Motor Transport 6 February 2023

OPERATORS INSIDE

WORLD-FIRST: Glasgow-based Hydrogen Vehicle Systems (HVS) has revealed that the consortium it leads, Hub2Hub, has been awarded £6.6m to develop what it describes as “a world-first autonomous zero-emission HGV for the UK market”. Hub2Hub will create a self-driving heavy goods tractor unit, which will begin vehicles trials in 2024 with the Asda supermarket chain. The consortium, made up of HVS, Fusion Processing and Asda, will build two prototype vehicles that will allow Level 4 autonomous driving. The £12m venture has been selected by the Centre for Connected Autonomous Vehicles (CCAV) as a recipient for its joint industry and government-funded project.

The first prototype will be fitted with a driver’s cab and tested on the road in autonomous operation, using Fusion Processing’s Automated Drive System CAVStar, with a safety driver at the wheel. The second prototype will have the driver’s cab removed and replaced by an aerodynamic fairing. This vehicle will be evaluated on test tracks, with the CAVStar system allowing a remote driver, located in a control hub, to operate the vehicle.

Buyer rescues Wrexham operator but economic pressures prove too much for other traders

Waste haulier saved as two more go under

By Chris Tindall

A haulage firm providing services to the waste and recycling sector and operating 45 HGVs has been sold in a pre-pack deal after it collapsed into administration.

Wrexham-based 4 Seasons Beer Tent Co, which traded as Ningbo Walking Floors, appointed administrators on 17 January after experiencing financial difficulties.

Begbies Traynor said the Covid19 pandemic was the catalyst for the firm’s problems and that it had experienced “significant losses”.

Joint administrator Joanne Hammond (pictured) said: “The disruption of Covid lockdowns combined with historic HMRC debts, rising overheads and the need to repay CBIL loans pushed the business into insolvency.”

However, after the business was put up for sale, a pre-packaged

deal was agreed with Stockton Property, which bought the business for £120,000 and saved all 38 jobs, including 31 HGV drivers.

Stockton, which shares the same director as 4 Seasons, paid £40,000 up front and the remainder will be paid in regular monthly instalments.

Financial records showed that 4 Seasons reported a £304,000 pre-tax profit for the period

ending 31 December 2021, but Begbies Traynor said over the following six months trading losses grew to £545,588.

News of the rescue came as two more hauliers collapsed amid financial difficulties.

The first was Lincolnshire-based international haulage firm BritPol, which closed down on 11 January with the loss of 80 jobs.

Based in North Killingholme, the haulier held a licence authorising 108 HGVs and 145 trailers out of its Immingham operating centre.

The company collected goods in Europe and delivered to bluechip customers in the UK, as well as in Germany, the Netherlands and Luxembourg.

A spokeswoman for Begbies Traynor said: “Unfortunately, the increase in fuel prices and inflationary pressures led to creditor action for non-payment.

“Due to a lack of interest as a going concern, the business’ assets have been sold.”

Unaudited abridged accounts for the year ending 30 September 2021 showed that Brit-Pol had fixed assets worth £6.3m.

Meanwhile, Merseyside-based Optimum Logistics ceased trading last November after its floating charge holder grew concerned about recovering its outstanding liability, despite the company’s most recent financial results showing that it had returned to profit by the end of 2021.

For the year ending 30 November 2021, it had increased turnover to £915,011 and reported a pre-tax profit of £51,372.

KBL said: “The joint administrators think that the company has insufficient property to enable a distribution to be made to unsecured creditors.”

New vehicles and route optimisation technology are top of shopping list

Tuffnells invests £7m in upgrades

By Tim Wallace

Tuffnells has announced plans to invest £7m into the business over the next year.

The IDW freight specialist is planning a series of major investment projects with a ‘significant upgrade’ to its route optimisation technology a top priority.

The bulk of the £7m investment will be allocated to a major upgrade of the company’s fleet, with £4m to be spent on more energy efficient vehicles boasting the latest technology, including cameras and telematics capabilities.

During 2022, 137 new vehicles were delivered as part of the

upgrade plan, with a commitment made for a further 184 this year.

Additional plans include a key

Palletways buoyed by signings

Thirteen hauliers renewed their contracts with Palletways UK last year, the network has revealed.

Palletways UK also reported that another 15 new members joined its network last year, including those making the switch from parcels to pallets.

Mitchell’s of Mansfield, one of the first members to join the network in 1995, just a year after Palletways was

Container slump hits Macintyre

Macintyre Transport, which is part of the Turners (Soham) Group, has been forced to make 15 HGV drivers redundant at its Knowsley depot due to a fall in the volume of container work with client MSC Shipping.

upgrade to ePOD scanning devices, commencing this month, enabling Tuffnells to take full advantage of the latest in scanning technology.

A large portion of the investment funds will also be used to upgrade the material-handling equipment in Tuffnells’ depots to ensure greater care and safety during the collection and delivery process.

These new financial commitments are in addition to ongoing investments in health and safety and network security, as well as continued improvements to customer services.

Turners (Soham) MD Paul Day told MT: “MSC has its own fleet and this fleet is utilised first, followed by the various subcontractors MSC uses.

“Unfortunately there isn’t a sufficient volume of containers to utilise the 15 drivers – Macintyre hasn’t lost any contracts, it’s [a result of] the reduction in overall volume.”

Ports across the UK have been reporting a fall in container volumes for some time. The Port of Liverpool, which Macintyre’s Knowsley depot serves, has reported a marked decline in 2022, pointing to rising interest rates, higher energy costs and weakening consumer demand for manufactured and imported goods.

Stobart cheers its return to black

founded, has extended its contract for another decade. The company, which began Palletways membership handling just seven pallets per day, now processes over 400 pallets a day.

East Sussex-based Independent Logistics Solutions (ILS) has also extended its Palletways UK contract, while Bicesterbased Darcica Logistics is the newest signing.

Stobart has returned to pre-tax profitability, latest figures showed, despite the “significant challenge” of the driver shortage affecting the haulage giant’s results.

For the 13-month period ending 31 December 2021, the company reported revenues of £591.2m and a pre-tax profit of £3.3m.

This compared to a £559.1m turnover in the previous 12 months, with a £7.7m pre-tax loss.

The haulier’s holding company, Greenwhitestar Acquisitions, was acquired by Culina Group in July

2021 and Stobart said that since the purchase it had continued to invest and had also rebranded.

Profit from operating activities before exceptional items increased by £7.5m to £41.2m, mostly due to its efforts to cut overheads and streamline the business.

Trucksters sees revenue soar by 300%

Spanish road freight transport start-up Trucksters registered a record €30m (£26.5m) annual revenue in 2022, a 300% rise on 2021.

The company, which expanded its service into the UK last year, employs a relay model using artificial intelligence (AI) and big data to deliver freight across Europe, reducing transit times by 50% – equivalent to air-transport times – while also allowing lorry drivers to spend more time at home by working shorter shifts.

The company, which targets large customers, attributes its success to its ability to use cutting-

Gang jailed for transporting illegal cash

The co-owner of haulier Genesis 2014 (Ltd) UK and four of its employees have been locked up for a total of 34 years after being found to be part of a criminal enterprise run from the Tunstall-based firm, which saw large sums of illegal cash transported across the UK and beyond.

The gang, described as a "nationally significant organised crime group" by HMRC, offered their services to criminals up and down the country and beyond as part of a £30m money-laundering scam.

The five men include Marcus Hughes, a senior manager and part owner of Genesis 2014 (Ltd) UK, two of the firm's drivers, Nicholas Fern and Damion Morgan, and Liam Bailey and Leon Woolley, who both worked as transport planners.

A sixth man, Simon Davies, a business associate of Hughes, was also convicted.

Genesis 2014 (Ltd) UK is no longer in operation. Its operating licence was revoked in April 2021 and the company appointed a liquidator in June 2022.

edge technology to rapidly and reliably increase the size of its fleet to support higher demand.

To this end, in 2022, Trucksters managed to increase its fleet three times, overcoming important challenges such as the driver shortage.

Trucksters said that as well as setting out to disrupt an “old-fashioned industry” it also wanted to make lorry driving more attractive to a wider demographic.

As such, the company recently created a driver experience department devoted to improving their working conditions.

Closure of three warehouses in restructure likely to affect 400 staff

Jobs at risk as Co-op shuts Leicester sites

By Carol Millett

Central England Co-op is to close three warehouses in Leicester in a major restructuring of its distribution operation, putting 400 jobs at risk.

The society, which trades as Central Co-op, has more than 400 supermarkets, shops and funeral homes in the Midlands and East Anglia.

Central Co-op’s distribution operation, which is based in Scudamore Road, Leicester, has three warehouses on the Braunstone Frith Industrial Estate, including two food distribution centres totalling 120,000sq ft and a chilled distribution centre totalling 42,000sq ft.

Central Co-op’s distribution operation in Leicester will move to the LIDIA network – a national collective distribution and logistics operation, which is owned by Manchester-based Co-op Group and already serves more than 4,000 stores via 13 distribution centres.

Debbie Robinson, chief executive at Central Co-op, said the

closure is a result of the business outgrowing its current distribution facilities in Leicester.

She said: “The commitment and experience of our distribution teams is amongst the best in the logistics industry and they do an amazing job.

“As we grow and invest in the society to support communities, we need to be ready for the future and we have now outgrown our current distribution facilities.”

She added: “I know this is going to be a difficult time for some of our colleagues and our priority will be supporting them and we are able to offer them alternative roles, either within Central Co-op or the LIDIA network.”

Reed Boardall upbeat despite battling tough year

Reed Boardall endured one of the most difficult years in its 30-year history, sinking into the red amid Covid lockdowns and suffering driver shortages, a criminal cyber attack and bad debt.

However, the Yorkshire-based temperature-controlled transport business says it is confident better times are ahead.

Its latest financial results showed the company managed to increase turnover by 6.2% in the year ending 31 March 2022, to £74.2m. But it made a pre-tax loss of £4.1m, down from a £705,000 profit in the previous year.

It said it had battled the impact

of the pandemic’s lockdowns and staff self-isolating, along with spiralling labour, fuel and energy costs, as well as the much publicised HGV driver shortage.

Chief executive Marcus Boardall said: “The pandemic disruption appears to be settling, and we are starting to bear the fruits of the proactive initiatives we have undertaken to establish our own in-house team of drivers – for example, over the last year, we have trained over 20 new recruits from scratch at our own academy.”

Boardall added that its financial performance during the trading period was heavily impacted by a

cyber attack, which left its IT systems out of operation for six days. He said the costs associated with business interruption and recovery were “substantial”.

The company also had to write off a debt when a large customer collapsed into administration.

STREET SMART: Trucksters is using AI to transform the haulage industry. Pictured are, from left: co-founder Gabor Balogh; CTO and co-founder Ramón Castro; and chief executive and co-founder Luis Bardají

Furious

haulier says minister is ‘scapegoating’ firms with higher penalty

HGV drivers face £10k migrant fine

By Carol Millett

An international haulier is challenging immigration minister Robert Jenrick MP to travel with one of its truck drivers through Calais to see the challenges his drivers and the company face to prevent stowaway migrants.

Kevin Hopper, MD of West Yorkshire-based Brian Yeardley Continental, has thrown down the gauntlet to Jenrick after the minister announced plans to fine lorry drivers and operators who inadvertently bring stowaways into Britain £10,000 per migrant, up from the current fine of £2,000.

Set to come into force this month, Jenrick said the current fine of £2,000, levied under the Clandestine Entrant Civil Penalty Scheme, is not sufficient to incentivise hauliers and their drivers to

KRL pair step up to build top team

Freight forwarder KRL has promoted two of its long-standing staff to director-level positions to support its development plans.

David Flaherty becomes operations director UK and Ireland and Greig Allan is now commercial director UK and Ireland.

properly secure their vehicles. New security standards for all vehicles will also be introduced.

“I challenge Mr Jenrick to travel with one of my drivers through Calais to see what they have to face and to come to my yard and see the measures we have taken, and the money we have spent, securing our vehicles above and beyond what is required under the Border Force accredited scheme,” Hopper said.

“There is nothing more we can do, yet we are now being scapegoated by the government and treated like common criminals.”

Allan began his logistics career at P&O Nedlloyd in Southampton as a transport planner, before moving to the export desk at P&O in Glasgow and then later joining JH Hillebrand, a company specialising in the drinks and beverage sector. He has also held positions at DHL and Kingscote Rojay.

Flaherty started in the aviation industry at Aer Lingus in the ground operations department at Dublin Airport.

He then moved into freight and worked in the import and export departments for Aer Lingus Cargo, before transitioning to the sales department.

Registrations are now open for this summer’s unmissable Road Transport Expo 2023 (RTX) – the tradeshow with a dedicated “all about the truck” focus.

Taking place at NAEC Stoneleigh from 28-30 June, this free-to-attend event is ideal for anyone involved with the running of an HGV fleet.

It provides the opportunity to meet more than 200 suppliers, including all major truck makers, in one vast venue. You can check out the latest trailers, tyres, tippers, tankers, safety equipment and much more.

Or why not test drive the latest trucks on the market? From Euro-6 diesel models through to battery-electric and biogas, there will be a wide range on offer from all of the leading manufacturers.

Meanwhile, the show’s Knowledge Zone will have informative sessions covering key topics such as vehicle compliance, technology innovation and fleet decarbonisation.

DHL chills with new trailers for Burton’s Biscuits fleet

DHL Supply Chain has added 32 new temperaturecontrolled trailers to its Burton’s Biscuits fleet, each fitted with Carrier Transicold Vector HE 19 units.

Registration for the Microlise Transport Conference 2023 has opened, with the Coventry Building Society Arena once again playing host. Held on 17 May, Europe’s largest road transport event is free to attend and designed with transport professionals in mind.

This year’s delegates will also have access to essential insights from expert speakers, an exhibition area showcasing the latest vehicle technologies, products and services, and topical workshops that complement the main agenda. Full details of speakers will be announced soon.

The units were specified by DHL and will support its GoGreen plan with fuel and energy savings and increase the efficiency of the Burton’s Biscuits operation.

The trailers replace older assets and combine all-

electric technology with a new multi-speed engine design, which delivers up to 30% fuel savings over the previous model.

The system’s fully hermetic scroll compressor and economiser provide a 40% increase in refrigeration capacity during temperature pull-down, as well as a 50% reduction in refrigerant escape, saving energy across the renewed fleet.

Make a date for Microlise in 2023

RTX registrations come with ‘all about the truck’ promise

Photo: Shutterstock

Einride is catching the decarbonisation wave with its digital, electric and self-driving technology

The future is autonomous

Rarely a week goes by these days without an announcement from Swedish company Einride (pronounced En-ride), so Andy Salter took the opportunity to catch up with general manager for Europe Robert Ziegler at the IAA Transportation 2022 event last September.

In December, the company announced it had secured $500m (£407m) of funding (a combination of equity investment and debt facilities). It appears to have the foundations in place to play a significant role in the decarbonisation of the freight sector, both in Europe and North America. The company has opened up in Germany and Benelux and, we understand, a UK market entry is imminent – this is definitely a company to watch.

Einride was founded in 2016 by ex-Volvo engineer Robert Falck and it is tricky to pigeonhole. You could call it an engineering company (its electric autonomous truck certainly turns heads), a software systems company (it has some powerful tech driving its transport management systems and enabling the journey to carbon zero freight deliveries), or a logistics provider (it has a fleet of over 500 electric trucks on operation with clients in Sweden, Germany and Benelux) – and even then you would have probably missed something.

“Robert Falck, our founder, saw that transport is going to become more digital, electric and autonomous,” explained Ziegler. “Initially, he had this vision of the electric autonomous digital truck. Experience has told us that this is

not going to scale quickly, so we have built the second logistics business on the side that is digital and electric.

“When we started that two years ago, everybody thought we were crazy. But if you go around the exhibition today, you’re not going to find any OEM without an electric truck on their stand. So I think we’re right on the board and the wave’s coming.”

Simplified design

The autonomous vehicle has recently had a facelift, refining the product offering, but the basic principle of a connected autonomous electric vehicle remains. “It doesn’t have a driver’s cabin, there’s no steering wheel, seats, no stereo, no air conditioning, no windshield, no windshield wipers,” Ziegler continued. “It reduces the complexity of the vehicle by more than 60%. When you speak to the other OEMs, you will find that this is the majority of their complexity. Just think about the UK. I mean, we don’t have to switch the steering wheel from one side to the other, it doesn’t matter. Basically, we have intelligence at the front of the vehicle and the rest is cargo space.”

The autonomous vehicles are already in service in Sweden running on public roads on a contract with SKF, while the first trials on US public roads took place last year. The driverless vehicles are controlled by a constantly monitored remote pilot who can stop the vehicles in the event of a problem. The intellectual property and design knowhow is all developed in-house by Einride, though the chassis and bodies are bought in.

Data-based decisions

“Fundamentally, we are a tech transportation company,” Ziegler said, explaining how the business relies heavily on data for its decision making. “When we work with customers at the beginning, we do what we call a transportation assessment. We take their data, run it through our machine and it gives us a report.

“As an example, it may say there is up to 40% of your route you can immediately electrify and then next year, you could do another 20% and so on. Our customers sign up for joint business plans over the coming years. And as technology evolves and charging infrastructure improves,

we can make constant improvements.”

On the contract logistics side Einride has been building up its battery electric truck fleet, placing sizeable vehicle orders with Daimler and Scania for Europe and BYD for use in the US. “We have a couple more deals in the pipeline,” Ziegler said. “And a couple of retrofitters are also working for us.”

In terms of UK aspirations, while it would not have been on Ziegler’s initial hit list, he hinted at an announcement soon. “We have had a lot of interest from the UK,” he said. According to Companies House, two Einride legal entities were registered in the UK at the end of 2022 and the company has recently been advertising for a UK operations director. We await further developments.

■ For all the latest news and information dedicated to the decarbonisation of the commercial vehicle and road freight sector, check out our sister website FreightCarbonZero.com

DIGITAL AMBITION: Einride general manager for Europe Robert Ziegler

The year ahead isn’t looking any brighter than the past 12 months for the road transport sector

Bleak prospects for 2023

Road haulage rates

Haulage rates stagnated in the final quarter of last year, according to survey data published last month by the Office for National Statistics (ONS). Rates in Q3 were 4.0% up on Q2’s – the biggest quarterly hike on record – but the rise in Q4 was just 0.4%, probably due to softer diesel prices in November and December.

Nevertheless, taking 2022 as a whole, typical rates were 10.8% up on 2021’s. This is the largest annual rise recorded in the ONS data, which stretch back almost 30 years. Soaring costs of fuel, drivers and finance charges were to blame.

In its review of services producer price inflation (SPPI), the ONS said transport and storage made the single largest upward contribution to the annual SPPI rate. This index, which monitors movements in the cost of all services bought by UK industry, rose by 5.2% in 2022, so haulage rate inflation was running at twice the overall average. The ONS data show that typical haulage rates in 2022 were 25% above their level in 2015.

Oil and fuel

The monthly average price of Brent crude oil dropped sharply in December, but it still left Brent’s 2022 average price at $100.9/barrel, an eye-watering 42% higher than in 2021.

Back in 2012, Brent was even more expensive, averaging $112, but bulk diesel that year averaged around 111ppl to 113ppl, rather less than last year’s typical average of 138ppl to 142ppl. This is despite last March’s 5ppl duty cut, some of which seemed to get lost in the noise of last year’s fuel market. The key factor is the 22% drop in the pound’s value against the dollar since 2012.

Brent rose throughout January, averaging $83. Typical monthly average bulk diesel prices were 127ppl to 131ppl. Recent forecasts indicate that Brent is likely to average $83 to $91 this year. This is lower than last year because global supply is expected to outstrip demand, but much depends on how quickly the post-Covid Chinese economy rebounds.

All in all, bulk diesel should be a little cheaper in 2023, perhaps averaging 130ppl to 135ppl. The

5ppl duty cut is set to expire on 23 March, but reports suggest the Chancellor may extend it for another year in his budget on 15 March, to avoid adding to inflation.

Truck registrations

Registrations of new heavy trucks (16 tonnes GVW and above) in the UK in 2022 were 13.4% up on the previous year, the biggest increase of Europe’s five major truck markets (see chart).

Data collated by the European vehicle manufacturers’ trade body ACEA shows that the UK’s registrations growth – based on an SMMT estimate – was double the EU-wide average of 6.5%. Registrations in Germany, Europe’s biggest truck market, were down by 0.9%, one of only a handful of countries to see a downturn last year.

Outside the UK, other countries with strong growth in 2022 included Hungary (30.4%), Netherlands (17.1%) and Spain (13.6%). The trend in each country’s truck market correlates reasonably well with the economic growth forecasts for last year, supporting the adage about transport being the barometer of the economy. The UK’s 2022 GDP figure will be published on 10 February.

The UK economy is tipped to contract in 2023, and EU economic growth is forecast to be just 0.3% to 0.5%, so the heavy truck market looks set for a quiet year.

Sterling

The pound bought an average of just €1.13 in January, the lowest monthly figure for two years. Currency traders reckon economic prospects in the eurozone are stronger than the UK’s, so the European Central Bank will probably continue to hike the interest base rate to conquer inflation.

The fragility of the UK economy is likely to deter the Bank of England from making many more rate hikes, however. Higher interest rates in the eurozone boost bond yields there, so demand for the euro rises and the pound suffers.

The pound-to-dollar exchange rate was at an all-time monthly low of $1.13 last October, but ster-

HAULAGE RATES

AVERAGE BRENT CRUDE OIL PRICE

TRUCK REGISTRATIONS OVER 16 TONNES GVW

ling has recovered a little since then, averaging $1.22 in January. US inflation fell from 7.1% in November to 6.5% in December, so currency traders believe that with inflation receding there will be little need for more interest rate hikes in the US. This has cooled enthusiasm for the dollar,

so while it remains strong, its value against the pound has softened of late.

The outlook for the pound remains poor. The consensus of latest opinions suggests its average exchange rate index score in 2023 will be 2% to 3% lower than last year’s. n

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Big questions, few answers

Like a mist clearing from the sea as the sun rises, it seems that the zero carbon future for road transport is gradually getting clearer.

problem of where they get charged and refuelled.

Steve Hobson Editor Motor Transport

Some people at the DfT have appeared blinkered when it comes to decarbonising road freight transport – it is all very well saying focus on the easy stuff and worry about the difficult bits later, but if your business is long-distance haulage with maximum weight trucks and trailers then your whole life is the difficult bit.

Even the easy bits aren’t that easy – yes there are plenty of pretty good battery electric 3.5-tonne vans on the market, but if you happen to run 50 at one site then charging them overnight at the depot or at drivers’ homes is still a massive headache.

At least we have a fair idea of how trucks up to the 26-tonne limit that will have to go zero carbon by 2035 will look – battery electric probably up to 18 tonnes and then batteries possibly with a hydrogen fuel cell range extender up to 26 tonnes.

Of course, these beasts will be very expensive to buy or lease, they will carry less freight and there will still be the

Over 26 tonnes, which have to go zero emissions by 2040, there remain technical challenges with batteries and hydrogen fuel cells, chiefly space and heat dissipation. A possible solution in the form of the spark ignition hydrogen internal combustion engine is emerging.

DAF parent Paccar, JCB and Bosch all have viable hydrogen ICEs suitable for heavy-duty applications well down the R&D road. Similar to gas engines, they will not be totally zero emissions but the exhaust can be treated with an SCR system and the proponents are confident they will qualify as zero emissions come 2040.

Still, these will not be a simple or direct replacement for diesel engines. Hydrogen is tricky to store, very explosive and, at the moment, expensive. Interestingly, even if the hydrogen is made from fossil fuels it will still be counted as zero tailpipe emissions, just like battery electric vehicles even if the electricity is made by burning gas or even coal in our power stations.

But that’s another story.

Efficiency vital in warehousing sector

The fundamentals of the logistics and industrial warehousing sector remain strong, with low vacancy rates, good (albeit moderating) rental growth prospects and occupier demand from manufacturers and 3PLs helping to plug the gap left by the online retailers.

Claire Williams Industrial research lead Knight Frank

While the monthly figures show online retail sales to be down, the expectations remain for further long-term growth.

The occupier market faces headwinds, but a lack of supply is expected to support continued rental growth. The location and specification of facilities will be of increased importance.

Supply will remain tight, particularly for well-located, grade-A facilities. A buoyant occupier market in 2022 has left vacancy rates at just 3.3% as we begin 2023, which will support continued rental growth. However, the rate of growth will vary according to location and quality of asset.

The volume of new development has been curtailed due to inflationary pressures on materials and increasing financing costs. Developments not yet under way may be postponed.

The diversity of the occupier base will provide a breaker against the economic headwinds. Softening economic conditions will weigh on occupier demand in 2023 but not all occupier types will face the same exposure.

While discretionary consumer spending will be impacted by high inflation and a weakening economic outlook, firms

focused on consumer essentials and discount retail will weather recessionary conditions much better, and there are many other factors supporting continued occupier demand. These include the need for holding more stock, the reshoring or onshoring of manufacturing and rising demand from less-traditional occupiers, such as vertical farms and data centres. There are some headwinds for the market. From April, occupiers will face higher energy bills and business rates. Business rates are set to rise substantially due to the strong rental growth over the revaluation period, with average increases of 34% across all sub-markets.

The current Energy Bill Relief Scheme comes to an end in March, to be replaced with a new Energy Bill Discount Scheme that offers a much lower level of protection due to the price cap being replaced with maximum discounts. Businesses must proactively consider how to manage energy consumption and costs.

Well-located, energy-efficient facilities that can help firms mitigate costs will be key to maximising efficiencies. Logistics operators with less-efficient facilities, or in secondary locations, may find it increasingly difficult to manage costs and operate competitively.

Got something to say?

If you would like to contribute to MT’s Viewpoint, email steve.hobson@roadtransport.com

Flexible credit

The journey to net zero carbon emissions will be expensive and potentially triple the credit needed in the haulage sector – so where will the financial flexibility come from?

The high capital cost of electric vehicles –likely to remain double that of internal combustion engines according to the most generous forecasts – will require much higher levels of debt in the road transport industry. Yet it’s not at all clear how feasible this will be for many operators, whose credit is already stretched wire thin.

The Opus Business Group report on the sector in April 2021 said the road transport sector had “average net gearing of 98%,” which is “still unsustainably high”. It says most of this £14bn of debt (against a net worth of £14bn) existed pre-pandemic.

The asset finance sector therefore has a dual challenge – to continue supporting a sector which underwriters and most of the wider finance community have never been enamoured of, and to find innovative products that help to make the decarbonised assets affordable and the debt therefore repayable.

Put simply, the finance sector will have to support much higher levels of debt with far less security, and higher risk.

Neil Galloway, sales director for Renault Truck Financial Services, says: “It’s something we are well aware of, that we’ll need larger [credit] lines across the board over time,” with each customer being judged on merit.

Captive houses exist to fund the assets, and generally self insure, and so their tolerance for risk will presum-

Electric trucks carry a much higher price tag than their diesel counterparts. Louise Cole explores how traditional financing models are evolving to support the uptake of these decarbonised vehicles

ably be greater. However, the amount of debt they will potentially underwrite doesn’t mean it will be plain sailing. Given that haulage is a low margin, capital intensive business that already struggles to negotiate significant price increases, and the total cost of ownership, residual values and genuine return on investment which EVs will achieve are currently all in the ‘unknown’ column, new finance products will have to emerge.

Truck-as-service

Some of the disruptors to the EV market, such as Volta Trucks and Tevva, are already starting to change the game with their competitive pricing and truck-as-service models. Volta Trucks, which has 7.5-tonne and 12-tonne versions scheduled for 2024 and a 16-tonne in design, reportedly has an order book bulging with 6,500 bookings already. It also rolls all the truck’s costs, from Distribution Network Operator upgrade and charging infrastructure to repair and maintenance, into a single monthly fee. One press interview suggests this could work out at £4,000 a month on a larger model.

TEST DRIVE: Vertellus will be offering demonstrator EVs on three-month contracts to major clients

The lease agreement itself doesn’t seem that innovative, however – Volta absorbs the risk of the residual value and the payments are structured to give the same or better TCO as a diesel over eight years. The customer also pays a deposit upfront.

Usage models may prove interesting. Iveco’s Green & Advanced Transport Ecosystem (GATE) is a long-term, all-inclusive rental model for electric trucks and vans. The expected operational launch date is mid-2023, when GATE, as a fully digitalised business, will pilot in Italy with a view to rolling out across Europe.

GATE will have an independent business structure with net-zero-specialist employees serving both the Iveco and Nikola brands. Iveco says it will offer “a comprehensive service based on a pay-per-use formula … on a variety of zero-emission vehicles, from last-mile delivery to long haul.”

The GATE cost will include repair and maintenance, connectivity and telematics, financing, insurance, energy, and additional ancillary services.

In this sense, pay-per-use seems to expand to include all costs but still be priced against the time the asset is kept. Other models might price by charging cycle or mileage.

Tevva, which recently received type approval for its 7.5 tonner and expects to sell 1,000 trucks in 2023, offers a pay-per-use model based purely on mileage. Its spokesperson emphasises that Tevva’s model will always allow for greater flexibility than fixed-term contracts, and ensure that charging follows the real-world productivity of the vehicle. There is no time element – the operator can keep the truck for as long as they want it.

Pay-per-use could solve one of the toughest challenges for the industry, which is that most pricing so far has tried to knit a coherent business case from the holey crochet of TCO variables. Even before an energy crisis ruined any meaningful fuel price comparison, TCO calculations tottered on top of current and future regulation and taxation systems. Clean air zones may well be replaced by road pricing as soon as zero emissions cars, buses and taxis reach a critical mass, which is likely to be long before HGV sales deadlines for ICEs are reached.

The reduced repair and maintenance costs may be achievable by the larger dealer sites but the industry at large will struggle with the costs of dedicated EV bays and an acute shortage of qualified technicians.

Residual values are also problematic, with too little certainty about the functionality or value of vehicles after the first five years. Close Brothers suggests that ‘enhanced residuals’, based on more knowledge and potential manufacturer backing, could solve this.

Currently, however, the residual values on electric

USAGE MODEL: Iveco’s all-inclusive Green & Advanced Transport Ecosystem (GATE) rental plan, which will also serve the Nikola brand, is due to launch later this year

trucks are not close to the 20% to 30% ICEs would be expected to command, according to Galloway.

Despite this, Tevva has confidence that the residual values of EVs will match those of ICEs, making the capital outlay greater for lenders but not the risk. A spokesperson says they are working to achieve TCO parity over an eight-year lifespan as quickly as possible, and while this does depend upon local market costs, the company is confident that electric vehicles will soon offer a better business case than diesel ones.

Vertellus, the collaborative venture by regional Renault Trucks dealerships to offer a national service, is currently welcoming the first of its 30 demonstrator EVs. These will be available on three-month contracts so that major customers can try them out in a real-world setting. “There will be a cost to this but it is an opportunity for customers to do their own R&D,” says Nigel Baxter, Vertellus MD. The appeal of three-month rental contracts may not be limited to demonstration projects. At last year’s Freight Carbon Zero summit, Dawsongroup truck and trailer MD John Fletcher said that TCO calculations didn’t work for many of their customers because they take vehicles on, or in support of, relatively short-term contracts.

This all adds up to asset providers taking far more of the risk of vehicle provision in order to mitigate the otherwise unfeasibly high costs faced by operators.

Although overall operators won’t pay less, allencompassing fees will potentially facilitate a much clearer conversation with customers about the true cost of the work being done.

Circular economy

Of course, the flip side of the pay-as-you-go model is the much longer lease. Volta Trucks’ battery technology is said to manage 4,000 charging cycles over 10 years with no degradation. If that’s true then for some operators running assets for a much longer lifespan than the usual three to five years becomes feasible and attractive.

UK buses (and US trucks) are typically run for more than 20 years, undergoing at least one full refurb through their lifespan. The working life of a regional bus isn’t that different to a collection and delivery vehicle: they typically do circa 60,000 miles a year, have an 18-tonne GVW and take all the knocks of urban traffic. However, because ICE buses – like refuse lorries – cost in the region of £350,000, they have traditionally been written down over much longer periods.

The UK truck industry has never followed this pattern, mainly because with only 40,000 units registered each year, truck manufacturers want to maximise new sales and so encourage the belief that costs would escalate after the first few years. However, when the financial crash hit in 2008, many fleets ran vehicles on beyond their initial life without incurring undue repair costs.

Baxter says Vertellus is well aware of the need for a more circular economy. And, whether as an operator or a leasing dealer, an asset that gives income over a much longer term is an attractive prospect.

“We used to do refurbs, and we offered trailers on 10-year plans with a refurb halfway through,” he says. “Our [current] business model is based on new sales and repair and maintenance, but both of those are likely to be lower [with decarbonised vehicles] so we might need to reinvent ourselves as the people who refurbish the assets mid-life.”

However, as Simon Matthews, sales director coach and bus rental at Close Brothers Vehicle Hire, points out, the typical lifecycle “for electric buses isn’t as clear at this point”.

Government help

One issue for haulage is that the government has not directed much in the way of specific funds to help hauliers buy battery EVs. The government has conducted relatively small demonstrator trials (the vehicles

going into public fleets) and last summer it announced £200m for a three-year demonstrator trial of various zero-carbon freight vehicles.

There is also a grant available to sellers to enable discounts at the point of sale, with a maximum of £16,000 for small trucks and £25,000 for large trucks (circa 8% of a £300,000 asset.)

In contrast, the German government provides 80% of the price differential between an ICE and a BEV or hydrogen vehicle.

Compare the paltry UK subsidies to the £270m the government has so far put into decarbonising bus fleets, match funding spend on electric infrastructure and

ON THE UP: Having received type approval for its 7.5-tonne BEV, Tevva can start mass production at its London facility

service assets for those with local authority contracts outside London. So far that £270m has helped to purchase 1,278 buses. First Bus, part of the privately held First Group, invested £43m into 193 new electric buses in 2022 and was match funded by DfT to the tune of £38m.

This is despite buses contributing 2% to the UK’s global greenhouse gas emissions compared to freight transport’s 19%. Bus pollutants arguably have a higher potential impact at the kerbside but nonetheless, freight accounts for 30% to 50% of nitrogen oxide and fine particulates.

Changing market profile

The decarbonisation journey may well continue the shift in ownership models that has been developing in the haulage market over the past seven years. In 2016, 42% of O-licences and 9% of vehicles were owned by owner drivers – circa 31,000 trucks. This proportion of the marketplace has been shrinking and is likely to continue to do so if credit for new vehicles is out of reach, particularly as it tends to value ownership over leasing.

The current market for electric vehicles, says Baxter, is the own-account sector, where companies are driven by customer and board values. Restricted licences account for slightly over half the total O-licences but only one-third of the vehicles (92,000). However, it is likely this group will blaze a trail for hauliers, for whom the business case and associated lending negotiations will remain much more complicated for some time.

■ For all the latest news and information dedicated to the decarbonisation of the commercial vehicle and road freight sector, check out our sister website FreightCarbonZero.com

Rising from the ashes

When fire destroyed ArrowXL’s Worcester hub, its operations only paused for a week. Since then, the business has grown through the Covid-19 pandemic and will face the expected recession with similar resolve, as CEO Charlie Shiels tells Steve Hobson

The story of how two-person delivery specialist ArrowXL came back stronger from a fire in its Worcester hub that would have finished many businesses is remarkable.

In April 2017 a devastating fire quickly took hold and destroyed the site, which handled 43% of the firm’s volumes.

As luck would have it, two weeks before the fire CEO Charlie Shiels (at the time COO) had been to look over a former Littlewoods warehouse in Chepstow. Although it was not of interest at the time, it was a godsend after the fire.

“It was 50 miles away and we moved in and ran it for eight months,” says Shiels. “We only stopped for a week then carried on running.

“We then started looking for another place and found one in Droitwich which we used for two years while we rebuilt Worcester. Remarkably, virtually none of our 200 warehouse staff left and we hired coaches to take them to work in Chepstow every day.”

The blaze broke out at 8.30am on Thursday 20 April, destroying the entire stock in the hub. ArrowXL Worcester was at the time primarily a delivery rather than a storage company so most of the products in the warehouse were for delivery in the next day or two rather than for longterm storage.

Trying to manage racking and picking of product with no IT was a major challenge, as Shiels recalls. “We were picking by hand and we found a way to print off the pick lists,” he says. “On 5pm that Saturday evening I was going round all the stationery shops in Chepstow buying up 30 clipboards and pens!”

While a few of its 85 clients had no choice other than to switch to other carriers, most stuck with ArrowXL and that, together with unwavering support from owners the Barclay family, got the company through the difficult first few days and weeks.

“The loyalty and level of support from the clients was amazing,” says Shiels. “Immediate support from the parent company was also obviously important. We went to zero income and still had the wages and bills to pay, which is where the support of the family helped us get back on our feet.”

At one point there were 200 trailers of product on site waiting to be delivered as ArrowXL’s retail customers wanted to keep selling throughout the week of the move.

Timely move

The company moved into its rebuilt £20m, 260,000sq ft Worcester hub in October 2019. It had only been in for a few months when Covid-19 struck and online sales

FRESH START: ArrowXL’s rebuilt Worcester hub opened just in time to handle increased sales during the Covid-19 pandemic

went into overdrive as people made offices and gyms at home, refreshed their garden furniture and bought fridge-freezers to stockpile food.

In the 53 weeks to 30 June 2021, the company saw revenue jump £24m to £114.9m. Pre-tax profit also surged to £1.9m, up from a loss of £465,000 in 2020.

“There was a Covid dividend,” says Shiels. “Then, as soon as things returned to normal, there was a Covid correction. But it didn’t go as low as the entry point, because more people used ecommerce for the first time to buy products they may not have bought before and then realised how comfortable they were with it.

“The older generation also used to have a three-piece suite for life – now it’s a fashion item and when people redecorate they want a new sofa. People now want to change their mattress every five years and the boxed mattress market has taken off.”

The Covid-19 lockdowns almost halted ArrowXL’s twoperson delivery model, however, as maintaining two-metre social distancing between crew members and consumers was a challenge. At one point the second crew member had to follow the truck in a car, a measure that the delivery crews themselves agreed was ludicrous overkill.

“A lot of people tried to stop us,” says Shiels. “We introduced daily Covid testing, PPE and a rigorous

FROM THE FIRE CAME A NEW WAY OF WORKING

The need to get back up and running quickly after the fire meant news ways of working had to be found, which have benefited ArrowXL since it moved into its new hub.

“The Chepstow site was probably half the size of the old 280,000sq ft Worcester hub,” says Luke Barton, Regional General Manager. “We changed the operational process when we moved and pretty much remodelled the network almost overnight.

“In the old operation we used to put everything away and then pick it – it was a full diary model. We went to a more just-in-time solution, which meant we needed less space because we didn’t have to put everything away. We effectively marshalled it for 12 hours then delivered it. It created something we actually use and sell to clients now.”

ArrowXL operates six regional warehouses, at Worcester, Enfield, Wigan, Airdrie, Inverness and Carrickfergus, and 24 delivery “nodes”. “As we are growing we are doing some modelling and the Swindon area is a bit of a black hole for us,” says Shiels. “South Yorkshire is also an area where we will have a hub in future years.”

The firm has a partnership with DHL in Dublin to cover the Republic of Ireland. “Since Brexit, trade with the Republic has fallen off a cliff,” says Shiels. “Very’s Littlewoods brand is still trading in the Republic and we service all of that, but our other 85 trade clients looked at the administration needed in the south and, apart from one or two, decided it wasn’t worth the effort.

“It is just some paperwork and maybe if we can educate and help them that might reignite that trade as the south was always a strong market. Northern Ireland is just business as usual.”

ArrowXL is getting more enquiries from continental retailers looking to use them to import and distribute their products in the UK. “Some quite big brands are talking to us about how they can use us as customs brokers and freight forwarders,” says Shiels. “If they can put some product with us and sell it via their normal ecommerce channels, we can deliver it for them.”

That might involve more long-term storage in the UK as well as just-in-time fulfilment. “We have developed our 3PL proposition over the last three years,” says Greg Whyman, ArrowXL commercial director. “We have been providing warehouse solutions for around 20 different clients where we unload containers or full trailer loads, do the pre-stock storage, pick, pack and ship either through the network or a range of carriers.”

The 750,000sq ft Wigan site has four floors and high-bay storage with capacity for 26,000 pallets, and the move to quicker flow-through of domestic shipments has created more storage space. “It makes sense for us to monetise that,” Whyman says. “Together with Covid, the Ever Given [the container ship that blocked the Suez Canal for six days in March 2021] meant we could have filled our warehouses over and over again.

“Demand has cooled now with the economic downturn and people have got plenty of stock.”

The interruption to the global supply chain coupled with the brief surge in demand for products like exercise machines meant that some retailers now have excess stocks.

“Demand went up very rapidly, then there were problems like the Ever Given, so stock didn’t move to the UK as fast as before,” says Whyman. “Towards the back end of Covid the gyms started to reopen and those retailers found that by the time the stock got here the demand had dropped. We are still being paid to store it.”

Returns is another area ArrowXL has invested heavily in, as its customers are understandably keen to realise as much value as possible from expensive items such as white goods, furniture and electricals. It has recently won a delivery contract with a major UK white goods manufacturer, partly because of the strength of its returns process.

TENACIOUS MINDSET: Charlie Shiels has faced down several significant challenges during his time in the job so far

procedure for cleaning the vehicles, so our colleagues were comfortable with the processes. As long as it was the same pair in the cab every day they were happy to keep working. We trusted them to carry out risk assessments on the doorstep.

“Because we couldn’t connect washing machines it actually reduced the time spent on each call and we were getting maybe an extra drop on each route. First-time delivery went through the roof and complaints fell off a cliff.”

Covid-safe procedures for the crews were helped by the fact that ArrowXL had by this time completed the roll-out of its DAF LF 7.5 tonners, which had far more spacious cabs than the previous vehicles, while the demountable bodies meant crews were in the same vehicle every day. ArrowXL’s policy of directly employing most of its crews rather than relying on agency labour was also a big factor.

As Covid-19 wound down in 2022 there was a largescale return to the workplace for many consumers after a year or more of working from home. Failed deliveries because a consumer is not at home when they should be is expensive, as a new bed cannot be left in a safe place or with a neighbour.

Delivery windows

Shiels was with DPD for 23 years before moving to ArrowXL in 2017 and says that while consumers have got used to a one-hour delivery window for parcels, it is much harder to achieve for two-person delivery of large items. ArrowXL gives recipients an initial two-hour window, which shrinks to half an hour as the day progresses, and crew will notify consumers if their delivery is delayed for any reason.

“If we are installing a washing machine as the first drop of the day and the plumbing isn’t quite right that knocks on for the rest of the day,” he says. “It might be a sofa won’t go through the front door or a hundred other possible variations. So while we give people a two-hour

WAGES ON THE INCREASE

While ArrowXL hasn’t had to increase pay by the 20% or more that Category C+E drivers have enjoyed, it has put up wages by an average of 15% over the past three years. Nevertheless, ArrowXL has faced industrial action by 350 members of union Unite, which accuses the company of paying “poverty wages” – an assertion Shiels says is just not true.

The loss of the grandfather right to drive a 7.5 tonner on a car licence for drivers who passed their tests after 1997 has seen ArrowXL open its own training school to put car drivers through their C1 licence. There is a lot more to two-person delivery than just driving, however.

“There is 3.5 tonnes of product in the back of one of those vehicles and delivering that is a physically demanding job,” says Shiels. “There is still a driver shortage and there is no one answer to it.

“We have to be more attractive. The money has to be better and that includes warehouse people.”

Rising staff, vehicle, fuel and subcontractor costs meant ArrowXL had to renegotiate its rates with its retail customers.

“The level of inflation we suffered in 2021 was unbelievable,” says Shiels. “Everything we touched went up, so we had to put our prices up in the autumn. We had no choice and it was quite a strong increase. We didn’t lose a client – we explained why and they understood.

“It was an above-inflation increase and we can’t do that again in 2023. Industry inflation wasn’t as bad in 2022 but we are still under extreme pressure.”

ArrowXL is training warehouse staff to drive both its 7.5 tonners and a handful of artics, but Shiels is worried that his newly qualified drivers will up and leave for better money.

“The whole industry has to do it,” he says. “We will do this and someone will pinch them. The big guys are doing it but everyone

time window it is very different from DPD’s half an hour. That is what I love – it is more complex, demanding and interesting.”

Entering 2023, the expected recession could hit discretionary spending on ArrowXL’s staple diet of large household goods.

“It’s the nature of this industry,” says Shiels. “We get over the fire, then there is Covid and now economic headwinds are blowing. If it’s not one thing it’s another. I can’t control the economy – all I can control is how good our service is and how tight our cost base is.

“Our service is the best it’s been in 10 years and that is what we sell. It is very different from parcels, where the drivers do 200 drops a day. Our crews do 30 or 40 drops a day and they are in your house, in your bedroom or in your kitchen. It is an intimate experience and I bear that responsibility quite heavily.

“We reckon we only have about 25% of the market, which means we still have 75% to go after.” ■

has to have collective responsibility to feed the future of this industry.”

In 2023 the company is throwing its six-month training scheme open to external as well internal candidates, giving a rounded experience progressing from the warehouse to a Luton van then onto the 7.5 tonners. To qualify as an apprenticeship scheme eligible for Apprenticeship Levy funding, they must continue training for a further six months after getting their C1 licence.

Not every driver’s mate has – or wants – a C1 licence as they are happy to crew without the stress of driving. This job role has also got more complex, as they now contact consumers through the working day to check they are in and update delivery times.

ArrowXL has experimented with 3.5-tonne delivery vehicles, which can be driven on a car licence and don’t have the added complication of tachographs, but found that, because the vast majority of routes cube before they weigh out, the 7.5 tonner is the best tool for the job.

“With a load capacity of 1,000kg maximum we can’t make a 3.5 tonner work commercially,” says Shiels. “There are some routes you could do with a 3.5 tonner – if you had a route full of TVs, for example – but the kg per cu m of the loads we move means we get more on a 7.5 tonner.”

Shiels does not currently see a viable zero-emissions alternative to a diesel truck. “We have spoken to a few people and an electric 7.5 tonner is £100,000 more at least,” he says. “It has a range of 180 miles and load capacity of 1.6 tonnes. It just wouldn’t work for us.

“We have looked at putting one into Enfield but to be brutally honest I’m just ticking a box. If I had to put 160 new electric trucks on the road tomorrow we would be bankrupt.”

IT TAKES TWO: Two-person deliveries continued to be carried out through lockdowns, despite the many challenges

Specialist gas haulier BOC impressed our judges with its ground-breaking virtual reality driver training programme

Best Use of Technology Award Screen tests

Some people still insist that using virtual reality technology to train HGV drivers is no substitute for getting them out on the road in real life. They claim that firms using this kind of approach are simply trying to cut costs from their dwindling training budgets.

But while BOC head of fleet transport Roger Wilkinson admits that the idea has indeed saved money, he says it offers plenty of other benefits and has proved a big hit with drivers. Importantly, it saves time when compared with traditional training techniques while also reducing the firm’s carbon footprint.

“We wanted to make training more exciting as well as a bit cheaper,” Wilkinson says as he begins explaining the principles behind DIViRT (Driver Immersive Virtual Reality Training).

“I wanted to keep it light and fresh. If you just keep sheep-dipping people every three years, you will get the same results. So, at the back end of 2018 we got talking to a Guildford-based firm called Diverse Interactive. They had done a sales gimmick with Mercedes-Benz where they had customers sitting in a gaming seat with a headset.

But the problem had always been that training its 500-strong team of drivers was expensive and required them to take a full day away from work to have accompanied drives out on the roads.

The training experience was also traditionally reliant on the skills of the assessor, and it was difficult to consistently measure against key safety criteria.

BOC wanted to make a step change to this approach and provide a platform to supplement on-the-road defensive driver training as realistically and consistently as possible, creating personalised sessions, tailored to the user, with actionable analysis and results.

To this end, it came up with a product focused on creating a realistic environment for the driver and an accurate and repeatable experience for the trainer.

Using six InstaPro 360 cameras, it shot scenes on a typical drive from Wembley to Windsor, in heavy traffic, to get 30 minutes of footage. It then took about a week to edit this down to a six-minute training clip.

The footage captured video in 8k at 60 frames per second. This eliminated motion blur and helped capture content not only in high resolution, but also with a high dynamic range.

DATA COLLECTOR:

Telemetry is captured from the seat and from several fixed points in the cab to make the virtual experience as realistic as possible

“We built on that using 360-degree cameras in the cab and put film footage on to the headsets. Then we thought it would be good to track eye movement, so we did another film set and introduced a hazard awareness element.”

As the UK’s largest provider of industrial, medical and special gases, safety is a key focus for the Wolverhamptonbased company, which has a national network of major production facilities, distribution centres and retail stores.

Vast amounts of telemetry have been captured, including ‘accelerometer’ data from the seat – so that corners, accelerating and decelerating felt realistic – and data from various fixed points in the cab, so that body roll could be accurately translated into virtual body roll in the motion seat.

Industry first

The software system is fully flexible running different driving scenarios and has the option to add numerous additional hazards, locations and assessment requirements in a streamlined way.

Eye-tracking plays a huge part in the training, allowing the trainee and the trainer to review the session and assess where the driver has been looking throughout the test.

“There’s nothing else out there with eye-tracking software,” Wilkinson explains. “There are other simulators – BOC has a simulator for the Netherlands operation – but there’s nothing like this on the market.

“We wanted the product to be more portable, so we have put it in a van, but it’s very sturdy. The driving session lasts six minutes and the idea is to bring the unit into a conference room or office space. There is a screen at the back of the unit and a desk where a trainer can take the driver through the clip and score them.

“There are hazards in there like cyclists, and vans coming up on the inside. Afterwards the trainer has a coaching conversation and tells the driver where improvements could be made.”

Wilkinson insists the data provides a vastly more accurate picture of the driver’s ability to spot hazards

and, when necessary, react to them. After completing the test, the assessor takes the driver through their attempt, with a focus on “influencing their cognitive behaviours” rather than on whether they have passed or failed.

Generally, drivers do fail the test, and a handful have been affected by motion sickness. But even though they aren’t meant to pass first time, they aren’t let off with a warning for a poor score. If improvements aren’t made, they are required to do a full defensive driver training practical, which is a day’s course, out on the road.

Recent results show that out of a total of 123 participants between July and August 2022, 12 passed on the first drive and only four failed after two drives. The average score for the first drive was 82% and for the second 86%.

Returning to the all-important cost implications, Wilkinson provides a breakdown of figures to prove the financial benefits of the approach.

“If each driver costs £675 per training session – that’s the driver trainer, the fuel, the vehicle, etc – it will cost you £2,025 over 10 years,” he explains.

“What we are doing is taking that same timeline of 10 years and instead of doing the physical defensive training every three years we do it every five years. You therefore reduce your overall costs over the 10 years from £2,025 to £1,350. But in between, you are doing virtual reality training where there is no fuel, no driver hours and no truck movements, so you are saving on those costs.

“Instead, it’s two six-minute clips, which is a maximum of 30 minutes at the beginning of a driver’s shift, so you are not taking him off the road.”

Setting standards

Our judges were particularly impressed with BOC’s entry, which, Wilkinson says, shows how seriously the company takes transport and safety – and how technology can support its efforts.

“We keep up with the pace of change and are looking to continuously improve our operations, particularly from a safety perspective,” he says. “So I am very, very proud to receive the award.”

Although BOC doesn’t own the intellectual property rights to the idea, parent company Linde Group hopes to develop it further, incorporating not only hazard awareness but also topics such as slow speed manoeuvring and winter driving for its Swedish colleagues.

Asked if standards in the haulage sector are where

they should be, Wilkinson believes some firms are letting the wider industry down.

“The good operators invest in good training but there are some unscrupulous one-man-bands,” he says. “Then there’s our European contingent with left-hand drive vehicles that don’t suit our roads.

“It feels like there are fewer of them since Brexit but they are still prevalent and there are still side swipes on motorways. I always look at the number plate – if it’s a foreign one, and you get in their blind spot, you are in trouble.

“Many good drivers have been lost due to the changes to IR35,” he adds, “and there are still recruitment issues, particularly in the south-east. We have got standards and we won’t relax those standards. Virtual reality training helps weed out underperforming drivers.”

Fuel options

Despite being a company at the centre of the gas industry, BOC has yet to embrace alternative fuel for its own fleet.

“We haven’t embarked on any trials yet,” Wilkinson says. “I don’t think the technology is quite there but I don’t think it’s far away. The infrastructure is starting to get there from an electricity point of view. CNG and LNG have been there for some time – but it’s still a fossil fuel.”

For now, alternative fuel is simply “part of BOC’s strategy,” he says.

“We’ve got a hydrogen refuelling station in Aberdeen for buses. We are on that journey as a gas supplier. As a fleet we haven’t got any plans in the immediate future but it’s something that’s rapidly catching up with us.” n

WHAT THE JUDGES SAID

Our judges described the solution as a “really clever use of leading-edge VR technology” that helped BOC overcome an age-old issue of providing safe, cost-effective and beneficial training.

Described by one judge as “a great tool that is different from everything that the market currently has in place”, the panel appreciated the analytical abilities of the system to enable targeted areas of improvement, and the reduced carbon footprint of not operating vehicles for training purposes.

WHAT’S MY SCORE? The assessor takes the trainee through their virtual drive to point out areas that could be improved

MT Awards 2022 winner profile

Customer Care Award Winning mentality

DPD, the UK’s leading domestic B2C parcels carrier, continued its dominance in the Customer Care category with its eighth win in the past nine years

DPD UK’s three wins at the MT Awards on September 7 puts the company – including its predecessor Parceline – on a total of 39 wins racked up since Parceline took the first of its eight trophies with Best Marketing Campaign in 1991.

DPD has dominated the Customer Care category, taking the title in eight of the past nine years, a track record that can largely be attributed to the introduction of its ground-breaking Predict service in 2009.

DPD has not rested on its laurels and is now the UK’s leading domestic B2C parcels carrier, doubling turnover since 2016 by establishing itself as the go-to carrier for retailers who value a personalised home delivery experience. Its 22,000-strong team delivers 410 million parcels each year for 7,500 customers, including leading brands such as L’Oreal, IKEA, Selfridges, M&S, Gousto, EE and Next. 2021 saw turnover break through the £2bn barrier, up £148m from £1,926m to £2,074m.

The company says that “putting optimum levels of customer service at the heart of everything we do translates into growth and a strong competitive edge, enabling us to continue outperforming the other main UK parcel carriers in the last five years”.

DPD carries out regular research among its retail customers to find out what is most important to them. The January 2021 survey of its top 100 customers revealed:

n 94% were ‘very satisfied’ or ‘satisfied’;

n 92% were likely to remain a customer;

n 76% would recommend DPD to others.

WHAT THE JUDGES SAID

Our judges were once again blown away by DPD’s winning entry.

“The board and executives are obviously committed to both customer service and to position themselves as the best home delivery operator,” said one judge. “They have demonstrated the ability to adapt to rising volumes and this has not impacted customer service levels as they remain consistently high on customer reviews and have over 99.81% on-time delivery performance.”

“They know their stats, they benchmark them, they get external verification, they get their clients’ feedback, they monitor it – it’s client service at aspirational levels,” said another.

“Customer care standards have put DPD at the top of this difficult sector, enabling year-on-year growth,” concluded our panel of experts. “This is an exceptional business and it is difficult to challenge its performance or the results it gets from providing industry-leading service. The entry relates well to the criteria and has clear, well-written proofs to back up the claims made.”

Perhaps the strongest indicator of customer loyalty towards DPD is that nearly 70% of these top 100 customers have now been with the carrier for five years or more.

DPD won £173m of new business in 2021, its best-ever result, and up from £142m in 2020. New accounts included Vision Express, North Face and B&Q. It also secured numerous three- to five-year contract renewals including John Lewis, Asos and Currys and says “this level of loyalty is crucial and means we can continue to invest in refining the doorstep experience”.

Despite being a significant carrier in its own right, Amazon remains a DPD customer. “First and foremost we see Amazon as a customer,” says Tim Jones, DPD director of marketing, communications and sustainability. “While Amazon has its own operation and uses other carriers, it is a very valued customer and we give it the same service and value as our other customers.”

As well as formal surveys, DPD stays close to its major retail customers through the executive sponsorship programme in which all 10 directors are aligned with 10 different top 100 customers, visiting each one at least twice a year.

Customer ratings

DPD’s app provides parcel recipients with a ‘Rate my Driver’ function that enables them to give a positive or negative rating for their delivery. Immediately after receiving a delivery, consumers can rate their experience with a thumbs-up or thumbs-down, give a star rating, and provide further detailed positive feedback.

“It allows the consumer to rate their doorstep experience,” says Jones. “That allows us to reward and recognise consistently good, above-and-beyond performance which is what we are always looking for. More importantly, where there is a thumbs-down we can investigate what wasn’t so good. That might be a matter of training around following standard procedure.”

DPD took this “golden opportunity” to understand what is most important to its customers’ customers and in January 2021 it began offering unhappy consumers the chance to request a call-back to prevent complaints from escalating.

This resulted in DPD making 136,000 calls to dissatisfied consumers. Following these calls, 54% of people rated their experience ‘really good’ or ‘awesome’.

DPD gives statements summarising the feedback to its retail customers so they can see for themselves exactly what their customers think of the DPD service.

Jones says that these continuous improvements in the recipient’s delivery experience show DPD is not relaxing its efforts. “That is never the attitude here,” he says. “The attitude always is ‘let’s look at all the little things we can improve’, because the minute we start resting on our laurels is the minute we start getting disconnected from our customers.”

In yet more evidence of how well DPD performs for consumers, just after the Christmas 2021 peak, Martyn Lewis’s MoneySavingExpert poll asked 9,200 home shoppers to rate all the major UK delivery companies based on their experiences.

For the ninth successive year, DPD was the winner with 61% of voters rating its service as ‘great’. Its nearest competitors in the domestic home delivery sector were Royal Mail (55%), Parcelforce (42%), DHL (40%), APC (32%), Hermes (28%) and Yodel (26%).

DPD’s closeness to its customers revealed that, especially in the months preceding the COP26 climate change conference in Glasgow, they were becoming more focused on reducing CO2 emissions in their supply chains.

Delivery options

Not content with having the biggest fleet of EVs in the sector with 1,700 battery electric vans, DPD decided to re-engineer one of its key processes – what the driver does when a first-time delivery attempt fails on day one. Until March 2021, this process was to make a second delivery attempt the next day, thus racking up extra mileage and CO2 emissions.

The new process is to send the parcel direct to a local DPD Pickup shop on day one, unless the consumer has used the app to nominate either the ‘safe place’ or ‘deliver to neighbour’ options. This has resulted in 4 million parcels being delivered directly into one of

6,000 Pickup shops, reducing carbon emissions by over 1.1m kg.

This initiative relied on expanding the network of Pickup shops and DPD negotiated new partnerships with a range of high-quality retailers, including Co-op and Morrisons. This nearly doubled the size of the network – from 3,500 to 6,000 stores, so that 97% of the UK population are now within five miles of a DPD Pickup store.

In August 2021 DPD signed a ground-breaking partnership with the Post Office, which opened its network for the first time in its 360-year history to a rival to the Royal Mail. Consumers can now collect their parcels from 1,500 Post Office branches across the UK.

“We were delighted with that,” says Jones. “We are constantly looking for more high-quality pickup points and I don’t think there is higher quality than a Post Office. Royal Mail is primarily a letters business, but we know it has ambitions to be a parcels company.

“Post Office is a great friend to DPD and I hope we will be extending that agreement.”

While the push from customers to cut carbon emissions is one factor in the drive to go carbon neutral by 2040, DPD also wants to pull the rest of the industry down the road to net zero.

“The overwhelming reason is that we want to be the UK leader in sustainability,” says Jones. “A key step is the electrification of our collection and delivery fleet. Sustainability is the only way forward and our parent company La Poste has declared our net-zero target date of 2040 – but that is the latest date we will achieve net zero in the UK and we are well advanced to bring that date significantly forward.

“Our customers want it and their customers want it too.” n

RACKING UP BUSINESS: DPD won £173m of new business in 2021, its best-ever result

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MT Awards 2022 winner profile

Operational Excellence Award All systems go

Family-run haulier

If you ever needed proof that our awards don’t just recognise the big guns of the industry, look no further than JPE Holdings.

Stuck on a nondescript road on the outskirts of Essington, Wolverhampton, the family-run SME doesn’t even have a sign on the gates. And if eventually you are lucky enough to locate it, you will encounter a modest row of rough-and-ready portacabins looking out over a muddy, heavily potholed yard.

But first impressions can be deceptive: “If you want a job as a driver here, you need to show that you can at least find us,” compliance manager Lindsay Smith explains – before quickly reassuring us that, despite outward appearances, JPE works to the very highest industry standards.

Central to the business is its fleet of 36 off-road Volvo 8-wheelers and seven Volvo FH artics and trailers, which run up to 75 shifts a day. Not forgetting a road transport team that are committed to operational and technological excellence 24/7. Together, this drives the company’s impressive compliance and safety records.

Founded in 1994, JPE specialises in the delivery of virgin, recycled and blended aggregates. It also owns three quarries and excavates, delivers and collects upwards of 950,000 tonnes of the stuff every year for customers in the construction and highways industries.

The company has been involved in many leading local projects, including the Black Country Route, the Trent Valley Four Tracking Project (TV4), the M6 Toll Road and the M6 hard shoulder strengthening.

“The systems we have in place, and the staff using them, are what won us the award,” Smith says. “I’m from a technology background, so when I came here four years ago I was appalled to find bits of paper floating around and getting lost. Things were being put on the system two or three times before an invoice was generated. Part of my remit was to get the operation paperless.”

Having achieved that goal, Smith turned his attentions to the DVSA’s Earned Recognition scheme, which JPE joined in December 2020. The firm now has an overall weighted compliance score of 99.1% for both drivers and vehicles.

Achieving ER, he says, was just a case of formalising the company’s procedures and policies in relation to driver and vehicle compliance. Having an IT and software system in place, as specified by the DVSA, now helps the team report on important driver and vehicle performance measures.

By working with Aquarius IT to embed ClockWatcher Elite’s tachograph analysis and vehicle maintenance and driver defect software, JPE acquired the systems needed to manage and report on all the driver and vehicle performance measures specified by ER and became an exemplary operator. Achieving ER also meant that the firm could complete the additional HS2 compliance and become only the third business to achieve both ER and HS2 audit standards.

“Earned Recognition needs to be something businesses aren’t running from but running towards,” Smith says. “No scheme matches it. FORS has had a terrible monopoly but it is no longer a compliance check, it’s only a systems check.

“Initially I was sceptical of ER but I would now wholeheartedly recommend it. The backing you get from the DVSA staff is fantastic. You phone your account handler and if they don’t know the answer to your question it gets pushed to the department that made that decision for an explanation.”

Validation

Smith also insists that firms joining the scheme don’t need to do much extra work to show compliance: “It’s not just for the multinationals,” he says. “Providing there is direction from the top to be as compliant and safe as possible, then it’s totally doable for smaller SMEs. We are sub-50 trucks and we have managed to do this.”

Smith seems as surprised to have won the award as he is delighted; JPE triumphed over some much bigger candidates. In fact, he was the only company representative on the night and the award was so unexpected that he missed his name being read out.

“I was too engrossed in conversation,” he laughs. “I was just starting to enjoy myself. I didn’t think there was a chance I was going on stage. I had a few drinks afterwards but the trouble was I had also had a few before.

JPE Holdings impressed our judges with its exemplary standards of regulatory compliance and a data-driven approach to telematics and transport management

“But this is validation that we are doing the right things and validation that smaller operators have a shot at winning these awards, not just blue-chip companies with shareholders. My MD was returning from holiday and was ecstatic when she heard we had won.”

Underpinning JPE’s operation are sophisticated telematics and transport management systems for driver, traffic, fuel, vehicle, trailer and tachograph management. The company’s full fleet of vehicles are equipped with 360-degree cameras on a live link – with the telematics transmitted and managed live via Volvo Connect.

All this has enabled the team to have greater control and financial visibility. It can plan and track journeys, calculate what each vehicle needs to ‘earn’ per day and accurately price each job.

As a business, JPE is “nice and steady”, Smith says, and growing each year. It enjoyed a 19% increase in turnover in 2021 and sales profit reached 21% with a net profit of £1,497,335, which equates to £15,436 profit per employee.

“My father was a lorry driver,” Smith continues, “so I already had a rough understanding of drivers’ rules.

“The business wants to take compliance extremely seriously and we are fortunate that the budget allows us to buy the best systems out there on the market.”

Sitting in his office, I am able to get a full idea of the benefits of the Volvo Connect system via a large screen on the wall showing where each truck and driver are located. The software allows JPE’s planners to manage deliveries in real time – not only by seeing where a particular vehicle is but also by providing information on the driver’s time available to drive and his current activity.

The ‘Roadtrak Scheduler’ calculates the exact haulage revenue each vehicle will achieve. Jobs turn from blue to white when they have been completed and different truck icons on each job indicate its actual status.

“Each truck has six cameras fitted to it,” Smith adds, “so accident investigation is made very easy. As an incident occurs, you can log on and see exactly what has happened. The driver camera is worth its weight in gold.”

Live cameras show the front, nearside and offside, rear, load and the driver. This system retains six weeks of data and gives the ultimate in proof of delivery where, if required, a video can be produced.

Recruitment

Turning to the main challenges JPE is currently facing, Smith says it is more about the tough recruitment landscape than rising costs. The company’s longest-serving driver has been with the firm for 20 years and its oldest driver is 74. But the promise of an easier work/life balance is luring others away.

“One or two drivers are still leaving every month that need to be replaced,” he admits. “I’ve got a Class One

driver finishing tonight who is going to Tesco. You would be surprised at the number who phone up and ask about the role and when we tell them it’s up to three nights out a week they are not interested. It’s like wanting to be a pilot but not wanting to do any flying.

“The challenge is recruiting people of the right calibre. You can see the conditions that most of our trucks drive in. Delivering to distribution centres doesn’t give you the experience you need to drive off road.”

Asked if the firm has any women drivers on the books, Smith smiles: “I’ve got two daughters and if either said they wanted to be a lorry driver I would tell them to stop at the services and have a look at the toilets,” he says. “There is nothing being done about that. How many new Aldis have sprung up lately, compared with new truckstops?”

The company has also nicely sidestepped delays to truck orders: “We were lucky,” Smith says. “If you go to the dealership for a truck, they will ask you when in 2024 you want it. I’ve heard of people buying trucks secondhand, running them for six months and selling them for more than they paid.”

He concludes the chat by reiterating his delight at winning the award: “I like to think that what most appealed to the judges was the compliance figures,” he says. “The whole business is built around data – and if you can get buy-in from the drivers, that is half the battle. They are buying into the management push for compliance, which is making awards like this happen.” n

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MAKING THE GRADE: JPE Holdings works hard to recruit staff of the

calibre and the company’s longest-serving driver has been with the firm for 20 years

MT Awards 2022 winner profile

Partnership Award Team spirit

One key factor our panel of expert judges look for when picking the winner of the Partnership Award is evidence of a true partnership, rather than just a long-term contract. The fact that Mike Watson Transport (MWT) and Real English Drinks Distillery (REDD) have worked so closely together to grow both their businesses for two years without a written contract is just that sort of evidence.

REDD is a young business producing growing volumes of premium gins, vodkas and rums which have now been listed by some of the major supermarkets as well as being sold online.

Diana Blaskett, chief operating officer of REDD, says the company’s story is almost like a fairytale. “If you read about it in a book, you wouldn’t quite believe it,” she says. “The business was born of the passion of the founders, Neil and Robyn Patterson [now chair and director respectively].

“Neil was asked to come to the UK from South Africa, where he’d been an award-winning winemaker for 20 years, to start a vineyard.

“While in the UK, Patterson identified an opportunity to make premium spirits,” says Blaskett. “Neil has exceptional talent which, when combined with a wealth of knowledge, creates amazing drinks.”

A turning point came when Neil and Robyn began working with AU Vodka. This not only resulted in a move to a different location, but also a third partner, Douglas Howard, now CEO, joining the business.

AU is a fast-growing vodka brand distinguished by its gold bottles. AU wanted a range of premium-quality spirits, some of which are flavoured, coloured and would appeal to their customer base.

“Neil created a number of specialist unique drinks which sold incredibly well,” says Blaskett. “They were promoted via social media and sold through Costco and Booker with REDD doing all the production, filling, packing and palletising themselves, and using a local transport firm to get it out to the various wholesalers for distribution.

“However, as demand grew the REDD team could no longer keep pace and had to look at new ways of operating, investing in new machinery and people.”

Blaskett continues: “It has been an amazing journey with REDD, which started in a rural business unit with a four-head filling machine. Now, after relocating in January 2021 to an industrial estate in Liphook near Guildford, the business operates from a 20,000sq ft building with an additional 40,000sq ft of storage and multiple filling lines.”

As well as making products for AU, REDD has developed a selection of its own beverages.

The newest addition to the line-up is the “pud” range of drinks, flavoured with some of the UK’s favourite desserts such as salted caramel, sticky toffee and chocolate brownie. REDD has also produced a range of limited edition seasonal and special occasion variations. “We developed this range to complement desserts or to drink neat over ice or pour over ice cream,” says Blaskett. “Not only is it really versatile, it also tastes good!”

So that’s REDD’s story – how did MWT come to get involved?

Reliable logistics

“When REDD started, it used a local transport company and kept being let down,” says Blaskett. “The business was growing quickly and it needed a company that was able to provide the flexibility required. Logistics isn’t what we do, it’s not what we’re about.”

So, Neil Patterson looked around and made a cold call to MWT based on their location and good reputation locally. MWT is one of nine hauliers owned by Palletline Logistics, whose MD is Paul Elson.

“The gentleman who answered the phone made such a positive impression on Neil that it started from there,” says Blaskett. “Paul and his colleague Keely [Priestman, commercial general manager] ventured down to ‘the rural location’ to understand what was needed and how we could work better.”

MWT provides a wide range of logistics services for REDD, as the customer’s transport requirements are relatively complex.

“It is varied,” says Elson. “We provide storage for a variety of items required in the manufacturing process at MWT’s warehouse facility. Some freight goes through the Palletline network and then there’s the full-load activity, some of which we do, while some will be handled directly by the likes of Booker.

“There is also some container work, where MWT will de-stuff and store the material.”

The symbiotic relationship between Mike Watson Transport and Real English Drinks Distillery has bolstered the growth of both businesses over the past two years – and all without signing a single contract

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On the back of REDD’s growth, MWT added a second site which also serves the distillery.

“MWT doubled in size over a short period of time,” says Elson. “We’ve kept the old site on and also moved into a new 28,000sq ft facility.

“We run the network operation from there. We’re moving more than 200 pallets a day so it’s not an insignificant size depot. We provide storage for other customers there too, but REDD is the predominant one.”

Blaskett adds: “This level of flexibility has been incredibly helpful. For example, we’ve recently gained a new customer because the bottling facility they used had gone out of business and all of their clients were scrambling around at peak time to try to find places that can fill for them.

“Due to the support of MWT we were able to make the necessary space available and accommodate them.”

Mutual trust

Both companies have grown since joining forces, despite – or maybe because of – the fact that their relationship is based entirely on trust and great communication rather than a written contract.

“It’s always been very symbiotic in the way that the relationship has grown,” says Elson. “There has never been a contract in place. We’ve never discussed a contract other than the fact that we’re comfortable working without one.

“We always strive for a relationship-based approach and this is one of the rare occasions that it’s actually true.

“We understand REDD’s plans and they’ve always been true to their word. There is a lot of trust in the relationship.”

Another strong signal of a true partnership is the integration of the service provider with the client, which has enabled REDD to make better use of its factory space. Blaskett says: “We always treat them as part of the team and they are so integral to what we do that we just have that unconscious relationship, which sounds corny but is true.

“One of the things we’ve been able to do is be more efficient in our own use of space so that we can store more finished product. That means we can run more than one production process at once because we’ve not had to keep all the raw materials on site. Being able to do that during peak times such as Christmas is essential.”

MWT also worked with REDD to support their BRC accreditation for its warehouses – something some retailers insist upon.

With such rapid growth it is inevitable that lessons have been learned on both sides along the way.

“What’s exciting for us this year is to do things differently to last year because we’ve learned,” says Blaskett. “We will have to work quite cleverly with storage and just-in-time on raw materials, which is where the planning with the local team will really kick in to help us do that.”

Other plans for REDD include breaking into the US market, increasing its online presence and continuing to expand its product range. As well as using MWT to handle more storage to free up production capacity, REDD could soon be adding a second manufacturing site.

“Who’s to know what may come in the future because we work with a number of different clients now,” says Blaskett. “We’re really lucky to have had people approach us and ask us to help and support their business.”

Looking back to the night in September at the Grosvenor House Hotel when their names were announced as the winners of the Partnership Award, Elson says: “We were thrilled to be honest. The entry hopefully demonstrated what we’ve achieved by developing this partnership, being non-contractual, being open and honest, standing by what you say you’re going to do and doing it, and having robust conversations.

“We had a really good night.”

Blaskett agrees: “It was lovely to meet the MWT team in a different context.

“It was quite an emotional moment. It was a genuine recognition of what we have achieved together that was really powerful. It was a fantastic night!” n

WHAT THE JUDGES SAID

Our panel of judges made REDD and MWT clear winners in a hard-fought category, with one saying: “I particularly liked the comment that REDD changed their production schedules to accommodate transport schedules. It can be hard to get a customer to change their process or spend money/increase cost unless they trust their partner and believe in the mutual benefit”.

Another commented: “I enjoyed this submission, full of information and success, especially around growth for both parties. Amazing increases in revenue and production which meant both parties utilised each other’s expertise to manage storage, transportation and pallet handling.”

One judge concluded: “From a very small start this partnership has grown and developed into a mutually beneficial relationship. There is a clear collaborative approach to solving challenges with trust on both sides. This has enabled both businesses to grow substantially over recent years, demonstrating the strength of the partnership.”

FLEXIBLE FRIENDS: MWT provides a range of logistics services to meet REDD’s relatively complex needs