Logistics: Bite-Size Insights - May 2022
In this edition of Logistics: Bite-Size Insights, we review the recent government proposals relating to hauliers and examine the impact of the Russian invasion of Ukraine on the logistics industry.
Are we due to see further attempts to limit the impact of Brexit on hauliers?
The impact of Brexit on the haulage industry is well versed – as are the various attempts by the government to limit such impacts, as covered in our previous publications. In our October 2021 edition we considered changes to the HGV driving test rules, in our December 2021 edition we looked at the Department for Transport’s (DfT) proposal to allow unlimited cabotage movements until 30 April 2022 and in our February 2022 edition we looked at the changes to the operator licencing regime.
And here we are again – another consultation and another proposal to try and tackle the issues that have arisen following the UK’s departure from the European Union. The DfT has recently advised that it is looking at proposals to allow specialist events haulage companies to temporarily transfer their vehicles between GB operator licences and operator licences registered in another location. A ‘specialist events’ haulier is one that transports specialist equipment for cultural events. The proposal forms part of the efforts to help specialist hauliers adapt to working under the UK-EU Trade and Cooperation Agreement (UK-EU TCA).
Currently, under the UK-EU TCA, UK hauliers can undertake up to two laden journeys within the EU following a laden journey from the UK, with a maximum of one cabotage movement (i.e. movement of goods within a single country by a foreign-registered haulier).
While most hauliers can operate as they did before Brexit, specialist hauliers’ reliance on cabotage movements means they are particularly affected.
The proposal will allow specialist hauliers to undertake journeys in:
The UK on the basis of their GB operator licence.
Another location on the basis of their other operator licence.
Specialist hauliers will not, therefore, need to change vehicles or have journeys limited by international market access rules.
The DfT hopes this measure will assist specialist hauliers to adapt to operating under the UK-EU TCA once after the temporary arrangements allowing international hauliers to undertake unlimited cabotage movements in the UK within a two-week period ends on 30 April 2022.
The DfT’s consultation closed on 18 February 2022 and – notwithstanding the recent end of the temporary cabotage provisions - the government’s response is still awaited.
Insurers and insureds should consider their policy conditions carefully if the new proposals are agreed, and in the ‘transition period’ between implementation of new rules. Even if legislation provides for certain movements, some insurance policies will not provide sufficient cover. Some policies will, for example, exclude cabotage movements.
Will greater funding be the answer to the driver shortage in the UK?
The government has recently allocated significant funds to improve roadside security and facilities for heavy goods vehicle (HGV) drivers. The government’s aim is to improve working conditions in order to retain HGV drivers currently working in the field and to encourage new drivers, in light of the current shortage in the UK. This is backed by an overall £52.5 million investment in driver facilities in order to address recruitment issues that have plagued the industry for years.
The Office for National Statistics show the number of people working as HGV drivers in the UK has fallen by 53,000 (16.5%) in four years, from 321,000 in 2017 to 268,000 in 2021.
Both COIVD-19 and Brexit have played a big part in this. A lot of EU drivers returned to their home countries before lockdown, as travel began to be restricted and prospective drivers were unable to learn or take the lorry driving test during the pandemic. In addition, lorry driving in the UK is no longer an attractive option for new EU workers due to the increased bureaucracy of Brexit and inability to freely travel back and forth.
The government funding will go towards improving security, showers and eating facilities as well as exploring increasing parking spaces for lorry drivers. Roadside service operators are being encouraged to apply for the multimillion-pound fund immediately with the aim that this will encourage more drivers into the field.
Other measures taken in the haulage industry:
£34 million was invested by the government to create new skills bootcamps to train over 11,000 more people to become HGV drivers in England.
The number of HGV driving tests available increased by 90% compared to pre-pandemic levels and the processing of provisional HGV driving licences has been prioritised.
This increased funding will be a welcomed development for HGV drivers. The lack of suitable roadside facilities remains a key barrier to recruitment, in light of the risks that HGV drivers face when taking their regular rest periods and overnight mandated rest breaks, which are required by law.
It is expected that safeguarding the comfort and safety of HGV drivers will assist in encouraging these key workers back into the industry and help to avoid supply chain disruptions and shortages, which have been impacting UK businesses and their insurers in recent years.
Improved facilities should also hopefully see safer parking areas and a reduction in thefts from parked vehicles. This, in turn, should be a welcome improvement for hauliers and insurers alike.
Russia-Ukraine Conflict: the cost of war
As the Russia-Ukraine conflict deepens and global governments continue to impose increasingly severe sanctions on Russia, the effect of this conflict on the logistics industry is increasing.
One of the glaring impacts facing hauliers is the ever increasing price of oil. With oil prices increasing, hauliers are likely to feel the impact at the fuel pump. Fuel prices have been rising since 2020 and the continual question around how to absorb those costs is nothing new.
Ultimately, the increase in oil prices means either hauliers have an even tighter margin on freight rates, or the customer pays.
The pricing issue is, of course, if fuel can even be purchased at all. Commercial and domestic drivers have all recently experienced the frustration of getting to a petrol station to find all the pumps are empty. This may result in an impact on contractual delivery times which means that contracts should be checked to see if there are any penalties for late delivery. Similarly, insurance policies should also be checked; whilst a contract may have penalties for late deliveries, the policy may not cover claims for delay.
It is important for hauliers and insurers alike to consider how they wish to approach claims that will inevitably stem from the conflict. Do hauliers absorb the costs on the basis that it is, perhaps, a temporary situation? Or could that be considered a naive approach when, arguably, the conflict may create long lasting increased costs and delays.
Perhaps now more than ever, hauliers need to think about investing in greener vehicles and the use of alternative fuels. We considered the risks and benefits of autonomous vehicles in our June 2021 edition.
Contact: Shaan Burton
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