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UNDERSTANDING ROAD FREIGHT This document is a LIVE document This document provides essential background information on selling to the road freight market in the UK. It is to be treated as a “first draft”, to be continually updated between BDM and reseller as your knowledge base expands.

WHAT DO THEY DO? The typical business of road freight 3PLs is offering transportation, storage and warehousing for goods as well as offering supply chain management services to other firms under contract. TYPICAL BUSINESS The logistics industry in the UK is comprised of several smaller sectors which are divided into different SIC number defining industry sectors. The sectors for the logistics industry are the following: 60.24 Freight transport by road 62.10 Scheduled air transport 62.20 Non-scheduled air transport 63.11 Cargo handling 63.12 Storage and warehousing 63.23 Other supporting air transport activities 63.40 Activities of other transport agencies 64.11 National post activities 64.12 Courier activities and other national post activities The freight transport by road and associated handling, storage and warehousing activities represents the biggest part of the market with approximately 95% and is assumed to provide the biggest sales potential. Within this market the so called third party logistics (3PLs) represents the biggest type of company – offering storage, transport, warehousing and supply chain management services to other firms under contract. They make approximately 70% of the total logistics industry whereas again, most are concentrated in road freight. The biggest part of the market is made up of small to medium sized 3PL’s – in fact only a few companies exceed the number of 250 employees. As the logistics industry is a derived industry it is highly dependent on the development of its economical environment. The road freight and the logistics industry as a whole are facing increasingly competition from abroad which forces companies to become more efficient. An indication of the competitive pressures at international level is given by the recent mergers which have taken place between DHL and Securicor-Omega, Exel Logistics and Tibbett & Britten etc. Many logistics providers now need to build a global network, either on their own or with partners, with communications systems and software to manage the supply chain efficiently. In 2005, the number of SME’s operating within the road freight sector in the UK amounts to 33,755 that employ up to 250 people. Out of these 33,755 companies, Invu already serves 53 resulting in a potential of 33,702 SME’s available to target. However, as mentioned before this figure has to be taken with caution. The 53 customers of Invu are pooled under the market sector “transport and logistics” which means that this number includes companies not operating in the chosen road freight sector.

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Growth Rate By Volume (billions of

2002 149.9

2003 151.7

2004 152

2005 152

2006 153

2007 153


tons ) £21.38

£22.43

£23.44

N/A

N/A

N/A

By Value (million) Table X.X: Own source The table provides figures about the tons that have actually been transported on the roads and the turnover the road freight industry realized. Please note that those figures represent the whole road freight sector not specifically 3PL road freight, nevertheless, as 3PL’s represent the biggest part within this sector the risk of having not the optimal figures is considerably low. Although the figures from 2005 have not been published yet, the Freight Transport Association published in their quarterly transport activity survey in January 2006 that the year 2005 was the weakest year of road freight transport since 2000, what especially the 3PL sector experienced. This development might have similar reasons to the downturn in the temporary + contract sector recognized last year. Summed up, the road freight sector is at the moment stagnating, but is not expected to decrease in the coming years because of an increasing need for transportation. There are a number of active bodies/institutions supporting and/or regulating this industry whereas two that provides the possibility to become an “Affiliate Member” that is the “British Association of Removals” and the British International Freight Association. However, unfortunately, both institutions are not eminently recognised in the market. The two biggest institutions, the FTA and the Chartered Institute of Logistics and Transport, do only offer advice but no accreditation. Institution Chartered Institute of Logistics and Transport Freight Transport Association (FTA) Road Haulage Association (RHA) Logistics Directors Forum (LDF) Institute of Transport Administration Chartered Institute of Purchasing and Supply British Association of Removals

British International Freight Association The Despatch Association

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Effect on Industry Promote particular interest of its members and provide services Represent their members to government as well as providing services and information Represent their members to government as well as providing services and information Professionals in a forum offering advice Institute of highly professional transport managers and operators offering a forum for members to exchange information and knowledge International education and qualification body representing purchasing and supply chain professionals Recognized voice of the professional moving industry, to provide a comprehensive range of essential services to its members, and to be the guardian of professional standards for the benefit of its members and their customers BIFA's role is to provide a focus for the international freight distribution industry. BIFA’s main tasks are to represent & lobby; inform & advice; promote; train. Focus on courier industry, is an independent trade association which exists to protect the interests of its members whilst raising the profile of the industry nationally


Vehicle and Operator Services Agency (VOSA)

Driving Standards Agency (DSA)

Driver and Vehicle License Agency (DVLA) Vehicle Certification Agency (VCA)

Department for Transport

The Vehicle and Operator Services Agency (VOSA) provides a range of licensing, testing and enforcement services with the aim of improving the roadworthiness standards of vehicles ensuring the compliance of operators and drivers with road traffic legislation, and supporting the independent Traffic Commissioners The DSA sets standards for drivers, riders and instructors. It deals with driver education and the provision of learning resources, the registration and supervision of the quality of assured instructors and the modern, effective and efficient assessments conducted as computer based and practical test Provides information about drivers licenses and vehicle registration within the UK VCA supports the industry by providing internationally recognized “Type Approval” testing and certification for vehicles, their system and components. As a leading Management Systems Certification body, VCA also provides certification to ISO 9001, ISO/TS 16949, IS) 14001, QS-9000, OHSAS 18001 and EMAS The Department for Transport's objective is to oversee the delivery of a reliable, safe and secure transport system that responds efficiently to the needs of individuals and business whilst safeguarding our environment

RANGE

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SIZE OF Mostly SME’s within this market sector COMPANY QUALIFICATIONS CILT Qualifications / TRAINING • Chartered Membership with the CILTUK

TYPICAL


• Continuing Professional Development Scheme (CPD) • CILT (UK) Level 2 Introductory Certificate in Logistics and Transport (NVQ Level 2) • CILT (UK) Level 3 Certificate in Logistics and Transport (NVQ Level 3, OND, Advanced GNVQ, A Level, AVCE) • CILT (UK) Level 5 Professional Diploma in Logistics and Transport (NVQ Level 4, ordinary degree, HND) • CILT (UK) Advanced Diploma in Logistics OR Transport (NVQ Level 5, honours degree, post graduate) • MSc Passenger and Transport Management (Post-graduate) • MSc Logistics (Post-graduate) LEGISLATION

FURTHER DETAILS OF LEGISLATION

• Road Transport Directive (Working Time Directive) • The Carriage of Dangerous Goods and Use of Transportable Pressure Equipment Regulations 2004 • VOSA/MOT Regulations • Legislation on HGV drivers • Digital Tachograph • One aspect affecting the logistics industry is the Road Transport Directive (RTD) which came into force on 4 th April 2005. It is part of the EU Working Time Directive (WTD) which affects everyone reliant on heavy goods vehicle drivers. It limits driving hours to 48 hours average a weeks. Thus, companies have the same or increased order quantity but less driving hours at their disposal unless they employ more drivers and buy additional vehicles which implies a higher cost burden for companies. •

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The logistics industry in total is one of the most highly regulated and enforced industries in the UK as it works very close to the public. They have to stick to strict standards of vehicle maintenance and operation for goods vehicles over 3.5 tonnes with help of a qualitative system of operator licensing. The vehicles have to pass annual tests and goods vehicles and trailers are subject to fleet checks at the operators’ premises and roadside checks by the Vehicle and Operator Services Agency (VOSA). In order to prove that all vehicles comply with the legislation, the operator needs to have the documentation about for example MOT checks and driving hours at hand. This is on the one hand a further need to comply with a law for the industry, however, communicating that Series 6 is able to manage all the documentation for vehicles and drivers in an efficient way could support an entry into this market.


USEFUL WEBSITES

INDUSTRY MAGAZINES

www.bifa.org www.skillsforlogistics.org www.iota.org.uk www.ciltuk.org.uk www.itmworld.com Warehousenews Elogmag Logistics IT ROADWAY Magazine (published by the Road Haulage Association) The Logistics Manager

ADDITIONAL INFORMATION:

. TYPICAL DOCUMENTS ABBREVIATION BILL OF LADING

CMR

FORM-A ATA CARNET MOT TIR CARNET CERTIFICATE OF ORIGIN INVOICES ATR CERTIFICATE EUR-1 Page 5 of 7

DESCRIPTION A bill of lading is a document issued by a carrier, e.g. a ship/s master or by a company’s shipping department, acknowledging that specified goods have been received on board as cargo for conveyance to a named place for delivery to the consignee who is usually identified Conditions in accordance with the conventions of the contract for the international carriage of goods by road General form for preferential tax rates Customs document Vehicle information for the MOT services Customs document Supports origin of cargo Supplier/Customer invoices Preference certificate (as Eur-1 but for Turkey) Preference certificate (mainly for use with Scandinavian companies to allow


DISPATCH NOTES CONTRACTS PASSPORTS PROOF OF DELIVERIES

P.O.Ds

IMPORT LICENSES

preferential rates of tax) Shows exactly what the cargo is, when it was sent and who the sender is Very important business document as 3PL’s mainly act on contract basis Copies of passports of drivers have to be kept With POD’s you can confirm that your shipment arrived. It includes the time of delivery, full delivery address and the name and signature of the person who accepted the shipment. Some goods need a license before importing

CIM TYPICAL FILING SYSTEM They tend to file their documents according to job numbers meaning which are normally generated by a transport management system like road runner. All documents or information related to this job number are then collected in a folder with the job number and the date and stored in a filing cabinet. The documentation of the single vehicles is stored in a separate filing cabinet under the registration number containing all necessary information amongst others MOT. The accounting department stores the all supplier and customer invoices as well as other financial information whereas some of it has to be kept for seven years due to tax law. The personnel department needs to store all information about the employees but especially about all drivers. Those documents are stored according to the employee’s name not only containing the general employment documents but also documents like copies of passports and drivers licenses. TYPICAL INVU FILING SYSTEM ADD SCREEN SHOT OF INVU DEMONSTRATING THIS STRUCTURE TYPICAL BACK-OFFICE SYSTEM •

Road Runner

WHO IS THE INVU DECISION MAKER WITHIN AN ROAD FREIGHT COMPANY? As the market is comprised of mainly SME’s the decision making unit is similar. It is mainly the CEO, CFO or Operations manager who is responsible for buying new software. WHAT ARE THEY KEY BENEFITS OF INVU TO THIS VERTICAL? • Page 6 of 7

Easy to use


• • • • •

Cost effective (advantageous as a highly competitive industry) Productivity improvement gives competitive advantage edge in the market Effective mutual document sharing throughout all departments Quick and easy match of all documents related to a certain delivery Compliance to the VOSA requirements

TYPICAL OPENING GAMBIT TO PROSPECTS IN THIS SECTOR: PROVIDE OPENING SCRIPTS IF TARGETING THIS SECTOR ON THE PHONE/BY EMAIL/BY LETTER SUMMARY SUMMARISE DOCUMENT FOR QUICK-GLANCE OVERVIEW. LIST KEY INVU USERS: •

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Understanding Freight