Motor Transport 8 January 2018

Sharp ■ Informed ■ Challenging

8.1.18

NEWS INSIDE P&H backing

MP adds support to former Palmer & Harvey staff p3

Growth story

Grocontinental moves into new era with new owner p6

Level playing field

Changes to the HGV Road User Levy could up costs p7

OPERATORS IN THIS ISSUE Abbey Logistics ..................................p17 Agro Merchants ....................................p6 Arrow XL .............................................p17 Birds Transport ....................................p6 CS Ellis .................................................p3 DX Group ............................................p17 Eddie Stobart Logistics ........................p16 Elddis Transport ..................................p16 Grocontinental ......................................p6 Hermes ..............................................p17 Kinaxia Logistics ................................p17 Maritime Transport .............................p17 Widdowson Logistics ............................p6 XPO Logistics ..................................p3/14 Yodel ..................................................p20

Former senior TC’s final report repeats concerns about ‘unfit for purpose regime’

Bell reiterates call for legislation change

By Ashleigh Wight

Traffic commissioners (TCs) are still awaiting changes to an “archaic, outdated and no longer fit for purpose” regime almost three years since the triennial review into their work was published.

In her final annual report before her departure last year, former senior TC Beverley Bell echoed concerns raised in 2016 about the lack of legislative change since the report’s recommendations were published in 2015.

Addressing secretary of state for transport Chris Grayling in the report, Bell said: “While I appreciate your officials have been dealing with the implication of the vote for Great Britain and Northern Ireland to leave the EU, little has been

done to bring about legislative change. I hope your officials will therefore have sufficient time and resource to consult on law reform.”

The report for 2016/17 also reiterated Bell’s concerns about the suitability of O-licence fees and whether they are enough to sustain an effective service for operators.

She said the annual cost of an O-licence, based on the initial licence application and grant fees, is less than £100.

“We hope your department decides to conduct a full consultation exercise about fee reform with the regulated industries, as my early discussions with them have shown the compliant industry would be prepared to pay a more realistic and proportionate fee

if it meant they were offered an enhanced service,” she wrote to Grayling.

Bell also welcomed the introduction of interviews with Office of the Traffic Commissioner senior team leaders for low-risk operators, which were introduced as an alternative to public inquiries (PI).

She said there was an increase of just over 25% in the number of such interviews last year, with 601 HGV and PSV operators diverted away from PIs. The number of PIs for HGV operators fell by 200 between 2015/16 and 2016/17 to 729.

“The fact that we revoked 261 licences shows these cases were rightly put before TCs to ensure that action was taken to put an end to non-compliant operation,” Bell said.

REPORT IN NUMBERS n The number of HGV O-licences in issue fell 4% to 73,458. n The number of vehicles specified on O-licences remained largely the same at 370,606. n The Eastern traffic area remained the largest area in terms of vehicle parc, with 69,571 vehicles registered on O-licences. n The number of standard international O-licences fell to 8,186 (2015/16: 8,289); standard national licences to 27,140 (2015/16: 28,448); and restricted O-licences to 38,132 (2015/16: 40,265).

HAIR RAISING: Palletline member HMT Groupage has put two Dennison Trailers curtainsiders into service featuring its customer Sally Salon’s livery. Initially HMT Groupage focused on keeping the client’s 275-strong Sally Stores business, which supplies a range of hair and grooming products to the beauty trade, stocked.

However, HMT Groupage UK and Ireland general manager Mark Gallagher said the relationship had continued to develop as Sally Europe diversified.

Business barometer p9 Interview: Paul Hayes p14 MT Power Players p16 Fleet risk management p18 Interview: Mike Cooper p20

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04/01/2018 15:06:44

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04/01/2018 12:41:35

News

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Online petition close to 12,000 signatures following firm’s demise in November 2017

MP adds voice to call for P&H investigation

Image: Rex Features

By Carol Millett

Wo r k a n d P e n s i o n s Committee chairman Frank Field MP (pictured) has added his voice to former employees’ demands for an investigation into failed wholesaler Palmer Harvey & McLane (P&H), which collapsed with more than £65m debt in November (MT 11 December 2017).

The 92-year-old Hove-based firm, which had an O-licence for 600 vehicles, delivered groceries to 90,000 customers across the UK, from local stores and food outlets to the UK’s largest supermarkets.

In a letter to the Pensions Regulator, Field criticised P&H’s management team as “highly irresponsible” for its decision to pay £70m in dividends in the face of mounting losses and a rising pension deficit. The MP also demanded an investigation into the firm’s

actions. The Work and Pensions Committee is also set to look into the events surrounding the collapse of the firm.

Meanwhile, the number of signatures on a petition demanding an investigation into the collapse of P&H has risen to more than 11,700 in

the four weeks since the company went under.

The calls are being made via a petition on Change.org, which was posted just days after the demise of the company in November last year.

P&H operations inventory manager Claire Walton, who

submitted the petition, said on the website: “As a former Palmer & Harvey employee it would be good to understand how and why it was allowed to happen and to have the people [responsible] held to account.”

Former employees have questioned the terms of a £3.4m interest-free loan that the company made to the chief executive Christopher Etherington in 2008 to help fund a management buy-out.

According to documents filed at Companies House, the terms of the debt were changed in 2011, making it repayable only in the event of a sale of Etherington’s shares in the business, something that cannot now occur.

Protruck Auctions is putting 200 P&H trucks and trailers under the hammer on 23 and 24 January.

Leadership team refreshes CS Ellis A fresh, young leadership team and a commitment to promoting from within are starting to pay dividends at family haulage firm CS Ellis.

Speaking to MT, chairman Trevor Ellis said his son and daughter had got a handle on the business since he stepped back a few years ago. “The business has completely changed and they run it better than I did,” Ellis said.

Son Charles (chief executive) and daughter Hayley (human resource director) are supported by FD Duncan Clarke and operations director Peter Turner.

“They are doing well, attracting and training people,” Ellis added of the firm, which runs a discretionary bonus scheme for its 130-plus employees, and has a staff survey and training plan. “It’s pleasing to see it grow and prosper. But it’s still tough,” he added.

Turnover rose 5.8% to £13.3m in the year to 30 June 2017. Approximately £2.2m was spent on developing its Wireless Hill and Whetstone sites.

Pre-tax profit for the period was £211,000 (2016: £221,000).

Home Depot’s rumoured XPO ambitions get mixed response Analysts have given a mixed response to a media report claiming US retail giant Home Depot had held internal talks about buying XPO Logistics.

The report, by US news website Recode, said an unnamed source “close to Home Depot’s strategy” had claimed the retail giant is considering a bid for the logistics giant to prevent Amazon buying it. XPO Logistics’ share price soared following the report.

Both companies have declined to comment, but Macquarie analyst James Clement believes the lack of acquisition activity by XPO could indicate a deal with Home Depot.

He said: “CEO Brad Jacobs was active in the press, saying XPO was, once again, looking 8.1.18

MTR_080118_003.indd 3

for deals and was prepared to spend ‘several billion dollars’, yet no deals have been announced. In light of this delay and the report, we conclude that it is possible XPO could be a seller rather than a buyer.”

However, Oppenheimer analyst Brian Nagel poured cold water on the rumour, stating that such a move contradicted Home Depot’s strategy.

He said: “We are hard pressed to see Home Depot purchasing a transportation and logistics firm the size and scope of XPO. Our XPO analyst Scott Schneeberger believes Home Depot would be most interested in XPO’s Last Mile Logistics business, which represents about 6% of the total company’s 2017 revenue.”

IN GEAR: Mercedes-Benz has made its Econic truck more attractive to general haulage operations with the addition of a 12-speed gearbox, with Travis Perkins taking delivery of the first 10 UKequipped examples. The low-entry vehicle was previously only available with an automatic 6-speed Allison box. However, demand prompted the manufacturer to introduce a 12-speed PowerShift 3 box for the 4×2 and 6×2 axle configurations, which should deliver better fuel economy for haulage operations. The 229hp trucks are fitted with Massey Engineering dropside bodies and HMF long boom cranes. The trucks will work in and around London.

MotorTransport 3

04/01/2018 15:22:18

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04/01/2018 09:21:40

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04/01/2018 15:32:04 09:23:35 12/12/2017

News

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Agro Merchants Group adds Grocontinental to its UK and Ireland portfolio, after buying Ireland’s Castlecool in 2014 and Northern Ireland’s Sawyers Group in 2015

Grocontinental moves into ‘new exciting era’

By Chris Druce

Netherlands-based Agro Merchants Group has bought Motor Transport two-times Haulier of the Year Grocontinental for an undisclosed sum.

Established in 1941, Grocontinental offers cold storage and logistics services to the food industry with a particular expertise in the dairy and meat sectors. It is located in Whitchurch, Shropshire, and operates from a 35-acre complex with a warehouse capacity of 197,000 pallets.

The business offers a range of specialist services including: cheese cutting; blast freezing; ingredient sorting; de-boxing and reboxing; shrink-wrapping; bar coding; labelling; and export packing.

David and Linda Grocott, third-generation owners of Grocontinental, will continue to lead the business as joint MDs. Carlos Rodriguez, CEO of Agro Merchants Group, said: “When we founded Agro in

Have you got top driving skills?

Nominations for the fourth Microlise Driver of the Year competition have opened. The competition uses Microlise telematics data to analyse drivers’ skills, but is also seeking nominations for awards not based on this analysis.

These include the Young Driver of the Year, Most Improved, Lifetime Achievement, HGV Hero and Extra Mile awards.

Make nominations via microliseconference.com before 16 February. The Microlise Conference takes place at the Ricoh Arena on 16 May 2018.

6 MotorTransport MTR_080118_006.indd 6

Tarmac retains FORS accreditation Tarmac has retained its FORS accreditation, allowing it to continue auditing its entire UK and subcontractor fleets.

Tarmac was the first operator to win FORS wholefleet accreditation in 2014, and currently has more than 1,800 vehicles in its fleet that are FORS accredited.

Sean McGrae, Tarmac’s senior national transport manager, said: “Our whole fleet accreditation highlights our commitment to improving safety.”

DfT considers lane rental scheme 2013, I quickly identified Grocontinental as the ideal potential partner in England to join our network.

“This is not just due to its market-leading position, highquality assets, and deep commodity expertise. I was most drawn to the culture and values of the Grocott family, their commitment to the local community, and the long-

standing relationships with customers and employees.”

A Grocontinental statement said: “Joining Agro Merchants Group is great news for Grocontinental. We are proud of the progression and success we have achieved over the years and now we have an excellent opportunity to take the company into a new and exciting era.

“To move Grocontinental into a larger group is not a decision we have taken lightly. We have been impressed with Agro’s ambitions and expertise; and its respect for our 76-year family-owned business heritage.”

Agro purchased Irish firm Castlecool 2014, followed by Northern Ireland’s Sawyers Group in 2015.

Pre-pack administration sales under scrutiny The government is investigating whether further regulation of pre-pack administration sales is needed after measures designed to improve transparency were introduced.

The review of the impact of these measures comes after it was revealed that out of 371 pre-pack administrations since November 2015, just 53 were reviewed by a voluntary panel of experts.

The industry measures arose from the recommendations of the Graham Review in 2014, which found that prepack sales were a useful business rescue tool, but that there was evidence of less successful outcomes when the sale was to a connected party.

The pre-pack pool was one

of the measures, enabling an independent ‘pool member’ to provide an opinion on the

purchase of a business and its assets.

The sale of assets of Widdowson Logistics to Birds Transport Leicester and Fleetstyle Distribution’s sale to Gateway Wales are examples of pre-packs that did not approach the voluntary prepack pool.

The Insolvency Service said that its assessment will look at the impact of reforms on all connected party sales in administration.

It added that this would “help to inform decisions on whether further regulation is needed prior to the expiration of the regulation-making power” concerning property sales to connected parties in administration.

The government is considering the national roll-out of a lane rental scheme, which could see councils charge utility companies up to £2,500 a day for carrying out roadworks at peak times.

The decision follows the successful piloting of the lane rental scheme by Kent County Council and TfL, which reported significant cuts in the disruption caused to drivers during roadworks.

Both trials, which were due to end in March 2019, have now been extended indefinitely by the DfT. The TfL and Kent trials found the scheme discouraged utilities from carrying out roadworks at peak times and incentivised them to collaborate on works to avoid the same stretch of road being dug up twice.

TfL’s pilot scheme reported a 55% decrease in serious and severe congestion caused by planned utility works in 2015/16, compared with the 2010/11 baseline.

Announcing the extension of the two pilot schemes following a consultation on the subject that attracted positive support, the DfT confirmed that it is “considering rolling out the lane rental scheme to other areas in England”.

The DfT added that the roll-out of the scheme would begin in 2019.

8.1.18

04/01/2018 12:19:56

News extra

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With government proposals looking at changing the nature of the HGV Road User Levy, the freight industry is worried that complexity will inevitably place additional costs on hauliers. Carol Millett reports

Going the distance?

Government plans published late last year to evolve the HGV Road User Levy into a green tax have raised the hackles of the freight industry.

The levy’s original brief when it was launched in 2014 was to create a level playing field that ensured foreign hauliers travelling on UK roads paid towards their upkeep. However, the government is reviewing the levy with the publication of a “call for evidence” paper by the DfT, which appears to move the levy beyond its original brief.

Dubbed Reforming the HGV Road User Levy, the paper outlines plans to introduce time- or distance-based charges akin to those used on continental Europe. It states that the reforms are aimed at incentivising hauliers to plan their routes more efficiently and cut their carbon emissions by investing in efficient engines and telematics, as part of the government’s wider airquality agenda.

Image: Shutterstock

Distance-based charging?

The paper points to models such as the German and Austrian motorway distance-based charging schemes and asks for views on how these models “could work in a UK context, for example whether a charge based on the amount of distance travelled by HGVs and by the emissions class of vehicle, could help to meet these objectives, or a differentiated time-based charge”. It also asks for views on various technologies, including automatic number plate recognition and tag and beacon systems, as well as onboard GPS units.

While the paper acknowledges the current levy system has been a success, it adds that it has its limitations. It states: “The current levy is based on weight and number of axles, and it does not vary according to actual use and impact on the road network, nor 8.1.18

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does it reward operators that adopt best practice in route operation.

“It is therefore timely to consider whether there is more we can do to create a system that is fairer to industry, incentivises more-efficient use of our roads and better meets our environmental ambitions.”

Administrative burden

The paper also insists that the changes are not intended to raise more money from hauliers. It is keen to hear from respondents about how to reduce the administrative burden, suggesting the levy could be integrated with existing UK vehicle-charging regimes. These include toll crossings and future regimes, such as clean air zones. It could also continue to function as it does now, as part of the Vehicle Excise Duty regime.

However, despite these assurances, the RHA and FTA remain concerned that the proposals will inevitably place additional costs on hauliers.

Christopher Snelling, FTA head of UK policy, believes any move to introduce road charging would add a layer of complexity that would impose administrative costs on the freight industry. He told MT: “The levy is complex enough, and adding a further layer of complexity will make it harder for freight operators to remain compliant – particularly the introduction of time- or distance-based charging, which could be difficult to administer.”

He added: “It will make it more difficult to manage costs in the future, with variable charges on different roads or at different times. How will freight operators plan their costs? And that is all on the assumption that the government keeps it cost-neutral. But what guarantee do we have that that will remain the case? They could eventually

say the cost has to go up to affect driver behaviour, for example.”

The RHA also expressed concern that unless the proposals are costneutral, they will undermine the competitiveness of the UK haulage industry.

Rod McKenzie, RHA director of policy and public affairs, said: “We welcome anything that will improve the quality of roads in this country, and while this industry is happy to pay its fair share in taxes, we are against anything that puts extra cost on this already hard-pressed industry.

“So whatever the government decides to introduce, it must be costneutral, otherwise it will make this industry less competitive than its European counterparts, which, in the midst of Brexit, would be a disaster.”

McKenzie also questioned the DfT’s focus on HGVs as a source of congestion and emissions. “Why are they singling out HGVs for this charge?

Freight movement is central to this country’s economic life and lorries do not make non-essential journeys – they don’t have a choice in the journeys they make when the likes of Tesco are waiting for their deliveries. It is cars and vans that cause the most pollution, and yet it is hauliers who are being punished by an unrealistic tax that is not going to reduce congestion,” he said.

HGV guinea pigs

Howard Cox, head of campaign group FairFuelUK, believes the move is part of a longer-term policy to introduce road charging to all road users. He told MT: “The government is using HGVs as guinea pigs – and although we are not against a pay-as-you-go policy, first of all fuel duty has to be removed. We are the most taxed drivers in the world.

So it’s all very well pointing to the

CHARGING MODELS

Germany

A distance-based scheme that applies to HGVs of 7.5 tonnes and over, covering the entire motorway network and some principal roads. Charge levels are between €0.08 and €0.29/km, depending on axle configuration and Euro-emission standard.

Austria

A distance-based scheme for HGVs over 3.5 tonnes covering the motorway network. Additional tolls are also in place at certain motorway sections. Charge levels are set between €0.16 and €0.33/ km, depending on axle configuration and Euro-emission standard, and are subject to VAT.

Czech Republic

A distance-based toll collection that covers the entire motorway network and some first-class roads – 1,200km. Initially for HGVs over 12 tonnes but extended to 3.5 tonnes and over, the scheme is administered by Kapsch, on behalf of Czech government.

Charge is based on use of motorway segments, while users require an onboard unit.

German road-charging model, but their diesel is 20% cheaper than the UK’s – and that is a country with a green economy and yet it subsidises its commercial transport because it understands its importance to the economy. The UK government needs to realise it has to get its road and transport policy right first, to get the economy and environment it wants.”

MotorTransport 7

04/01/2018 11:32:18

News extra

motortransport.co.uk

In the first of a series of briefings for members following meetings with government ministers and officials, RHA chief executive Richard Burnett looks at the knowns and unknowns of Brexit

Into the unknown...

Known

On 29 March 2019 the UK will leave the EU, the single market and the customs union. This means the end of free movement of goods and people between the UK and the EU, and the introduction of customs controls.

There will be a transition period of approximately two years after this date, during which some or all of the EU regulations will continue to apply in the UK.

Image: Rex Features

Unknowns

Where and how these controls will happen is open to discussion. It has been agreed that there will be no ‘hard’ border between Northern Ireland (part of the UK) and Ireland (part of the EU), and both the UK and northern French local government agree that it would cause chaos to have physical customs controls at cross-Channel ports.

The UK is working on a new elec-

tronic customs clearance system to replace the Chief system, and the aim is to have goods cleared as early in their journey and as far from the port of entry as possible. The transport industry is calling on the government to release details of this system by March this year to give operators and shippers enough time to prepare the necessary systems.

But international hauliers should start working with their customers now to bring paperwork up to the standards that will be required to ensure smooth customs clearance: for example descriptions of goods must be adequate to allow a customs commodity code to be identified.

Domestic operators will not be immune, as any delays in the import of goods could affect delivery schedules.

A hard Brexit could lead to more demand for UK warehousing to increase buffer stocks, but this will be harder with perishable products, more of which may be produced in the UK after Brexit.

Known

EU residents in the UK will be allowed to continue living and working here after Brexit.

Unknowns

The procedures for identifying those entitled to remain in the UK have yet to be agreed. Foreign drivers undertaking international haulage are advised to obtain full passports as they may no longer be allowed to re-enter the UK using other identity documents that are currently acceptable. Even though EU residents may be able to enter the UK via Ireland with no immigration controls, they would still require a visa to enable them to work here legally.

UK operators should prepare for a

8 MotorTransport Untitled-2 1 MTR_080118_008.indd 8

decline in the availability of EU drivers and warehouse staff by recruiting and training more UK staff.

Known

When the UK leaves the EU, we can set our own cabotage rules to reduce or get rid of the current EU restriction of three domestic trips by foreign vehicles within seven days after unloading in the UK.

Unknowns

Policing of the current rules is poor and there are few reliable statistics on the amount of cabotage taking place in the UK. To avoid restrictions on UK hauliers undertaking cabotage work in the EU, the UK may agree to maintain alignment with EU rules in this area.

Known

On Brexit, an arrangement will be needed to allow the international movement of vehicles.

Unknowns Whether this will be a permit system or mutual recognition of O-licences has yet to be decided. The UK government is taking this opportunity to review the Lorry Road User Charging system, which charges foreign vehicles a flat fee for using UK roads. The RHA is opposing any moves that will increase UK hauliers’ costs or see hauliers funding a new road pricing scheme that will later be used to charge car drivers.

8.1.18 14/12/2017 14:04 04/01/2018 11:37:08

Focus: Business barometer

motortransport.co.uk

We’ve crunched the numbers to see what the UK’s economic outlook is for the year ahead

2018 outlook: you heard it here first As we embark on what is shaping up to be a year of unprecedented uncertainty, Business Barometer has scoured the latest, most respected, forecasts for the UK’s economic outlook, not forgetting that all-important oil price. All forecasts were published in Q4 2017.

We have calculated the median of the various projections to reduce the influence of any outliers.

GDP 3.5

Annual % change

3.0 2.5 2.0

GDP

1.5

When the first estimate of GDP growth for 2017 is published later this month most analysts believe it will show that the UK’s economy grew 1.5%, down from 1.8% in 2016. The overwhelming opinion is that the economy will continue to slow as investment, business confidence and consumer spending all feel the Brexit pinch. Most analysts expect to see growth of 1.4% this year, slowing to 1.3% in 2019.

1.0 0.5 0.0 2012

2013

2014

2015

2016

2017

2018

2019

OIL PRICE

Oil

120 100

$ per barrel

80 60 40 20 0 2012

2013

2014

2015

2016

2017

2018

2019

INFLATION 4.0

■ CPI ■ RPI

Annual inflation %

3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 2014 8.1.18

MTR_080118_009.indd 9

2015

2016

2017

2018

2019

The median forecast for the average price of Brent crude this year is $56.6 (£42.4)/barrel, just 4.6% up on 2017’s average of $54.1. Even better news is an expectation of a modest drop in 2019, down to an average of $55.7.

Coupled with the upbeat view of sterling’s future value against the dollar, this bodes well for continued stability of diesel prices during the next couple of years.

Oil producers are said to be keen to hold the price at around $55/barrel, believed to be just low enough to deter development of pricier shale oil. The International Energy Agency even suggested oil will remain between $50/ barrel and $70/barrel until 2040, whereas the US Energy Information Administration’s favoured projection is for Brent to climb steadily to $109/ barrel by 2040.

Inflation

The unanimous opinion is that UK inflation peaked late last year and is now on a gentle downward slope.

Taking the average of the 12 monthly inflation figures published each year, the overall 2017 CPI inflation figure is likely to be 2.7%.

Our forecasts expect it to nudge down to average 2.6% this year and then to 2.1% in 2019. RPI is likely to have hit an annual average of 3.6% in 2017 and is tipped to drop to average 3.4% in 2018 and 3.1% in 2019. But any

further shifts in the pound’s value in response to Brexit negotiations will affect costs of imported products and materials, upsetting these forecasts.

Sterling

There are no real prospects of the pound regaining the value it lost during the past couple of years. Forecasts for the Bank of England’s Effective Exchange Rate Index (EERI), which evaluates sterling against numerous currencies, suggested the pound’s average value in 2018 and 2019 will be within 2% of its 2017 average. That was the lowest since the EERI was rebased in 2005.

But there is some optimism about the pound’s future performance against the dollar. Its average value in 2017 was $1.29, but the CBI is forecasting $1.38 for this year, rising to $1.42 for 2019.

That currency boost would help suppress UK fuel prices. Opinions are divided when it comes to the pound’s performance against the euro. Some believe it will stabilise this year at its 2017 average of €1.14, but the majority view is that it will fall, averaging €1.12 this year and €1.10 in 2019.

Earnings and unemployment

With data from the final quarter still to come, it is likely that UK average earnings for full-time employees rose by 2.2% in 2017. Earnings are expected to pick up by 2.5% this year and then by 2.8% in 2019. Even though inflation is expected to soften, these modest projections indicate earnings will fall slightly in real terms. Analysts believe the UK’s unemployment rate – still one of the EU’s lowest – will shrug off much of the Brexit gloom. The rate is forecast to remain relatively stable this year at 4.4% before edging up to 4.6% to 2019.

Interest rates

The expectation is for the Bank of England to raise the current 0.5% base rate to 0.75% this year, probably in Q2.

A further rise to 1% is anticipated around mid-2019.

Sources: Bank of England; Confederation of British Industry; European Commission; HM Treasury (Independent forecasts); International Energy Agency; International Monetary Fund; Office for Budget Responsibility; Organisation for Economic Cooperation and Development; US Energy Information Administration; World Bank.

MotorTransport 9

20/12/2017 10:26:55

Viewpoint

motortransport.co.uk

Don’t settle on ordinary: consolidate

O

Image: Rex Features

The Grinch Mount Crumpit

cado’s admission that it has been held back by a driver shortage while motorists’ frustration gets worse because of the increasing number of side-street-blocking home delivery vans is a paradox for the modern age; how can we eat our cake if the distribution system chokes suppliers, streets and the public alike?

The answer would appear to lie in consolidation, something Britain’s HGV transport industry is rather good at – think Spalding, for example, and the fleets based in the area serving Britain’s fresh produce suppliers. At the consumer end of the pipeline, does it matter if these goods have been delivered to the store by a shared transport system? Of course not – eggs is eggs.

But things are different in the home delivery supply chain, where one supermarket-branded home delivery van may well be closely followed by another delivering the same or similar products to the house next door.

A DfT study revealed that 70 million fewer bus journeys would have been undertaken in 2016/17 compared with the previous year. A proportion of these saved journeys are doubtless due to the burgeoning home delivery industry. At the same

time, car ownership has increased. Presumably, a proportion of these cars are owned by people who avail themselves of home delivery services and are consequently freed to make alternative journeys instead – which raises the question of whether home deliveries generate environmental benefits or just add to the problem.

But the winds of change are blowing, driven by internet giants set on taking over every aspect of our daily lives, including the distribution of provisions currently supplied by supermarkets.

These online behemoths will not care one jot who delivers their products, they will simply opt for the most cost-effective option, ie: consolidation, which they will hawkishly monitor in every conceivable manner to eke out further savings.

And there’s sense in their thinking: after all, as Andrew Carnegie said: “The way to become rich is to put all your eggs in one basket, then watch that basket.”

To conclude, I offer another egg quote, one for traditional retailers to perhaps mull over. It comes from CS Lewis: “We are like eggs at present. And you cannot go on indefinitely being an ordinary, decent egg. We must be hatched, or go bad.”

It’s time we spoke out about road tolling O Steve Hobson Editor Motor Transport

ne of the many unforeseen spin offs from Brexit is that the government is taking the opportunity to review the HGV Road User Levy, with one proposal being revisiting the idea of some kind of road tolls. The levy was a clumsy but popular instrument designed to ensure that foreign trucks pay at least something towards the cost of using UK roads.

Finding a fair way to pay for fixed infrastructure such as the road network is always complicated.

In the past, Vehicle Excise Duty (VED) was supposed to reflect a rough estimate of the track costs of each vehicle class, based on the theory that larger vehicles wear out roads more and should pay more. That concept is long gone, and VED is now instead based on a rough estimate of the pollution emitted by each vehicle. This fixed charge still fails to reflect the fact that highermileage vehicles pollute (and wear out the roads) more than low-mileage ones.

One solution we have proposed is scrapping VED and increasing fuel duty to raise the same

10 MotorTransport MTR_080118_010.indd 10

overall sum. This is revenue-neutral both to road users and the Treasury, but those using more fuel and emitting more pollution – whether this is because they have an old, inefficient and probably dirty vehicle – or just do a lot of miles pay more.

Before the lynch mobs turn up at MT Towers, this does not mean a return to the despised fuel duty escalator, which was just an extra tax thinly disguised as an environmental measure. It would rebalance the way all road users pay for the road network, based on how much they actually use it and the damage they cause to the environment.

This of course fails to solve the problem of foreign vehicles arriving in the UK with 1,500 litres of cheap diesel and doing their three cabotage trips for free – which the levy does address. So is road tolling the answer? Let us know what you think.

The newspaper for transport operators

To contact us: Tel: 020 8912 +4 digits or email: name.surname@roadtransport.com Editor Steve Hobson 2161 Editor-in-chief Christopher Walton 2163 Group news editor Chris Druce 2158 Deputy news editor Emma Shone 2164 Group technical editor Colin Barnett 2141 Aftermarket editor Roger Brown 2168 Vans editor George Barrow 2156 Urban editor Hayley Pink 2165 Group production editor Clare Goldie 2174 Chief sub-editor Rufus Thompson 2143 Key account managers Andrew Smith 07771 885874 Richard Bennett 07889 823060 Display telesales Barnaby Goodman-Smith 2128 Group sales manager Julie McInally 2122 rtmclassified@roadtransport.com Sales director Vic Bunby 2121 Head of marketing Jane Casling 2133 Head of events/MT Awards Stephen Pobjoy 2135 Managing director Andy Salter 2171 Editorial office Road Transport Media, Sixth Floor, Chancery House, St Nicholas Way, Sutton, Surrey SM1 1JB 020 8912 2170 Free copies MT is available free to specified licensed operators under the publisher’s terms of control. For details, email mtsccqueries@roadtransport.com, or call 01772 426705 Subscriptions Tel 0330 333 9544 Quadrant Subscription Services, Rockwood House, Perrymount Road, Haywards Heath, West Sussex RH16 3DH Rates UK £135/year. Europe £163/ year. RoW £163/year. Cheques made payable to Motor Transport.

Apply online at mtssubs.com Registered at the Post Office as a newspaper Published by DVV Media International Ltd © 2018 DVV Media International Ltd ISSN 0027-206 X

Got something to say?

If you would like to contribute to MT’s Viewpoint, email steve.hobson@roadtransport.com 8.1.18

04/01/2018 11:07:46

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04/01/2018 09:32:34 12/12/2017 15:31:03

Interview: Paul Hayes

The 4th dimension KeyPL business unit director Paul Hayes updates Steve Hobson on the 4PL’s progress

T

he 4PL operation originally launched in 1986 by TDG for Corus (now Tata Steel) has changed hands twice since then, but is still going strong under the leadership of business unit director Paul Hayes, pictured below.

TDG was acquired by Norbert Dentressangle (ND), which rebranded the 4PL as KeyPL, and ND was in turn taken over by XPO Logistics in 2015. The current US owners have retained the KeyPL branding and injected some fresh impetus into the project, with improved IT and a wider geographical spread to its customer base.

“We’ve moved on in two distinct areas,” says Hayes. “One is from a technology point of view, enabling us to bring more added value to our customers, and to their customers.

European control towers

“The other element is that we’ve seen more demand for European control towers. While we have been traditionally UK-based, we’re becoming a European one-stop shop.”

One UK-based client for example manufactures cosmetics in Poland and Russia, and is now using KeyPL to ship product into other continental European countries, as well as to the UK. Like every other logistician, Hayes is waiting with bated breath to see the 14 MotorTransport MTR_080118_014-015.indd 14

effect of Brexit on the pattern of UK and European manufacturing and distribution.

“Who really knows?” he says. “We’re waiting to see what’s actually going to happen.

Personally, I think we’ll end up with something similar to what we’ve got today, because despite what everybody’s saying, Europe needs the UK and we need Europe.”

Matthew Howard, business relationship manager at KeyPL, is also philosophical about Brexit.

“Regardless of where the customer ends up making his product, they’ve still got to move it from A to B,” he argues “So, from a logistics perspective, the fact that we’re pan-European means there won’t be a tremendous change for some time in that regard.”

KeyPL is ideal for manufacturers requiring large volumes of daily deliveries throughout Europe, providing access to a pre-approved roster of hauliers at cost-effective rates with all the benefits of a 3PL. By pooling work and transport capacity, customers and hauliers enjoy the benefits of scale, including less empty running, higher efficiency and thus reduced costs.

While KeyPL only employs assets when the market does not provide

the right resources, being owned by a large multinational 3PL with physical assets in 1,425 locations in 34 countries means it is able to call upon substantial in-house resources when necessary.

“We did introduce 15 trailers of our own into Tata Steel,” says Howard. “But if you consider that was 15 vehicles out of the 2,000 employed there, it’s not a big number.

“We are also providing other services such as warehousing now for Tata on one part of the contract in South Wales.”

XPO retained the two divisions of ND, Transport Services and Logistics, and KeyPL sits within Transport. This operates a shared user transport network but would normally leave warehousing to Logistics.

“We are providing warehousing now, in Transport,” says Hayes. “We are also doing LTL [less than trailer load] work that can tap into our network. It comes through us so we still have the single point of contact for the customer.

We just deal with it internally.”

One difficulty faced by every large 3PL is how to deliver the full range of services it can provide in a coherent way to each customer in every industry sector.

“From a KeyPL perspective, if we get it right, we will be the customer’s entry point to all of these services,” says Howard. “It makes it much easier for the customer and helps us too.”

Hayes adds: “One beauty of a 4PL within a 8.1.18

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motortransport.co.uk

PUTTING KEYPL ON THE WEB

3PL is that you can introduce our whole range of services to them.”

XPO is investing heavily in its technology infrastructure to provide seamless access for customers to its full service offering.

“Customers have different requirements, whether it’s home delivery or delivery of big lumps of metal,” says Howard. “What we are trying to do – where possible – is to standardise everything. So, regardless of whether you want a barbecue or a TV delivered to a house or a section of steel to be delivered halfway across Europe, the service is the same.”

Helicopter view

This works both ways, in that the Transport network depots that have full truckload movements to fulfil can use KeyPL as an alternative to using XPO vehicles or their own subcontractors. By establishing control towers with a helicopter view across the XPO network – as well as the subcontractor fleet – resources can be used as efficiently as possible.

“I have the volume, and the subcontracting is beginning to migrate to a centralised platform,” says Hayes. “The more orders we can put into the pot, the more we can do with it.

“We can buy smarter and better, and we can link things up. That is a much stronger position than a local depot could achieve.”

KeyPL’s annual turnover is almost £120m, with contract wins and growing business with existing customers offsetting the loss of Agri Industries and reduced volumes from Tata Steel.

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One soft drinks manufacturer, for example, is looking to consolidate its European transport providers from 15 to just three, with KeyPL taking on its bulk transport and acting as the 4PL for most of its existing contractors.

KeyPL’s expansion into continental Europe sees it doing around £10m a year in international FTL business to and from the UK. This can be handled in three ways.

“First of all, we are filling up XPO fleet coming in or out of the UK,” says Hayes. “It’s just a case of ‘we’ve got an empty vehicle in the UK, can we find a load for it to go back?’ That is maybe 50% of what we do, whether it’s going back to France, Spain, Russia or wherever.

“We then have a small fleet of 25 trucks. The drivers come over from Poland, spend a month over here and we plan them and tramp them around Europe.

“And then the other element is pure subcontracting.”

Despite the fall in the value of the pound since the Brexit vote, there is still an imbalance of trade and there are plenty of foreign trucks going back to the continent from the UK empty.

“We use Waberers as one of our subcontractors,” says Hayes. “The imbalances are still there but the costs have evened out a little bit, compared to what they were 10 years ago when it used to be very cheap to go back into mainland Europe.

“The imbalance is not quite two-thirds, onethird anymore. For some countries, Poland for example, the imbalance actually went the other way at one point.” ■

The technology behind a 4PL can be as simple as a desk of planners with phones and a spreadsheet – but KeyPL has invested many millions of pounds in IT to web-enable its planning system.

“Everything now is completely web-based, so I get the same view regardless of whether I’m in the office in Scunthorpe, Linby or Crick – or in a McDonald’s car park – because we’re completely mobile now,” says Matthew Howard, business relationship manager at KeyPL. “Our primary application is the Web Transport Suite [WTS], which allows the team planning any particular operation to view their various tasks throughout the day. They can see how many loads need to be consolidated, how many are allocated, etc.

“If they want to consolidate particular customers, we’ve got various algorithms that allow for auto-consolidation.

What we’ve been working on over the past 18 months is to improve the level of decision support that we provide to the planners, giving them the tools to make intelligent transport decisions.”

As well as giving the planner options to place a load at various prices, it also suggests ways to optimise efficiency by combining loads, whether that is a backload or a triangulation. By generating various scenarios planners can look at the full range of options for planning any given load, including different modes of transport such as rail, road, air or sea.

Some customers, for example, are now routinely using rail for long-distance bulk shipments.

It is also possible to put the WTS into automatic mode so as orders come in they are allocated to a carrier with no manual intervention.

“We’re trying to push a lot more down that route because we want to put more effort into customer service,” says Howard. “So if the planners don’t need to make a decision they can let the system do it on a negotiated price with a carrier for a fortnight or a month or whatever.”

Once the loads are planned, the various carriers are given their work schedule by email, via a WTS mobile app or by logging in to their own screen on the WTS. “So each of the carriers has visibility of their activity,” says Howard. “They can go on the carrier board, and they can accept or reject loads.”

The WTS is the same platform on which KeyPL’s track and trace facility is based. “All of our carriers should be using our track-and-trace mobile application, which tells us where they are and tells them all the work they’ve got for the day for that particular route.”

The mobile app also provides an electronic proof of delivery facility, which KeyPL is gradually moving its customers on to.

“Some customers still like a bit of paper, and that’s just the way that they’ve gone about their business for many years,” says Howard. “That migration is proving a little bit more tricky, but generally we’re finding that people are going towards that. Certainly, outside KeyPL, on the pallet network, 75% of our customers are paperless now, and that’s the way we’d like to go from a KeyPL perspective.”

The track-and-trace facility also enables KeyPL to tell customers in advance when a delivery is on its way. “We’ll be sending email and text alerts out to customers with the status of their loads so they know when to expect delivery and can prepare,” says Howard. “When we started using track-and-trace, we went from what we believed was a 98% delivery performance to probably 78% on day one.

The pleasing thing is that we have now got a true delivery performance, and it’s back up to 98%.”

The KeyPL WTS is probably the closest thing any 4PL or indeed 3PL has come to a DPD-style planning, track, trace and information system. While the initial costs are high, the improved efficiency and customer service will reap dividends for the early adopters.

MotorTransport 15

11/12/2017 12:12:32

Power Players ELON MUSK Title Organisation

Movers and shakers Who is influential enough to make MT’s Power Players list?

Welcome to the 2018 Motor Transport Power Players, the editorial team’s take on who will be the key influencers – including some of those who are up and coming in the industry rather than the established names – on the transport and logistics industry this year.

We have decided to rule out politicians, regulators and trade associations this year just to

ALEX LAFFEY Title Organisation

MTR_080118_016-017.indd 16

Title Organisation

The Tesla boss certainly generated a lot of publicity with the launch of the Tesla Semi, the world’s first – and possibly last – electric long-haul truck. With the electric vehicle company burning through money like a 1990s merchant bank, the cynics suggested the Semi was nothing more than a PR stunt to attract more investment.

So why is Musk in Power Players? The answer is that even if the Semi never turns a wheel in anger, it has got people talking about the long-term problem of how the world will shift heavy loads over long distances in a future when diesel either runs out or is no longer allowed because of its carbon emissions.

While we here at MT seriously doubt a 38-tonne truck with 14 tonnes of batteries is the solution to this problem, every transport operator needs to start thinking about truly sustainable alternatives to fossil fuels (and that includes natural gas, which is a very attractive medium-term low-emissions heavy truck fuel).

JOHN AND STEVE CARTWRIGHT

NIGEL COOK CEO Eddie Stobart Logistics

Family firms have been synonymous with road haulage for four generations, but Eddie Stobart Logistics entered a new phase of its illustrious history in May 2017 when it broke away from Stobart Group and listed itself on the AIM stock exchange. Before the flotation, William Stobart stood down as a director, ending the Stobart family connection with eponymous haulage company founded by Eddie Stobart senior in 1970.

Laffey, who has 25 years’ experience with one of ESL’s largest clients, Tesco, came into the business in 2015 and is an example of the new breed of professional logistics bosses who were not born or brought up in haulage (think also of finance man Adrian Colman who runs the only other large listed British logistics firm, Wincanton).

There is without doubt a place for family firms in the transport industry – they can make decisions for the long term without worrying about pressure from shareholders for short-term profit – but they can suffer from difficult access to funding and problems with succession as the next generation often don’t fancy the high risk and low rewards of haulage.

16 MotorTransport

shake things up, as while roles such as the senior traffic commissioner, transport minister and head of the DVSA are vital, they are, by nature, immutable.

Hopefully this year’s list will be food for thought and perhaps a little controversial, so feel free to let us know what you think and who should be in next year’s line-up.

CEO Tesla

CEO Elddis Transport

With Brexit proving to be a cause of great uncertainty, smaller operators such as Nigel Cook’s Elddis Transport are to play a vital role in keeping the wheels of the UK economy turning.

A former MT Haulier of the Year, the company is putting “strong and stable” into action. Last year it recorded a turnover of £25.6m, and Cook said he was focused on steadily expanding its customer base.

“We’re trying to slowly grow the business, in a controlled manner, making sure we’re profitable, which is the most important thing, and we manage the cash flow to make sure the business is successful,” Cook told MT last year.

Whatever the outcome of Brexit negotiations, operators such as Elddis Transport – and MT readers in general – are sure to provide a consistent and vital service to the UK economy, without fuss.

Title Organisation

Joint MDs Tiger Trailers

When brothers John and Steven left the family firm Cartwright Group and said they were going to set up a rival trailer builder Tiger Trailers, they were met with a degree of scepticism. With the UK market already awash with product from domestic and overseas trailer builders, was there room for a brash new start-up to set up a new manufacturing plant from scratch? As it turns out there was, and Tiger’s first three years have been so successful it has just relocated to a bigger factory to cope with demand. Even better news is that Tiger’s success hasn’t been at the expense of Cartwright Group, which has just had a record year.

Tiger has benefited from some former Cartwright customers keeping faith with it and giving it initial orders – but no one can build a successful business on favours alone. Rather, the Tiger has roared due to genuine innovation in areas such as moving deck double-deck trailers and producing a quality product at the right price. Reports of the death of British manufacturing have been exaggerated.

8.1.18

20/12/2017 11:42:31

motortransport.co.uk

LLOYD DUNN

JOHN WILLIAMS Title Organisation

MD Maritime Transport

Title Organisation

CHARLIE SHIELS CEO DX Group

Title Organisation

CEO Arrow XL

Attracting and retaining good-quality drivers has been a headache for many operators in recent years. But Maritime Transport MD John Williams has taken major steps to ensure that his company is offering drivers a rewarding career.

Not only does it look after its existing driver workforce by providing high-quality toilet and shower facilities and competitive wages, it is also working on getting new blood into the industry through various driver training schemes.

Maritime Transport has teamed up with Scania to offer drivers that qualify through the manufacturer’s driving school a place on its year-long driver training programme. Drivers receive regular assessments, structured career progression and access to a long-term mentor.

Ex-armed forces personnel are also offered career opportunities at the container haulier, assisting with their transition into civilian life.

2017 was a hell of a year for DX Group. With an £80m loss to its name and a share price that has plummeted 90% since 2015, the eyes of the transport industry will be firmly fixed on new boss Lloyd Dunn as he tries to turn the business around, quickly.

Dunn has previous with business transformation, having been at the helm of competitor Tuffnells’ rescue in between 2002 and 2014, and has a personal tie to DX after his business Nightfreight was sold to the operator in 2012.

Surrounded by a new leadership team including fellow Nightfreight co-founder Russell Black, Dunn has the power to help one of the UK’s most recognisable delivery brands to sink or swim after years of difficulty. Lending the business £5m out of his own pocket suggests Dunn is feeling confident in the business’s durability, but only time will tell.

ArrowXL is one to watch this year. With former DPD man Charlie Shiels installed at the top of the two-man delivery business and an impressive growth trajectory that has seen annual turnover increase by half (49%) since 2013, we’re expecting great things from the former YodelXL, freed from its sister company’s infamous brand.

From a low of 2013 where it made a loss of £7m, the ship has been turned around and back in profit, culminating in a £2.7m pre-tax profit on £82m turnover in the year to June 2016 (its latest published figures as MT went to press). This from a habitually loss-making business is to be applauded, and despite a fire gutting one of its biggest sites last year, Arrow shows no sign of stopping.

Its AskXL tracking software and web app has revolutionised two-man delivery in the country and its customercentric ethos has won two MT Awards, to date. After assuming the CEO role, Shiels said he has “big plans for the future” of ArrowXL.

PETER FIELDS

MARTIJN DE LANGE

DAVID BATTY

Title Organisation

Director Kinaxia Logistics

Kinaxia Logistics has existed for a few years now – with its 2015 purchase of Lambert Brothers bringing it to wider attention – but it was in 2016 that it started to disrupt the market, and in some cases cause friction in its pursuit of a number of pallet network members.

It represents more broadly a wave of new consolidators in the SME section of the road transport market – James Dolan Group signalling similar intent with its purchase of Dooley Rumble in November – that are offering those with grey hairs an exit strategy.

With BC Transport becoming haulage company number nine under the Kinaxia brand, Fields has promised yet more activity to kick off the new year.

If the past year is anything to go by, there may well be another member of Kinaxia by the time you read this.

8.1.18

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Title Organisation

CEO Hermes UK

Martijn de Lange stepped into Carole Walker’s role as CEO of Hermes UK in November. That in itself would be quite a task at this MT Award-winning business.

The new boss has spoken of the advantages of having the former UK boss Walker running the Hermes European operation, but a true test of de Lange’s abilities will be how he negotiates the emotive issue of workers’ rights.

This has seen the company come under fire in the mainstream media, receive scrutiny from a select committee, HMRC getting involved and legal action from the GMB union.

There was a pause due in part to a referendum and then a general election, but the issue is far from dead. Depending on how well de Lange navigates the treacherous waters ahead, the potential is there not to simply affect just how Hermes runs its operation but the wider sector and road transport as a whole. That makes de Lange a power player in our book, and a man who could have a profound effect on many operators in the logisitcs sector.

Title Organisation

Fleet manager Abbey Logistics

Abbey Logistics appointed the highly experienced Batty as its fleet engineer to bring some extra technical expertise to the fastgrowing tanker company. Batty, also chairman of the influential British (formerly Brewery) Transport Advisory Committee, is evaluating a range of natural gas tractor units, a line-up from which DAF is notably absent.

Abbey has been a long-term DAF customer and it would be a significant step in the development of gas trucks if Batty recommends the operator – twice MT Haulier of the Year – goes for Iveco, Scania or Volvo gas trucks.

Batty is a hard-headed engineer, not a fluffy environmentalist, so he would never go for gas just for green window dressing.

Gas trucks would have to justify themselves on commercial, technical and driver acceptability grounds against established diesel vehicles before Batty would add them to his hard-working fleet.

We all eagerly await the outcome of his rigorous evaluation.

MotorTransport 17

20/12/2017 11:43:17

Fleet risk management

Risky business

Recent changes to the Ogden discount rate have made proactive fleet risk management essential. Louise Cole speaks to industry figures to find out how businesses can get protected

I

n March last year, the Ogden rate (or insurance discount rate) changed from 2.5% to -0.75%, throwing insurance markets into shock, and adding £3.5bn to the cost of personal injury claims, according to estimates from investment analysts EY. The government has just announced a victory for the insurance sector that will see a new mechanism brought into play in April for the calculation of personal injury payouts – this time expected to put the discount rate between 0% and 1%. What has become clear, however, is that fleets must work with their insurers more closely than ever to mitigate fleet risk.

The Ogden effect

The Ogden tables are used by courts to calculate the payout from insurance companies to those suffering life-changing injuries. The payout calculations include the likely lifespan of the claimant, the care needed, and their lost earnings.

However, as this will be delivered in a lump sum and not over a course of years, the likely return on invest18 MotorTransport MTR_080118_018-019.indd 18

ment (ROI) of the compensatory sum is deducted from the payout.

The move to -0.75% pushed the motor insurance sector to record-high combined ratios – in other words, the sector is losing money on fleet insurance. Zurich Commercial Insurance motor fleet specialist Steve Stock says: “The ROI on fleet insurance for 2016 [prior to the effect of Ogden] was reported as being -8%.

Insurers need to turn those figures back towards profit. So we need to increase rates per level of exposure and bring down the total cost of risk to protect our bottom line.”

Stock describes the motor fleet insurance sector as “burning capital” and lists the huge reserves insurers have had to put aside due to Ogden.

It is possible that the negative effect of the Ogden discount rate and the underlying poor results might force some insurers to leave the sector altogether, and some fleets could become uninsurable.

He says Zurich is now only looking for customers who are willing to be proactive and collaborative about fleet safety.

ALL CHANGE FOR OGDEN The change to the Ogden rate means many things: ■ motor and fleet insurers are losing money; ■ fleets have seen increases between 8% and 20% of their 2016 premium – and for some it will be far higher; ■ insurance renewals will have to be considered far earlier and in far more depth – by both sides; ■ open personal injury cases are being delayed wherever possible, until the new rate change comes in next year; ■ insurers will be focusing on preventive measures in fleets. Eliminating fraudulent claims and rapid first notification of loss will still be important – but the priority is preventing personal injury claims; ■ fleets will have to review their entire risk assessment and risk management strategy to ensure that its emphasis – and its effect – is on the prevention of collision.

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04/01/2018 15:13:54

motortransport.co.uk

BLM lawyer Elizabeth Wallace says the new Ogden figure makes claims cost up to four times as much, and the cost of reinsurance has increased by 175%. “We had a child brain injury case that was worth £2.3m the day before the Ogden change. The following day it was worth £6.7m,” she says.

If the rate reverts to 1% (currently the bestcase scenario), payouts will still cost half as much again as they did last year. (See table 1 of personal injury calculations at different Ogden values on the gov.uk website.)

Fleet risk management

If operators want manageable premiums going forward, they will have to invest in a proactive fleet risk management strategy. If they want to prevent major premium increases, they will have to prove to their insurer that their fleet risk is identified, minimised and managed.

“The average premium increase across the sector’s portfolio is reported to be 15%. The biggest part of every premium is the level of predicted attritional losses and the provision for the mid-size, large, and catastrophic claims,” says Stock, “so there needs to be a reduction in the frequency and severity of claims.”

“We need customers to be fully engaged,” he adds. “We want to spend time with them understanding their organisational risk, their policies and procedures, the causes of their proven risks and their theoretical risk. We need to identify which risks the operator will manage and then see initiatives from the organisational and managerial level down to individual drivers.”

Independent risk scoring

SmartDrive Systems vice-president EMEA Aidan Rowsome (pictured below left) says: “Insurers need visibility – seeing is believing.

These days even properly used telematics often won’t give fleets sufficient insight into their real risk exposure or the tools to mitigate it.

“You need both reactive and – most importantly – proactive systems. Many operators think their camera systems [such as that pictured above] will show them their level of risk but it won’t – it will only show incidents,” he says.

Rowsome says transport managers will never know about most of a driver’s risky behaviour unless it triggers an incident on their telematics or footage. “Even then, they either don’t have the context or root cause of the action, or they don’t have any experience in objective risk analysis,” he adds.

SmartDrive Systems offers a video-based driver analysis system that uses those typical telematics triggers – harsh braking, acceleration, swerving etc – to capture footage of the road and, crucially, the driver in 20-second clips, typically 10 seconds before and after the event.

This is then analysed by SmartDrive’s experienced road-risk team to identify the reasons behind the event and to score the driver for risk.

Insights that need to be acted upon are placed in a driver-coaching queue in a secure online 8.1.18

MTR_080118_018-019.indd 19

portal for the manager to use in training and then sign off. This gives a clear audit trail that shows the company has both identified and acted upon the risk.

Rowsome says that in order to prove a correlation between frequently unobserved risky behaviours and collisions, the SmartDrive team divided its previous year’s data into two groups – those drivers who had experienced collisions and those who hadn’t. They then scored their behaviours overall.

Collision drivers are consistently more distracted, 94% more likely to use a mobile phone, 64% more likely to be eating and 70% more likely to be yawning while driving.

In a separate analysis of all the events it has studied, SmartDrive has determined that for every 300 risky behaviours, fleets will have 29 minor collisions and one major collision.

Rowsome says once fleets have a true picture of their risk – with fully scored drivers, including an understanding of mobile phone use, seat belt compliance, distracted driving, etc – then they can afford to be more innovative with their insurer.

“Once you understand your real risks – your worst drivers and what they are really doing on the road – you can manage and mitigate those risks. At that point you can start to raise your insurance excess, or self-insure a greater proportion of the business with confidence and that will have an immediate effect on premiums,” says Rowsome.

Rowsome says insurers will also have to become innovative in the wake of the Ogden rise. “Traditionally, insurers only used past claims history to work out your loss liability, so new technologies would take a year or two before they would affect premiums. But with proper visibility of a fleet’s risk, objectively scored by a third party, your insurer can see your risk fall as soon as you deal with it. You can point to the risk identified and neutralised, so their response may be much faster.”

Approximately 95% of road traffic collisions involve human error, and 76% are entirely human-caused, according to the Royal Society for the Prevention of Accidents. SmartDrive Systems has now analysed more than 200 million pieces of fleet footage. It says 88% of all collisions could be avoided by better driving skills, and almost half of the not-at-fault collisions could be avoided by the driver had they anticipated better.

TOP TIPS FOR FLEETS ■ Talk to your broker or insurance partner now about how the Ogden rate change is likely to affect your fleet premiums. Start discussions months before renewal.

■ Start to discuss ways of identifying and mitigating risk that will provide immediate benefit.

■ Take steps to understand your real risk exposure. Look at: mobile phone policies, including hands-free calls, personal mobiles and protocols for contacting drivers while on the road.

Check how many wear seatbelts outside the depot.

■ Use technologies – such as camera footage – to exonerate fleet vehicles from fraudulent claims, expedite first notification of a collision and so manage claim costs.

■ More importantly, use technology, such as managed video analysis, to improve driver behaviour. Remember, no technology is effective unless you act upon the insights it gives.

■ Don’t allow the driver shortage to encourage managers to go easy on risky drivers. Driver safety should be at the heart of any retention policy and drivers who do not buy into a safety culture will cost far more than they generate in revenue.

In other words, the biggest part of risk reduction is proper education and control of the driver.

Reducing risk

Whatever technology or interventions operators choose, they will only be effective if managers act on the information they receive. This means having buy-in from the board and line management, because driver-coaching is time-consuming and organisational change is challenging.

It also means making sure that whatever information comes to managers is in the simplest, most actionable form. Reams of telematics data, or hours of camera footage will not, in all likelihood, be manageable or useful. Ensure the system delivers clear, simple directives, showing the problem, the driver and the specific behaviour to be coached. It is also important, says Stock, to ask the driver whether the behaviour is driven by the demands of the business, and, if so, to implement organisational change. ■

MotorTransport 19

04/01/2018 15:14:19

Interview: Mike Cooper

This will be a year of change Yodel CEO Mike Cooper has a four-point strategy to turn the loss-making carrier around after eight years of losses. He tells Emma Shone how he is going to put it into action

Y

odel has been haemorrhaging cash for so long that its CEO Mike Cooper used the word to describe his company’s past results. In its eight years of life, Yodel has never managed to turn a profit.

In its most recently reported financial year, to 30 June 2016, the carrier waved goodbye to £50.4m in its seventh consecutive pre-tax loss since the company was formed with the merger of Home Delivery Network with DHL Express’s domestic operation in 2010.

But all that, according to Cooper, is about to change. With a restructured operations team, extensive IT investment and a four-point strategy

to drive the bottom line, Cooper says this year will be a year of change for the better at Yodel.

Cooper became the latest in a series of CEOs appointed by Yodel’s billionaire owners the Barclay brothers in February 2016, on the day an episode of Channel 4’s Dispatches aired footage of the carrier’s employees throwing and walking over consumers’ parcels.

“It wasn’t the greatest introduction to the company,” Cooper tells MT, “but we went into that episode with huge trepidation and, OK it wasn’t hugely flattering, but if you look at the content they had to go back some way to find all the footage to pull it together.

“But it was a wake-up call for us – it was good for us to be able to say ‘this cannot happen again’. I told the teams to assume that there will be journalists around over peak, so what we do has to be up to scratch.”

Lost identity

Joining Yodel from EasyJet, Cooper was under no illusion that the business was in good shape numerically. But what did take him by surprise, he says, was that Yodel hadn’t just lost millions of pounds; it had lost its identity along the way.

“I did 72 one-on-one meetings when I arrived, and the recurring theme from people inside and outside the business was that they didn’t know what Yodel stood for. Our big clients would say we know what DPD stands for, we know its legacy, we know what it’s good at. We know what Hermes stands for, with its lower cost model. But then there’s Yodel sitting in the middle of it, with not much view of itself in terms of its identity and its market position.”

Cooper made it his and his leadership team’s mission to articulate how Yodel was going to 20 MotorTransport MTR_080118_020-021new.indd 20

succeed, and its direction of travel. The answer, they decided, was to differentiate itself to its clients by personalising the service it offers each retailer.

“I don’t believe there is anyone in the industry doing that credibly at the moment,” says Cooper. “Every day we get feedback from 4,000 consumers around the UK. That’s gold dust to our clients. We can personalise the data they receive to different parts of the country, for example. We present it on a dashboard for them and we can say ‘this is what your clients are saying through us’.”

Silent branding

Instead of sticking its branding all over its clients’ website and apps, Yodel plans to integrate itself silently into the background for those retailers that opt for its Xperience service.

“Retailers want to build a brand that brings people back to shop with them, and says we’ll deliver your order too. So rather than sending the consumer to a different website or app, we’ll embed our functionality onto the retailers’ website. So the Yodel brand becomes silent, almost invisible.”

Creating this point of difference is a strong selling point because consumers shopping with different clients have different expectations from the delivery service they receive.

“Talk to the marketing director of John Lewis about the relationship it is trying to build with its customers and you get a different response from the logistics carrier manager from Missguided. So while consumers may say it’s delivering a parcel, for our clients’ businesses it’s a very different type of experience that they’re trying to create.”

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motortransport.co.uk

Bespoke client experience is just the first of four strands to Yodel’s strategy to improve its bottom line, which Cooper believes will cross into profit in the next 12 months.

The second goal is to create a more flexible transport network, which included adding Sunday deliveries to its portfolio and changing final mile drivers’ long-standing terms and conditions. “To get a more efficient cost base we spent six months [of 2017] negotiating with three trade unions. It’s a seven-day market and we’re asking people to step up to that. So there are some tensions,” admits Cooper. “When I arrived I also asked why we were running a certain trunking schedule. And the answer was that they’d always run that trunking schedule.”

Yodel eventually won the seven-day flexibility it needed after tough negotiation with the unions and three ballots. “We had to sweeten it. And I think you look at yourself in the mirror and know that is the fair and right thing to do,” he says. “In any business you’re running these trade offs between a shareholder who’s haemorrhaging cash on the one hand and guys who’ve had T&Cs and ways of working for a long time.”

Innovation

The third strand of Yodel’s strategy is to create a more stable and innovative platform for its data, and to use it in a more effective way. The carrier has spent more than £20m on IT upgrades in the past two years, replacing an inefficient technology infrastructure that was a hangover from Yodel’s integration with DHL Domestic in 2010.

“DHL Domestic and Yodel both had their own systems, and both stemmed from the 1970s and 1980s. And we bound those two 8.1.18

MTR_080118_020-021new.indd 21

ageing, creaking systems with a bit of a string, and that was Yodel’s IT system until now.”

In its 2016 peak, Yodel processed data that would have taken more than 24 hours using its old IT system. With the upgraded version, it took just 20 seconds.

“We’ve made great progress in that area,” Cooper says, “but there’s still a lot more to do.”

The fourth and final strand to Yodel’s game plan is to ensure its people are engaged with the business and doing their best work.

“We have about 10,000 people, and peak is about 13,000. If those people aren’t engaged – if they don’t understand the direction of travel, feel committed and understand their particular role – then you’re knackered.”

To this end, Cooper replaced much of the operations team after joining the business, restructuring and strengthening it with three key senior appointments including former Marks and Spencer logistics director Adrian Harris. He says their role, ensuring parcels get from A to B, underpins Yodel’s future.

“You can come out with all the fancy strategies in the world, but unless you’ve got that underpin of boringly consistent delivery, forget whizzy new tech, your clients don’t want to talk to you about that. They want to know why it went wrong last week.”

While Cooper concedes that DPD has set a tough benchmark for delivery standards in the parcel sector, he believes that other carriers will catch up in that area, while Yodel blazes a trail in its client-focused strategy.

“In terms of the end consumer there’s some hygiene stuff where you have to be at a certain level or you’re just not credible in tomorrow’s market. But that’s not a point of difference. We

will be good enough at that, and be better at creating a different experience for retailers.”

Another hurdle Yodel is working to overcome is its public reputation, which has taken a beating in the past. But Cooper says its reach of three million households a week puts the business in good stead to do this. “The Yodel brand was toxic, but we’ve got three million people a week consistently saying we’ve provided a good service. If we were touching 50,000 houses a week our ability to change how people view the brand would be very limited,” he says.

Transformation

Cooper believes that its troubled background actually gives Yodel an advantage when it comes to business transformation.

“The more successful the organisation, the more difficult it is to change. The one good thing we have here is we know we haven’t been as successful as we could have been, so we can build on that and turn it into something different and positive.”

But how many years will the Barclays continue to put money into Yodel’s pockets?

Yodel’s shareholders, Cooper understands, are in it for the “medium term”. “They’re very proud of the businesses they’ve built elsewhere and they want to be similarly proud of the businesses they’ve built here.”

Cooper says he and his team have given shareholders a credible growth strategy that they are delivering against and that progress has been good. “We’re not locked into a market where you can make very little change, and that’s one of the reasons I joined,” he says. “In 18 to 24 months, Yodel will be dramatically different.” n MotorTransport 21

03/01/2018 14:41:02

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04/01/2018 09:34:25