Logistics: Bite-Size Insights - September 2022

In this edition, we consider the impact of the ongoing strike action at UK ports, the future of clean air initiatives, and the UK Government’s latest proposals to ease the current HGV driver shortage.

Another strike another setback for the haulage industry

As we get over one set of strikes, the industry faces yet another round of disruption.

Earlier this month, management at the Felixstowe Dock and Railway Company ended pay talks after an offer to pay a 7% increase was rejected by 82% of those who voted. The proposed increase has been received by the workforce as a pay cut in view of the current inflation rate at 12.3%.

In response, a second strike has been announced for eight days beginning at 7:00 am on 27 September 2022 and ending at 6:59 am on 5 October 2022.

This is in addition to industrial action at Peel Ports in Liverpool (which was delayed to observe the national period of mourning for HM Queen Elizabeth II). The 11 day strike by the 500 workers at the UK’s fourth largest port is over pay disputes.

Peel Ports accounts for 12% of the UK’s container freight imports. Felixstowe is the UK’s largest port and is responsible for 48% of the UK’s container goods. These overlapping strikes will cause unprecedented delays and will have a significant impact on the haulage industry.

Hauliers have reported that there is already a shortage in the supply chain resulting in customers running low on stock. That shortage will inevitably be amplified by the ongoing and planned additional strikes. Some hauliers reported losses in excess of £1 million from the first strike so this further action will not be welcome news.

Hauliers are advised to check whether an alternative drop-off and collections may be arranged. If the contract with customers has a requirement for delivery by a certain date, such contractual terms will need to be varied to take into account this month’s additional disruptions. It is preferable that this is done now, rather than deliver goods late and negotiate variance to terms after the event.

Hauliers may have cover for such strike action and wordings should be checked by both insureds and insurers to see where they stand in respect of potential claims for delay or non-delivery.

Contact: Shaan Burton

A stumbling block for the Zero Emission Zone (ZEZ)?

In our June 2021 and December 2021 editions of Logistics Bite-Size Insights, we considered the UK Government’s plans to tackle air pollution. The government introduced measures to improve the air quality and health of those who live in congested areas – aptly named the “clean air initiative”. A number cities, such as Bath and Birmingham introduced Clean Air Zones (CAZs) as part of this initiative.

This presented challenges for hauliers, predominantly by way of additional costs. This was either in the form of a charge under the clean air schemes, or additional costs in taking longer, more indirect routes that avoid those areas. It was estimated that an additional daily charge of £100 equates to an extra 25% on the daily running costs of a non-compliant vehicle.

These charges are not insignificant and need to be absorbed somewhere along the supply chain. With freight rates already squeezed, the increase of CAZs could be a significant economic factor for a lot of hauliers. Top this with the substantial increase in fuel prices and hauliers have a very serious commercial problem to deal with.

In response, the RHA took the step to lobby Oxfordshire County Council, which has resulted in the postponement of their plans to expand their Zero Emission Zone (ZEZ) from next year. Instead, the council plans to introduce traffic filters “on an experimental basis” from next summer. The even better news is that the commercial vehicles are exempt from the experimental traffic filters.

RHA Managing Director, Richard Smith, has been reported as saying:

Of course we all want the cleanest air possible – none more so than the operators of commercial vehicles; trucks, coaches and vans. We are already doing all we can to address the issue but the timing of the ZEZ is dependent on the state of the commercial vehicle market to deliver and until zero emission HGVs and coaches become readily available, and a price that operators can afford, it will be an uphill struggle. However, we welcome the response from Oxfordshire County Council and look forward to working with them and others on the technical issues so that air quality targets can be achieved.

Whilst this only applies to Oxford, it may be a sign of things to come as the government’s clean air initiatives might not be such a priority area under the government’s new leadership. That said, a slowing in pace does not mean that it is not coming – hauliers should consider more clean air solutions sooner rather than later to avoid being left behind in the logistics market. They should also anticipate that certain ‘green’ requirements will be written into insurance policies, or reflected in premiums.

Contact: Shaan Burton

A call for drivers

It is of no surprise that Brexit and COVID-19 caused a catastrophic shortage of drivers in the haulage industry. The Department for Transport (DfT) has attempted to introduce a number of measures to tackle the problem, such as a revision to the driving test and the amount of journeys a driver based outside of the UK may complete within the UK.

However, the crisis continues.

The DfT is once again evaluating what it can do to tackle the issue and has recently launched a call for evidence on:

…the economic benefits of widening the recruitment pool for medium-sized goods vehicles and minibus drivers, which may attract more people to the industry and support economic growth by further strengthening our supply chain. It is clear that, prior to 1997, new drivers of any age had the freedom to drive a wider variety of vehicles, including cars with trailers. I, the Department for Transport and government are seeking opinions on reverting to these ‘grandfather rights’.

The call for evidence is open until 28 October 2022.

As this is a call for evidence opposed to a consultation, the 88 questions contained within the response form are aimed directly at freight and haulage operators, allowing those impacted to have a say in government reform.

Hauliers and insurers alike should carefully consider whether such revisions to the “recruitment pool” will have an impact on their respective businesses, and if they want to take this opportunity to engage with the government on these proposals.

The proposals could mean that drivers with far less experience and driving qualifications are permitted to carry out haulage roles. That lack of experience could increase the risk of accidents or even delays due to lack of knowledge of certain routes, loading and unloading procedures, or even standard paperwork requirements. This in turn creates additional insurance claims which increases the risks for insurers and, eventually, premiums for hauliers.

As a result of the potential change in driver qualifications, certain requirements as to a driver’s experience may be written into future insurance policies, and these should be reviewed on a regular basis.

Contact: Shaan Burton

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