breadth
and scale. Judging its cost-effectiveness is difficult, however.
The estimates that have been made of the economic and environmental
benefits accruing from driver training and company-specific advice,
especially in the area of fuel efficiency, seem reasonably robust.
The impact of FBP literature and benchmarking schemes is much
harder to quantify as assumptions have to be made about the related
level of behavioural change over different time-scales.
Truck simulators have been used, on an experimental
basis, to train drivers in safe and fuel efficient driving techniques
in both England and Scotland. Given the high cost of acquiring
and maintaining these simulators, this form of training appears
to offer a poor return by comparison with on-the-road driver training
schemes, such as SAFED.
This question also raises wider issues about
the availability and quality of statistics on the cost and environmental
impact of logistics operations. It is now over 10 years since
the last general survey was conducted of companies' logistics
costs in the UK, comprising estimates of expenditure on warehousing,
inventory and goods handling as well as freight transport. Lorry
operating cost tables published by the major trade associations
and in the trade press provide an indication of transport expenditure,
but this gives only a partial view by transport mode and logistical
activity. In managing their logistics companies trade-off transport
costs against inventory and warehousing costs as, for example,
in the application of the just-in-time principle. The cost effectiveness
of the government's sustainable logistics programme might be more
accurately measured if up-to-date survey data were available on
the level and composition of companies' logistics expenditure.
A recent project undertaken for the Commission
for Integrated Transport has revealed significant discrepancies
in official estimates of CO2 emissions from road and rail freight
operations in the UK.[49]
This reflects differences in the methodologies used and underlying
assumptions. Given the importance now attached to carbon mitigation,
particularly in the government's sustainable distribution strategy,
it is important that a single agreed set of emission factors be
compiled which accurately measure the carbon footprints of different
types of freight transport operation.
How successfully has the Government influenced
European negotiations regarding freight operations? How could
the Government help to ensure a level playing field between the
UK and overseas freight companies?
British road freight operators continue to pay
much more for their fuel than their counterparts on the European
mainland, entirely as a result of the higher fuel duty imposed
in the UK. In an attached paper,[50]
I discuss the extent to which this fuel price differential has
distorted the market for road haulage services in the UK. If this
anomaly is to be corrected at an EU level, it would be preferable
in environmental terms for the rate of fuel duty in other member
states to be levelled up to the UK rate. Research by the European
Environment Agency and by our research centre at Heriot-Watt University
indicates that the taxes imposed on road haulage operations come
much closer to internalising total environmental costs in the
UK than in other EU countries. Attempts by the European Commission
to harmonise diesel fuel duty across the EU have been relatively
ineffective. Even if its plans to raise the minimum level of duty
on diesel fuel over the next seven years were fully implemented,
it would still only represent just over half the current duty
rate in the UK.
In earlier written and oral evidence to the
Transport Committee, I outlined a system of road user charging
for lorries which could be used to "level the playing field"
between UK and foreign-registered hauliers, in addition to meeting
other transport policy objectives. This would be much simpler
and cheaper than the LRUC scheme which the government decided
to abandon in July 2005 and, unlike some of the time-based vignette
systems that have been considered over the past two years, would
have the advantage of relating the charge to the distances that
lorries travel.
October 2007
49 McKinnon, A C. "CO2 Emissions from Freight
Transport in the UK" Commission for Integrated Transport
(http://www.cfit.gov.uk/docs/2007/climatechange/pdf/2007climatechange-freight.pdf) Back
50
McKinnon, A C. "Increasing Fuel Prices and Market Distortion
in a Domestic Road Haulage Market: the Case of the UK" European
Transport, issue no. 35, April 2007 (http://www.istiee.org/te/) Back
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