Logistics: Bite-Size Insights - December 2021

Welcome to the latest edition of Logistics: Bite-Size Insights, where we focus on all things haulage-related, providing oversight of current developments and topics of note in the industry.

In this edition, we explore the supply chain crisis as it continues to be headline news. We look at potential solutions, the impact on accidents and personal injury claims, and how understanding the geo-political landscape can assist businesses and their insurers.

Cabotage – a workable solution?

The subject of how to solve the current supply chain crisis has been debated at great length. Companies, industry bodies and the government are all desperately trying to come up with that magical solution to alieve the pressure on the haulage industry – a pressure that has increased with the Christmas season demands.

The Department for Transport (DfT) has recently concluded a consultation in respect of implementing a temporary legislative extension of road haulage cabotage in a bid to reduce some of this pressure.

Cabotage is the transport of goods (or passengers) between two places within the same country by a transport operator from another country. Prior to the consultation, the UK allowed EU heavy goods vehicle operators the right to carry out two laden transports within seven days of arriving in the UK.

The DfT has, following consultation, agreed to allow unlimited cabotage movements of heavy vehicles within Great Britain for up to 14 days after arriving in the UK. Put simply, this means that when a non-UK operator enters the UK, that haulier can then carry out an unlimited number of domestic movements within the UK for a period of 14 days.

The view is that if non-UK hauliers are permitted to carry out additional movements, this will ease the demand on our own domestic haulage companies. The extension was agreed on 28 October 2021 and will continue until 30 April 2022.

Whether this will ease the current supply chain issues remains to be seen.  

It is interesting to note that the extension was agreed despite three quarters of those consulted voting against the suggestion of extending the cabotage period. Concerns over UK businesses being undercut, driver pay being compromised, safety and access to parking facilities were raised as reasons for objecting to the current extension.

The DfT’s position is that the extension will not have an impact on haulage rates or driver pay and that any non-UK haulier coming into the UK still needs to comply with the UK’s driving hours rules, laws for condition of vehicles and standards for operating licensing. 

This extension may be welcomed by those companies who have struggled to source enough drivers or vehicles from the UK as it allows an additional resource that the DfT says is essential to get the supply chain back on its feet.

However, one thing to keep in mind is haulier liability policy terms - some haulier policies may not provide cover if goods are carried pursuant to cabotage.

It is perhaps understandable that such policies may exclude cover for such movements due to the concerns raised in the consultation. Whilst there are regulations in place that non-UK vehicles and drivers must comply with – whether they have done so is another matter. Before engaging in any cabotage movement, it is worth checking the insurance position within your policy.

Related items:

New solutions, new problems?

The shortage of drivers and the proposed remedies might potentially exacerbate what are already common causes of accidents and personal injury claims.

Are your drivers and cargo safe?

Road traffic accidents (RTA) involving HGV lorries are already a significant danger to other road users and pedestrians. Despite making up only 4% of London’s traffic they are responsible for three quarters of fatal collisions with cyclists.

Reductions to training requirements (specifically the scrapping of tests to tow trailers up to 3,500kgs, which 3 out of 10 drivers previously failed) and the increase in allowable hours per week for HGV drivers (from 56 to 62) may increase the risk of an accident as under qualified and overworked HGV drivers take to the roads.

Temporary visas have also been introduced. This could lead to an influx of drivers unfamiliar with driving on the left and whose training falls below the levels required in the UK. Previously, training of foreign drivers was – if possible – provided in their first language.

Post-Brexit and as a result of COVID-19 challenges, business may not be so diligent about the level of training now provided.

In addition, those returning to the industry may be out of practice and require refresher training, which may not be available. As a result, there is a real risk of an increase in accidents and subsequent RTA claims involving HGV vehicles.

Claims may not only come from third parties. The increase in hours means that HGV drivers will be sat for longer periods, potentially under more stress than normal. It is well established that prolonged periods of sitting and/or stress can cause or contribute to musculoskeletal problems. Due to lack of staff and unloading delays, drivers could also find themselves at an increased risk of suffering manual handling injuries if they assist in unloading operations without first undertaking sufficient training.

As a result, hauliers could see an increase in claims relating to driver injuries, particularly back injuries – and this is could be something of a silent catastrophe. It is not beyond the realms of possibility for a large percentage of the workforce to begin to suffer from such stresses, particularly following a busy period such as the festive season.

Is the industry able to take yet another blow such as an influx in personal injury claims where the driver is not physically fit enough to work?

Careful consideration must be given as to how to remedy this problem. The current supply chain solutions offered may ultimately lead to a higher level of personal injury claims across a wide variety of areas. Hauliers must ensure that sufficient training is provided to staff to keep their employees (and their businesses) safe.

Read the full article: HGV shortage: risks for the personal injury market

Geo-political impact

While supply chain problems can appear to be very close to home, they are of course one of the most global of risks and, as a result, are particularly sensitive to shifts in the geo-political landscape.

Solving the UK driver shortage is not the end of supply chain risks. Future claims will continue to arise from a variety of sources: bottle necks and availability (or not) of warehousing space; problems in physically moving goods due to strikes and protests; the increased risk of hijacking and theft due to limited available routes, looting or security presence being removed from storage facilities.

The inability to move goods also leads to an increased risk of theft and potential fraudulent claims with malicious actors taking advantage of the inability to track goods. Supply chain management may become more difficult to control. Global sanctions may change as situations develop, resulting in ports being declared unsafe, leading to policy coverage disputes. 

Understanding the political direction of travel at a country level is increasingly significant for businesses operating across international borders.

Our report demonstrates how salient macro-political issues are among grassroots communities, providing businesses and their insurers with a clear understanding of emerging risk to enable long-term sustainable operations.

Read our full report: Geopolitical outlook: Kennedys' business risk barometer

Update on Clean Air Zones (CAZs)

In our June edition of Bite-Size Insights we considered the push for cleaner air in cities across England. The UK Government has now announced that CAZs will now be introduced in Manchester, Bradford and Portsmouth.

Manchester and Bradford became part of the scheme from 15 November 2021 and Portsmouth from 29 November 2021.

As referred to in our June edition, the introduction of such zones will mean additional costs that will need to be considered by hauliers when moving goods in those areas.