If an organisation must have to have a problem, let it be one that stems from industry growth. This is what the UK’s Freight Transport Association (FTA) is facing at the moment as the economic troubles in Europe begin to stabilise. Automotive World spoke to FTA’s James Hookham, Managing Director of Policy and Communications, on some of the key events shaping the regional freight industry today.
It’s going to be messy
“In the UK, the big news is that we are fast coming out of our recession. We seem to be coming out of it faster than other parts of Europe and, indeed, the rest of the world,” he explained. “Transport businesses that had contracted during the downturn are suddenly being asked to take on more work and move more goods as economies start to recover. A lot of the things that we’re responding to on behalf of our members are associated with the good problem of coping with growth, after several years of declining or at least flat activity.”
In the UK, this has resulted in a shortage of qualified drivers. “The industry is very concerned about there being enough drivers in place to meet peak season in the retail sector, which is the run-up to Christmas, right across Europe.”
This challenge has been compounded by the rise in online shipping. As more people buy online, more goods need to be delivered, and quickly. “This is a great opportunity. It’s opened up the whole world of business to consumer logistics, which, back in the day, was limited to the way your fresh milk was delivered to the front door. What that means in practical terms is that you’ve actually got to get a supply chain that finishes at the doorstep, not just at your retailer’s central distribution warehouse in the centre of the country. The challenge, in terms of just the logistics, is enormous.”
Hookham describes the change as a “complete seismic shift from where managers have been traditionally.” While the freight industry is trying to adapt, it has so far been a matter of “learning as we go along. There was a lot of very expensive trial and error. Not everyone made it. But the successful models are starting to come through now.”
Of the leading players in the segment – FedEx, TNT, DHL, UPS and others – Hookham expects to see some consolidation moving forward. “There must be some pretty suboptimal loads, especially at the price that it’s been quoted. I think the danger is that online retailers have tried to play down the cost of postage, the consumer is thinking that delivery is free. Therefore, they’re unwilling to pay the true cost of it. So it is a very significant challenge. It’s going to be messy. Not everyone will survive because very few people are making money on this at the moment. So it’s going to be an interesting time over the next three years or so.”
Environmental concerns
There is also a lot of concern about meeting air quality standards, and what this could mean for the many diesel powered lorries on the road. “Many European cities are not going to meet the standards of air quality set by the European Union,” believes Hookham. For governments that fail to meet the requirements, the European Union has promised to bring infraction proceedings. “And that is going to knee-jerk a lot of possibly damaging actions by city authorities to target the sources of this pollution, which is partly – not exclusively, but partly – diesel engine vehicles. And clearly, commercial vehicles will be a significant part of that.”
More recently the European Commission has outlined plans to begin regulating carbon emissions from heavy vehicles, using a new VECTO computer simulation tool. “The most important thing that the Commission does is to make sure that this stays tied up with any further development of the Euro standards for the non-carbon emissions, or the non-CO2 emissions, for some vehicles.”
The real risk, as Hookham sees it, is conflicting standards. “The danger is that it is a bit like we have in Euro VI, actually. In order to achieve very low levels of pollutants, we’re having to burn more fuel to raise the temperatures and raise the pressures, and as a result, fuel consumption goes up, and our carbon footprint goes to pot.”
Safety
Safety is one of the key industry priorities today, and much of it involves efforts to reduce the “quite appalling fatalities and casualty statistics in some parts of the world.” While an increasing array of safety technology is making its way into commercial vehicles, there is also a growing focus on the driver.
“In Europe, we’ve moved on from simply just fixing the vehicle. The next big challenge will be getting the psychology and the approach of the driver right,” explained Hookham. “Part of that is, for example, the Driver Certificate of Professional Competence (CPC), making the drivers more familiar with the requirements with which they must comply and the general operating environment in which they work. The move that I’m seeing talked about most frequently amongst our members in the UK, our big fleet operators, is psychological profiling, or psychometric profiling.”
This involves making sure that companies screen drivers and that there are well established psychometric tests that determine if an individual has the right mind-set for the job. Much development work on this area has taken place at European universities. “There’s been quite a lot of academic input into this, but certainly those businesses and all the big fleets do this now,” said Hookham. “It’s another way of testing and understanding the psychology of drivers and making sure that they’re not going to lose their rag on the first occasion that someone does something stupid on the road. Partly for safety, but partly it’s reputational, because it’s your livery that’s on the side of the truck that that guy is driving. For me, that’s the next big step in driver safety.”
New borders
For the UK, there is currently the question of possible new borders depending on the future of its relationship with the European Union, and whether or not Scotland decides to remain in the UK. “It’s going to come into particularly sharp focus after our general election next year, but I think all logistics businesses will be very concerned whether or not the UK decides it’s still got a future in the European Union. Just as we are concerned locally as to whether or not the UK loses one of its key partners, in Scotland.”
However the decisions go, both of these questions have considerable implications for the freight industry, ranging from new borders to the placement of assets. “Are the rules for operating your fleet going to be the same in Scotland and the rest of UK? Is the UK – should it leave the European Union – still going to follow the same kind of rules?” questions Hookham. “That will all play out over some considerable time, but that’s going to be the kind of thing that’s concerning the industry as we go through the next couple of years.”
Speaking for the industry
Amidst this background, one of the FTA’s priorities is to ensure that the government understands the consequences of its policy decisions on the efficiency with which freight is delivered. Its impact on the UK economy is considerable. “The FTA cost the UK economy £30bn (US$40.2bn) last year and, boy, are we proud of it,” Hookham explained. “We were successful in persuading the government not to increase fuel tax, and, as a result, the government’s income is about £30bn less than it should be. Our members make the UK economy happen on a day to day basis. Logistics delivers everything every day for everybody.”
The agency’s impact on Europe is similar. “We represent UK interests in Europe, but, increasingly, we’re finding that our positions, our views, and the priorities of vehicle operators and logistics managers, which we articulate on a UK basis, are common right across the continent. All the same pressures and priorities apply if you’re a logistics manager based in London as it does if you’re based in Berlin or Paris or Rotterdam,” said Hookham. “You’ve got pretty much the same costs. You’ve got the same obligations and pressure from your customers to deliver on time, reliably, and at minimum price. You’ve got all the same environmental and safety pressures on you. So we find ourselves speaking as much on behalf of the European audience as we do for a British one.”
James Hookham will be speaking at Automotive Megatrends Europe 2014, taking place on September 10-11, 2014. Organised by Automotive World, Automotive Megatrends Europe 2014 is a two-day, six-stream conference focusing on Commercial Vehicles and Passenger Cars. Hookham will join other stakeholder panellists in the Big Picture Panel Discussion, which will focus on the key megatrends that are set to shape Europe’s light vehicle industry over the next ten years and beyond.
Megan Lampinen
