Logistics: Bite-Size Insights - July 2023

In this edition of Logistics: Bite-Size Insights, we review the latest UK Government initiative impacting the haulage industry, consider the Supreme Court’s recent judgment around recoverability of excise duty under the CMR and provide an update on the rising risks related to clandestine entrants.

Bigger lorries, bigger savings?

In an attempt to boost productivity in the ever troublesome supply chain, the UK Government has announced that as of 10 May 2023, legislation is in place to allow longer lorries on the roads.

Whilst the volume of goods may be the same, it is estimated that there will be 8% fewer journeys than are currently being carried out. The Department for Transport has said that this equates to one standard size trailer being taken off the road every 12 trips. In money terms, the Department for Transport has estimated that this will generate £1.4 billion in economic benefits.

This will of course have an impact on the emissions being released into the atmosphere with a direct benefit to hauliers if it means that less charges are to be paid. The UK is moving towards a greener supply chain with the introduction of ULEZ and congestion zones around the UK. Those classified zones attract a fee if certain vehicles are not compliant. However, if there are less vehicles needed, this could be a welcome saving for some haulage companies.

However, as with any new legislation, the Department for Transport has advised that it “expects” additional safety checks and training to be put in place. Therefore, once again, this is perhaps just another hit on the already strained supply chain industry. With bigger lorries comes a bigger, more experienced skillset required – a skillset that the haulage industry will need to develop at its own expense.

The Department for Transport has suggested that further training will be required in scheduling, record keeping, route planning, training and loading. The press release from the Department for Transport has also stated that:

Operators will be legally required to ensure appropriate route plans and risk assessments are made to take the unique specifications of LSTs into account.

It is no secret that the haulage industry is struggling with a shortage of HGV drivers. This may serve to be yet another sting in the tail when trying to recruit experienced drivers that will have the required legal qualifications to drive these longer lorries. However, the most recent records shows that the Driver and Vehicle Standards Agency (DVSA) carried out 29,384 HGV tests for the period March 2022 to May 2022. This is an increase of 54% on the same period for 2019 … a glimmer of hope perhaps.

Insurers will need to be aware of these changes and make sure that their insureds are keeping them up to date with the fleet it is operating. Larger lorries will of course have a larger volume of goods being transported at once and, therefore, a larger risk at one time. Policies may need to be reviewed when considering "per vehicle" limit, together with any conditions attached to the policy terms in respect of the training of drivers.

Contact: Shaan Burton

Recoverability of excise duty under the CMR

The Supreme Court has put the question of the recoverability of excise duty under the CMR beyond any doubt and reintroduced certainty as to the English Courts’ position on this point.

Moreover, it has provided useful guidance as to how to determine what additional “charges” can be recovered from a carrier under Article 23.4 of the CMR, in addition to the limits of liability.

This upholds a precedent that, despite academic and judicial criticism, has been effective for almost half a century and has not given rise to substantial concern, prejudice or commercial difficulty in either the logistics or insurance industries. Liability for excise duty is a recognised risk for both parties, and insurers manage this accordingly.

Chris Chatfield, Partner, London

Read here a summary of the judgment and what this means for future claims under the CMR.

Contacts: Chris Chatfield and Sara Askew

Clandestine entrants – a heavy price to pay

Pursuant to the Nationality and Borders Act 2022, the UK Government plans to increase the penalties that may be imposed under the Clandestine Entrant Civil Penalty Scheme. The hike is significant - one particular fine is set to increase from £2,000 to £10,000 per entrant.

It is easy to see that this increase could very likely be financially crippling for a driver and for the driver’s haulage company. This impact quickly rises when more than one clandestine entrant is found in the vehicle.

Drivers, and companies alike, should also be aware that fines can still be issued even if no clandestine entrants are found in the vehicle; all road hauliers are required to have an effective system in place to prevent people from using their vehicles to enter the UK illegally.

This is clearly a move by the government to force haulage drivers and companies to prevent the people from being able to gain access to the vehicle in the first place in order to enter the UK illegally – the fines being an early incentive to consider the security of a vehicle. The list of standard checks that will be expected can be found here.

Hauliers should also consider their insurance terms – cover may of course be subject to certain security requirements being in place; for example, padlocks to be used on all vehicles. Failing which hauliers could find themselves with a hefty fine from the CECPT, a claim from its customer and no insurance to assist.

See our earlier update on clandestine entrants here.

Contact: Shaan Burton