Motor Transport 6 March 2023

Tipper firm folds with £1.6m debt

A Herefordshire haulage firm incorporated almost a quarter of a century ago has gone into liquidation owing £1.6m.

Accountants from Leonard Curtis were appointed to Ken’s Tipper Hire on 31 January and they are now in the process of winding up the business.

A statement of affairs showed that the haulier, which traded out of three operating centres in Kington, Bromyard and Hereford, owed creditors £1.6m, including £111,700 to employees and £551,000 to HMRC.

Records showed that the company was incorporated in 1999 and it held a standard national licence authorising between seven and 16 HGVs and eight trailers out of its three depots.

FRESH LOOK: Youngs Transportation & Logistics has started adding Renaults to its fleet that display its new branding. Two T520 High 6x2 pushers have joined its 150-plus fleet and follow on the heels of a 26-tonne D Range that was delivered at the end of last year. A further three T480 Highs and two 26-tonne T480 rigids are on order. Andre Jenkins, Youngs’ south-east fleet manager, said: “Introducing the new branding to the fleet was an important step in communicating the company’s new look and feel. Things are changing in the fleet too, and the Renault trucks are replacements for a competitor model that we’ve used for years. Not only was the overall deal more competitive, the Renault trucks, in my opinion, look smarter and have a greater presence.”

Cargo Services Group and JL Enterprises plan to divest interest in fast-growing logistics giant

Hong Kong pair ready to sell stakes in EV Cargo

By Carol Millett

Hong Kong-based Cargo Services

Group and JL Enterprises

Holdings are planning to sell their stakes in EV Cargo Holdings, which owns EV Cargo UK.

Supply chain services provider Cargo Services and family-run freight forwarding and logistics firm JL Enterprises have confirmed they plan to divest their entire investment in EV Cargo Holdings, which is also based in Hong Kong.

Cargo Services and JL Enterprises were founded by Hong Kong tycoon John Lau. He is also the chairman of Hong Kong-listed CN Logistics International Holdings, and was a major inves-

tor in EmergeVest, the Hong Kongbased private equity firm that owns the majority stake in EV Cargo.

EmergeVest created EV Cargo in 2018 after combining six UK logistics companies in its portfolio.

MT reported last year that EmergeVest was considering

options for its majority stake in EV Cargo, following a surge in investor demand in the logistics sector, according to sources.

These were said to include a sale or an initial public offering of the business at a valuation of at least $1.5bn (£1.25bn).

News of the divestment comes as EV Cargo continues on its acquisition trail. Last month the group announced the purchase of the remaining 60% of the shares of Allport Netherlands from its joint venture partner, subject to merger control approval.

The deal will make EV Cargo the sole shareholder of the company, which provides air and sea freight forwarding and PO management services for importers and retailers across the Netherlands. It will be rebranded as EV Cargo.

This latest purchase is part of EV Cargo’s aim to deliver more than $3bn of revenue through growth, mergers and acquisitions.

Failure of timber importing customer rapidly pushed SCL into the red

Haulier’s quick demise caused by Ukraine war

By Chris Tindall

It took just six months of loss making activity at East Yorkshire-based Sam Carmichael Logistics (SCL) for it to collapse into administration, which can be blamed in part on the Russian invasion of Ukraine.

The company, which had 21 employees and operated 18 HGVs out of its North Ferriby base, was incorporated in 2021 and became profitable in its first seven months of trade, its administrator claimed.

Interpath Advisory said the firm’s woes began when its two largest customers started facing financial difficulties. One of them, Carmichael International, was involved in importing Russian timber.

Both of these big customers were closely linked to SCL by virtue

of having common shareholders and directors.

In addition, one of them held SCL’s O-licence and so when it also began to struggle it created cash flow problems for SCL.

Interpath said SCL was consistently profit making in the seven

months to June 2022, generating EBITDA of £116,000. However, with the start of the Ukraine war in February 2022, the flow of Russian timber stopped overnight and Carmichael International’s subsequent insolvency hit SCL’s sales volumes.

It meant the Yorkshire haulier went into the red from July onwards, generating a loss before interest, tax and amortisation of £235,000 in the five months to November 2022.

“Unsecured trade creditors totalled £39,408 and related party creditors were £1m at the date of the joint administrators’ appointment,” said the report.

“We do not anticipate funds will be available to make a distribution to unsecured creditors.”

Hazchem Network warns of fire risk from lithium batteries

The Hazchem Network is raising awareness of the need to rely on ADR carriers for the transport of lithium ion batteries.

Lithium batteries are becoming much more common as they are increasingly being used to power vehicles, as well as being used in consumer electronics and solar equipment. But The Hazchem Network has warned that many customers are unaware that ADR hauliers are required to transport batteries with a power rating above 100Wh, due to the risk of them catching fire.

Hazchem MD Rob Symes said batteries below 100Wh may still require ADR and this must be checked with a dangerous goods safety adviser.

Devereux blames fatal accident and fuel costs for slide in profits

Devereux Transport and Distribution increased sales by 6.4% last year, but the Billingham-based firm dipped into the red after it settled an HSE fine following a fatal accident.

The company reported revenues of £13.9m for the year ending 31 March, an increase of £835,000 on the previous year’s results.

Gross profit was £1.9m; however, it made a

pre-tax loss of almost £93,000 after it received a fine, which it is understood related to the death of lorry driver Christopher Barnes.

The 69-year-old fell more than 7ft onto a concrete floor at a customer’s premises while he was unloading his lorry in April 2018.

MD Ken Devereux told MT the whole incident was still “very raw” and that it had given

the customer its own safe systems of work, including working at height.

In its trading statement the company said that although sales had increased, rising fuel costs caused a small drop in its gross profit margin. “The company’s trading results for the year are in line with the expectations of the director,” it added.

Palletways duo take Cardiff reins

Palletways has appointed two new managers (pictured) for its Cardiff depot.

Matt Carter, previously sales manager in Bristol, has been promoted to depot manager commercial for Cardiff and new face Sharon Askey becomes depot manager operations.

Palletways said both appointments bring a wealth of industry experience with them and they will be jointly responsible for the day-to-day running of the operation at Atlantic Way.

Carter said: “I couldn’t be happier to remain part of the Palletways family which has invested greatly in my develop-

ment, allowed me to learn new skills and hone my experience.

Askey added: “I’m keen to help build on Palletways’ offering and operational efficiency, attract new business and strengthen the brand in South Wales.”

Photo: Shutterstock

AB FAB: DPD has snapped up South East final-mile courier Absolutely. The firm has a fleet of around 200 couriers servicing clients ranging from fashion brands to law firms and media businesses. Its fleet includes an expanding number of zero-emission vehicles, such as cargo bikes and push bikes, alongside vans and motorbikes. It also undertakes temperature-controlled courier services. “Same-day delivery is one of the fastest growing segments of the logistics market and this move allows us to further strengthen and expand our offer, following the acquisition of CitySprint last year,” said Elaine Kerr, DPD UK chief executive.

Kinaxia confirms key appointments amid growth drive

Kinaxia Logistics has strengthened its senior management team with a series of key appointments as part of major growth plans.

The appointments follow a restructuring that has seen the company create three divisions – Distribution, Primary and Logistics & Fulfilment – in a move aimed at improving efficiency and introducing standardised operational processes across the group.

Richard Smith (pictured, left) has joined Kinaxia as MD of the group’s Primary sector business. He joins from DHL Supply Chain,

where he was operations director for its Jaguar Land Rover account. Smith has succeeded Mark Thompson, with a remit to continue its profit-

able growth and broaden its customer base.

Thompson (centre left) has now become chairman of MTT and has taken on a groupwide procurement role.

Paul Givelin (centre right) has been promoted from group projects director to take on a broader role as commercial director.

Phil McBean (right) has been promoted to a new role of group network director as Kinaxia continues to integrate its businesses following the restructure. He was previously operations director at Kinaxia’s Panic Transport in Rugby.

EC’s curbs on C02 anger both manufacturers and green campaigners

Fury at new HGV emissions targets

By Carol Millett

The European Commission’s new CO2 targets for heavy goods vehicles have been criticised from all sides of the fence.

Under the rules, announced by the European Commission last month, HGVs will have to reduce their emissions by 45% by 2030 and 90% by 2040.

The targets have been criticised by businesses, manufacturers and environmental campaigners alike, who argue they are either not ambitious enough or fail to consider the provision of infra-

Nicholls and Knauf unveil net-zero livery

Haulage firm Nicholls and its client Knauf have unveiled the first of many new liveried trucks highlighting the CO2 savings generated

structure to support the transition.

Lars Stenqvist, chief technology officer at Volvo Group, said the proposed legislation puts all the onus on the truck and bus manufacturers without a timeline for infrastructure provision.

European operators would need to buy an estimated 400,000 more zero-emission trucks, with at least 100,000 new zero-emission trucks registered every year.

Sigrid de Vries, director general of the European Automobile Manufacturers Association (ACEA) warned: “Given that charg-

by the fleet of LNG trucks used to make the partnership’s deliveries.

The pair said that with Knauf emissions from its UK deliveries representing roughly 23% of all its Scope 3 emissions and the bulk of Nicholls’ Scope 1 & 2 emissions, cutting these was a priority for both organisations.

Knauf entered its partnership with Nicholls after Brian Moran, Knauf logistics manager, reviewed the company’s haulage partners and key contracts in a bid to cut emissions.

“They were already on a committed and defined sustainability journey,” he said.

“While we do still use diesel trucks for deliveries where distance and infrastructure for LNG isn’t viable, we are making the move to using more LNG trucks for our deliveries.”

Family-run Lockwood signs up to Palletline

Lockwood Group has joined the Palletline network, which the Midlands firm said would help it to reduce its final leg delivery area in DE postcodes.

ing stations that are suited to the specific needs of trucks are almost completely missing today, the challenge ahead is enormous.”

Conversely, environmental group Transport and Environment condemned the new targets as a “craven concession” to truck manufacturers, which will slow down the electrification of trucks.

It called for lawmakers to mandate a 65% cut in 2030, which it said was equivalent to the zeroemission sales goals already announced by Daimler Truck and Volvo.

Keith Allsop, Lockwood transport and warehouse director, said: “The company has a reputation for innovation and for going the extra mile to meet customer needs.

“Its values are very much aligned with our own and we look forward to being a fully fledged member as we start a new chapter in our journey.”

Family-run Lockwood Group was established in 1965 and has over 600,000sq ft of warehousing across seven sites, employs a 200-strong workforce and operates 86 vehicles with 219 trailers.

Boat haulier rides cash flow wave thanks to new TMS

Independent haulier AS Taylor Transport is improving cash flow after switching to a new transport management system (TMS)

The company, which is based near Burton-on-Trent, specialises in long and wide loads for boat transport and general haulage.

It has recently upgraded its TMS from the Stirling system, which it had used for decades, to the cloudbased Mandata GoPlus.

This is a TMS designed for hauliers requiring more advanced system integrations. It offers job

creation and planning and streamlines the POD and invoicing process, which enables logistics firms to speed up cash flow.

Emma Tideswell, AS Taylor director of transport operations, said: “The invoicing system is excellent and it integrates well with Stirling Accounts; we’re able to easily transfer information between the two, which saves us time.

“Invoicing is a much quicker process and the customer gets the invoice and other documentation together, in one email.”

‘Complexity’ of DfT form likely to restrict industry feedback, says haulier

Red tape threat to LHV road trial

By Carol Millett

A government consultation on the proposed trial of Longer Heavier Vehicles (LHVs) is using an application form that is so “unnecessarily and extremely convoluted” that it could risk the trial getting the go-ahead, according to one LHV expert.

Kevin Buck, MD of HazComp, who has long been lobbying for a UK trial of LHVs, has raised concerns about the complexity of a form, which the DfT has sent out to the 85 hauliers that have expressed interest in taking part.

The hauliers have been asked to use the form – an MS Excel spreadsheet – to give examples of how their businesses would use LHVs on the trial.

These examples will be used by DfT to determine industry demand and the feasibility of running a UK road trial.

However, as MT went to press, only three of the 85 companies had submitted a total of nine examples of LHV use.

A DfT spokesman rejected

RHA lays out key priorities

The RHA is to focus its resources on a number of newly defined priority areas for future campaigning to help better support its members and the wider sector.

The priority areas it has identified are: skills; driver facilities; environment; international operation; costs and regulation; and infrastructure.

The RHA has also set a number of policy goals to chart its progress in each of its priority areas.

Buck’s claims. “We flatly rule out the idea that the process is somehow conspiratorially difficult,” he said. “The Department will carefully consider all of the outcomes from the currently ongoing study work in making a decision as to whether it is appropriate to proceed to on-road trials of LHVs.”

For example, a key goal under its driver facilities priorities is to secure planning rules reform to make it easier for developers to build new truck stops.

The association also aims to persuade ministers to announce an HGV fuel duty rebate under its costs and regulation priorities.

Panattoni dreams of South Coast

potential as Sussex work begins

Panattoni has begun speculatively developing a 452,469sq ft last-mile logistics development at Burgess Hill, 45 miles south of London.

south coast markets, and is adjacent to facilities occupied by DPD and Roche.

TUB

Bartrums has added three more Fruehauf stepframe bathtub tipping trailers to its fleet to boost its UK-wide malt barley haulage operation. The order strengthens the East Anglian company’s relationship with Fruehauf, which stretches back more than a decade. The 53cu m-capacity bathtubs join a fleet of 170 trucks and 250 trailers operated by the family-run business, which is building a new 80,000sq ft warehouse to manage the growth of its haulage work. Expected to cover 130,000 km per year, the bathtubs are specified with front-access combined ladder and walkways, smartphone-enabled PM1155 weigh systems and a Dawbarn Hydroclear electric sheeting system.

Construction follows the granting of planning consent by Mid Sussex District Council at the end of January and reflects Panattoni’s confidence in the strength of the south coast logistics market, where it said the demand-supply imbalance is acute.

The site is located on a 22-acre plot that fronts the A2300 dual carriageway and provides fast access to the A23/M23, Gatwick Airport, Brighton and the wider

Panattoni intends to speculatively develop 14 units, with planning in place for light industrial, general industrial and warehousing and distribution. The units will be built to a Breeam rating of ‘Very Good’ and an EPC rating of ‘A’ and will benefit from 15% roof lights, electric charging points for vans and cars and up to 7.5 MVa of available power.

The move comes following recent purchases of sites in Crawley and Brighton.

TfL consultation looks to tighten Direct Vision Standard

TfL has launched a consultation on a series of proposals to tighten up the Direct Vision Standard (DVS) and HGV safety permit scheme.

First introduced in 2019 as part of the DVS, the scheme requires all operators of HGVs weighing more than 12 tonnes to apply for a free permit to operate in London.

Fatal collisions involving HGVs where vision was cited as a contributing factor halved from 12 in 2018, the year before the scheme was introduced, to six in 2021.

Hauliers are granted the HGV safety permit if the vehicle meets the minimum DVS star rating, which is based on how much the driver

can see directly through their cab windows.

TfL is now asking for people to have their say on recommendations to enhance the current Safe System, taking into account new and emerging technology or safety equipment not previously available.

The consultation is open until 3 April 2023.

THUMPING:

Rebranding for growth

By Steve Hobson

Total Vehicle Solutions Group has rebranded as TVS Interfleet, as the CV bodybuilder positions itself to offer greener products to the transport industry.

It has also launched a bespoke bodywork division called Purpose Bodies, which will build lightweight ambient vehicle products.

TVS has collaborated with OEMs to develop lightweight e-tippers and e-mixers, including the UK’s first electric mixer created in partnership with Renault, and it said the rebrand would help it continue this work.

Its existing brands Priden Engineering, McPhee Mixers, SB Components and Wilcox all remain part of TVS Interfleet’s stable, along with Purpose Bodies.

TVS has five factories at its largest manufacturing site in Wisbech, plus four Wilcox factories in Market Deeping and the McPhee mixer plant in Glasgow. Priden remains the leading supplier of pneumatic discharge equipment for animal feed bulk vehicles.

TVS Interfleet’s rebrand also includes Motion, its brand to deliver aftersales service and parts, and the Edge brand, which will lead the development of innovative new products.

It has been owned for the past seven years by private equity firm Elaghmore, which was set up in 2016 to acquire small- to mediumsized UK industrial companies across multiple sectors. It acquired Wilcox in 2021 and its stated aim is to help regenerate UK manufacturing rather than turn a quick profit for investors.

Body beautiful

TVS commercial director Phil Ashton spent many years at rental firm Ryder and says he worked with SB Components for over 20 years. “But very few people know we build bodies,” he says. “I was at a conference the other day and the fleet engineer at a large 3PL leant over and said ‘I didn’t know you were a bodybuilder’.”

While McPhee and Wilcox are well known for their concrete mixers and tippers respectively, the group is less recognised as a builder of a range of dry ambient vehicle bodies – but it is the preferred supplier to John Lewis & Partners for its home delivery

vehicles and is working with the retailer on the next generation of lightweight bodies for its electric vehicle fleet.

A walk around the Wisbech site highlights the huge variety of bodies, fuel tanks, catwalks, exhausts, suzie mounts, lockers, doors, toolboxes and dropsides it manufactures from sheet steel and aluminium for customers as disparate as Openreach, local authorities, utilities and owner drivers. It is said that every commercial vehicle is a prototype as everyone wants something slightly different and nowhere is that more true than at TVS.

Its new division Purpose Bodies has been created to design and build alloy tippers up to 3.5 tonnes, plus a range of dry box, curtainsider, crane-equipped and dropside bodies for all weight categories.

TVS is the sole UK agent for Italian mixer manufacturer CIFA, and including these sales, it is the market leader in the mixer market with a 69% share. Priden and Wilcox together account for 30% of the tipper market, while the group supplied 12% of the commercial bodies sold in the UK in 2021, up from 7% in 2020.

Future ambition

The group has ambitious plans for growth under its relatively new senior management team, which has a useful mixture of experienced transport hands in Ashton and technical director Kevin Walker, blended with ex-aerospace people including chairman and chief executive Craig Harris.

Capacity is, however, being constrained by erratic deliveries of the new vehicle chassis on which TVS works its bodybuilding magic.

“Chassis deliveries are all over the place,” says Ashton. “If they

are late we can’t always create a new slot for them as we can’t afford to have our people stood around. Tail-lifts are also in short supply.”

While people often talk about EVs as the future, Ashton says “they are here now”. TVS is already building bodies on Renault and Tevva electric chassis, and with blue chip names like Tesco, DPD, Tarmac, Evri, Hanson, Cemex and Travis Perkins among its customer list, it is certain to be at the vanguard of the drive to zero emissions. Walker hopes that electrification will lead to greater standardisation of vehicle body design, helping to keep manufacturing costs down.

Collaborative innovation

As well as developing lightweight ambient bodies to squeeze every drop of payload from the new wave of electric vehicles, TVS has partnered with Renault Trucks and Scottish Enterprise to develop an innovative McPhee electric concrete mixer that has gone into operation with Tarmac.

This is part of a development process that is also testing a hydraulic tipper body on a Volvo 8x4 chassis and is intended to produce an electric tipper body by mid-2023.

The McPhee e-mixer is different from the existing CIFA product in that it is powered by the vehicle batteries rather than having its own, heavier self-contained battery pack.

SAFETY INNOVATION

“A battery electric vehicle has to work as well as a diesel,” says Walker. “Our 6cu m drum on the Renault 6x2 EV will give the same payload as a diesel.”

Discussions about sacrificing range to achieve payload parity begin with the normal response when talking about EVs – “It depends”.

“We need to forget what we know and start again,” argues Walker. “We are using a datalogger and vehicle management system to monitor the vehicle to see if it is really doing what we say it will do. These are expensive pieces of kit, so they must do what they say.”

Walker points out that while battery electric vehicles aren’t cheap, availability from some manufacturers is actually better now than for diesel chassis.

Even before the government ban on sales of new fossil-fuelled trucks starts in 2035, Ashton says that major clients will be specifying zerocarbon vehicles on their projects. He cites the planned Lower Thames Crossing, a new tunnel under the river east of London. National Highways says it will be “a pathfinder project that is exploring ways to build the new road with a carbonneutral footprint”, which Ashton interprets as meaning only battery electric or hydrogen trucks will be allowed on site.

TVS Interfleet lives by its strapline: “The chassis drives the body, but the body drives the business.” ■ To explore the latest bodybuilding technology, make sure you head to this summer’s Road Transport Expo. Register for your free ticket at roadtransportexpo.co.uk

As part of its project to produce an electric mixer, TVS has developed Interlecs, a software system designed to help cut some of the 40 mixer roll-overs that happen each year.

These usually happen when a full load of cement is at the top of the drum while the vehicle is cornering, something the software can detect and prevent.

Now it has been proven, there is no reason this could not be used on diesel-powered mixers too, says Ashton.

CV bodybuilder has its focus firmly targeted on expanding the business into a greener future

The LGV Driver Cat C+E Apprenticeship is chosen for an exceptional funding band review Funding for the future

On 17 January 2023, the Institute for Apprenticeships and Technical Education announced that 20 apprenticeships had been selected to be considered for an exceptional funding band review. The LGV Driver Cat C+E Apprenticeship is one of those 20.

This Level 2 apprenticeship gained full accreditation for articulated and drawbar vehicle drivers on 6 August 2021. It takes 13 months to complete and the funding band was set at a maximum of £7,000 after two procedural reviews and lobbying by the Trailblazer Group and Trade Associations of the then secretary of state for transport, Grant Shapps.

The Institute has selected the Apprenticeship for Exceptional Funding Review based on the following criteria: impact of cost increases on the delivery of training; skills shortage occupations; priority industry sectors; and the

number of apprenticeship starts that there were in 2021/22.

The LGV Driver Apprenticeship had 2,830 starters in the 2021/22 academic year – the most it had ever recorded in one year since the original Cat C Apprenticeship was introduced in 2016. After consultation, the Trailblazer Group

OTHER TRAILBLAZER INITIATIVES

Supply Chain Warehouse Operative Apprenticeship

A sub-group of the Trailblazer for Transport and Logistics is currently working with IFATE to update the Standard and EPA of the existing Warehouse Operative Apprenticeship, which was originally introduced in 2016.

Supply Chain Operator Apprenticeship

The existing Supply Chain Operator Apprenticeship currently has two options. One for a traffic office role such as a traffic planner or traffic operator and one for a removals operator. This obviously will not work as the roles are only minimally connected. The Trailblazer Group has established a sub-group to update and revise the true Supply Chain Operator Apprenticeship. Another sub-group led by the British Association of Removers is looking to develop a separate Removals Operative Apprenticeship.

was unanimously in agreement that an Exceptional Funding Band Review should be carried out and this decision was relayed to IFATE on 27 January 2023.

The format for the setting of funding bands has changed since the apprenticeship was accredited in 2021 and quotations from three training providers are no longer required.

Rising costs

The evidence of training costs based on the Apprenticeship Training Plan is the core of the submission. The elements of costs to be considered are as follows: training instructor employment costs based on classroom, distance learning and one-to-one tuition; consumables (fuel etc); mandatory qualification costs; end-point assessment costs; non-teaching time; and administration costs.

Since the Apprenticeship Funding Band was fixed in 2021, training providers have incurred

significant increases in salaries for training instructors and fuel costs. The training providers in the Trailblazer Group were very supportive in providing information to complete the submission. This was made on 24 February 2023 in accordance with IFATE’s timetable and represents a substantial increase to the funding value, although IFATE will only consider increases by one funding band.

Next, the data and evidence provided will be verified. IFATE is due to make a funding recommendation to the Department for Education on 17 April 2023, with a view to any revision being applied from 1 May 2023.

Route Review

In my last column I promised to update you on the Route Review being conducted by IFATE of the Transport and Logistics Sector. The analysis of the consultation questionnaire responses has now been forwarded to the Route Panel. They were meeting in February to consider the impact of the results of the consultation on the Principles and Characteristics of Apprenticeship Standards. A further meeting for Trailblazer chairs to be advised of IFATE’s views as a result of the consultation is planned for 2 March 2023. Like many processes within the Department for Education, progress is slow, but I will keep you informed as more developments occur.

■ Jim French MBE, Co-chair Trailblazer Group, Transport and Logistics

Image: Shutterstock

Fog of confusion over London

As you may have heard, the London Ultra Low Emissions Zone is expanding to cover an area inside the whole of the M25 (but not the actual motorway itself) in August.

Steve Hobson Editor Motor Transport

For operators running in to London, but not experts on the various TfL schemes, this will just add to the confusion and cost of servicing the capital and it is understandable that many are simply avoiding London because of the cost and confusion.

Just because the ULEZ is expanding to cover the whole of London and surrounding counties does not mean that the Low Emissions Zone or the Congestion Charge are disappearing. And don’t forget the Direct Vision Standard that is being tightened in 2024.

So,in a nutshell,from August this year the ULEZ will require all vans under 3.5 tonnes to be Euro-6 when driving inside the M25 or pay a £12.50 daily charge. It operates 24 hours a day, every day except Christmas Day.

The LEZ operates 24 hours a day and covers Greater London, which is an area roughly within (though not exactly bounded) by the M25. The daily charges for the LEZ are: £100 for vans over 1.205 tonnes unladen weight and up to 3.5 tonnes GVW that do not meet Euro-3, and for HGVs over 3.5 tonnes that meet Euro-4 for PM but not for NOx; and £300 for HGVs over 3.5 tonnes GVW that do not meet Euro-4 (PM only).

Cleaning up our act

Big news from Europe last week as the European Commission issued its draft legislation on CO2 emissions from heavy-duty trucks and buses. Big news because, if approved by the European Parliament and the Council of the EU, the far-reaching regulations will become the market standard for Europe and will drive the truck manufacturer’s strategy for the next 20 years.

The proposals set CO2 emissions reduction targets for the vehicle builders, based on a 2019 base. You’ll have seen reference to an overall target of a 45% reduction for 2030 (it’s currently 30%), a 65% target for 2035, and a 90% target for 2040. Scratch a bit deeper and you’ll find the regulation will come into force for trucks over 5 tonnes GVW (vans are lumped in with the car regulations) and the targets are slightly lower at 43% for 2030, 64% for 2035, and still 90% by 2040. Trailers are now in scope and have their own reduction targets, with a 15% CO2 reduction (relative to 2025) by 2030.

Manufacturers who produce zeroemission vehicles (and assuming there will

The Congestion Charge operates from 7am to 6pm Monday to Friday and noon to 6pm at weekends and bank holidays. There is no charge between Christmas Day and New Year’s Day. It covers central London roughly from Marylebone to the City of London and from Clerkenwell to Lambeth and applies to all vehicles except registered recovery trucks and costs £15 a day.

The TfL website helpfully points out: “Remember, the LEZ is not the same as the Congestion Charge and the ULEZ. If you drive within either of these charging zones you need to pay them even if you meet the LEZ standards or have already paid the LEZ daily charge.

“Heavy goods vehicles, vans and other specialist vehicles over 3.5 tonnes gross GVW that meet the new [sic] Euro-6 (NOx and PM) standards already in operation in the ULEZ will not have to pay an additional ULEZ charge.”

Got all that?

Don’t misunderstand – everyone wants cleaner air for a healthier London population and with the ClientEarth lawyers holding the government’s feet to the fire, tighter legislation to meet international air pollution is inevitable. But come on, let’s do this in a clear, sensible way that everyone can understand and hits the right targets rather than introducing piecemeal zones that only annoy and confuse.

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be some type approval requirement to cover these) will be able to trade them with anyone, which could be good news for the small series start-ups as it may provide a new revenue stream for them.

So where does this leave the UK? Clearly, as we’re no longer part of the EU, UK sales won’t count towards the manufacturer targets. In the absence of UK legislation to back up the announced ‘end of sale’ dates for fossil-fuel-powered trucks, UK commercial vehicle operators and vehicle importers will no doubt be scratching their heads trying to work out how one of the biggest truck markets in the European region fits into the brave new world of decarbonised transportation.

Oh yes, and we’re still waiting for the announcement of when the ZERFD trials will be kicking off! You didn’t think I’d forgotten did you…?

Keep it clean.

Got something to say?

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

Andy Salter

Managing director, Freight Carbon Zero

Tricky transition

The lack of certainty about future plans for fuel infrastructure and taxation is proving a costly challenge for truck manufacturers. Steve Banner investigates

Will registrations of new non-zeroemission trucks come to a spluttering halt or show a last-minute surge prior to the UK government’s deadlines for ending their sale?

Come 2035 the axe will fall on models grossing at up to 26 tonnes and by 2040 there will be a complete ban on the sale of trucks running on fossil fuels.

According to Andrew Scott, UK head of electric mobility and product development at Renault Trucks, new diesels are unlikely to disappear from manufacturers’ catalogues prior to those dates, but the choice offered to customers looks set to be restricted.

It boils down to money. Truck makers do not have the resources to fund everything.

“Electricity and hydrogen are rightly seen as key fuels when it comes to decarbonising transport,” he observes. “However, manufacturers are having to make commitments to these new technologies at the same time as making massive investments to improve the fuel economy and reduce the CO2 emissions of the diesels that comprise the vast majority of their sales.

“Each future investment decision has to be made in the light of a manufacturer’s ability to recoup its costs,” Scott continues. “As a consequence, it seems likely that the range of diesel options available in the future will be less than it was previously.”

Says Iveco: “At the moment we do not plan to wind down deliveries of trucks equipped with internal combustion engines in advance of the deadlines, but some rationalisation of the portfolio could be considered depending on how demand evolves.”

The introduction of Euro-7 for trucks in 2027 will have a significant influence on the decisions manufacturers make. MAN wants to see a light-touch Euro-7, given that diesel will have a less important role to play than zeroemission technologies and the investment required to fund further developments in both will be huge.

Flexible production

But Scott is not anticipating arriving at a situation where it is suddenly no longer cost-effective to build diesels alongside trucks using other propulsion technologies.

“As far as Renault Trucks is concerned, we’re fortunate in having a wide range of manufacturing options,” he says. “For example, diesel, compressed natural gas and electric E-Tech D models are built on the same assembly line at our factory in Blainville in northern France.

“Each production site – and indeed the wider supply chain – continues to flex in line with changes in demand. The change in drivelines will evolve over time, as will our manufacturing facilities.

“We don’t expect a defined tipping point between diesel and electric/hydrogen solutions, but an ongoing move from one to the other as the economics of production and operation change along with legislation.”

Not surprisingly, sister brand Volvo takes much the same view.

Says a spokesman: “We already have a full range of electric trucks, which we’re selling and delivering today alongside our current diesel range.

INCREASING UPTAKE: DAF Trucks UK MD Laurence Drake believes progressive incentives will enable operators to plan for an electric future

“As the trucks are built on the same production lines, it’s pretty simple for us to build either.”

Scott doubts that there will be a big surge in registrations of diesel trucks prior to the legislative end dates, in the way that registrations of Euro-5 models rocketed prior to the introduction of Euro-6.

“The business case for zero tailpipe emissions will have become compelling for most operators in most applications prior to those end-dates, so there will be less of a spike than was the case with Euro-5,” he contends.

Major fleets especially will have planned their replacement cycles to avoid being caught out by cities emulating Oxford and introducing zero emission zones (ZEZs).

Scott does not believe that derv will simply become unavailable at the pumps, a view shared by Iveco. However, energy providers will be focusing on and investing in other sources of power, and there is the question of how heavily diesel will be taxed.

The tax effect

If the taxman comes down hard on every litre, then that will dent the appeal of diesel trucks and affect their second-hand value, with a roll-out of ZEZs restricting their use in some urban areas. “Any moves to road pricing according to CO2 emissions will also have a significant impact,” adds Scott.

Tax could indeed have a key role to play in shaping the market, agrees DAF Trucks UK MD Laurence Drake.

The government could decide to use the levers of VAT and duty to make diesel 10 times more expensive than it is now, with so-called green electricity becoming almost free, he suggests. At the same time, more and more cities may decide to roll out ZEZs.

If this situation arises, then diesel trucks will become far less appealing and demand will swing in favour of electric models, especially if they are heavily subsidised.

“With careful attention to incentives and favourable energy prices then we could see a gradual increase in battery electric uptake,” he says. “But we must have incentives that are progressive and enable operators to investigate and evaluate electric vehicles and consider how their businesses need to change for the future.”

While tax may threaten their viability, diesels will continue to operate for many years after the end-of-sale dates, Scott predicts: “Some will keep going up to 2050 or beyond if legislation allows it.”

Might Westminster relent and either scrap or significantly water down the 2035 and 2040 cut-off dates? Scott doubts it.

“While the government has asked the industry to identify suitable vehicle types for exemption, it seems

LACK OF CLARITY IN THE EU

While the UK government has announced its intention to ban sales of all new diesel trucks from 2040 onwards, the EU had yet to clarify its position on the rules that will apply in member states at the time of writing. Europe’s truck makers have stated through their trade association, the European Automobile Manufacturers’ Association (ACEA), that all new trucks sold will need to be fossil-free by 2040 in order for the industry to reach carbon-neutrality by 2050.

MAN says that it supports the setting of binding interim targets for 2030 and 2035 to 2040 in the EU’s CO2 review. However, it points out that the existing targets are already demanding, and its backing for even tougher ones will depend on how rapidly an effective charging infrastructure for electric trucks is created.

It adds: “We do not support a complete ban on internal combustion vehicles by 2040.” It argues that there will still be trucks that will require this older technology, including those involved in heavy haulage, or operated by the military. It could be an option to power these vehicles by fuel from renewable sources such as HVO, biomethane or green hydrogen.

The company stresses that it is hugely committed to the roll-out of electric trucks for most applications. “From 2025 onwards we expect total cost of ownership parity for electric trucks compared with diesels,” it states. “As a consequence, we expect around 40% of long-distance truck sales and 60% of distribution truck sales to be electric by 2030.”

likely that few if any will continue beyond the deadlines,” he says. “Despite this, we believe that a case can be made for solutions such as hydrogen combustion.

“It emits no CO2, but small quantities of NOx generated from the air drawn into the combustion process. We will continue to work through various industry bodies to provide the data to inform government policy.

“We see the diesel engine having a role in the transport mix for a considerable time where the conditions and/ or the demands of the vehicle’s operation make diesel the optimum solution,” says Scott. “We welcome and encourage the use of suitable low- or zero-carbon fuels in diesel engines to limit any negative consequences of the combustion process.”

REDUCED CHOICE: Andrew Scott, UK head of electric mobility and product development at Renault Trucks, predicts that the range of diesel trucks available will decrease as the ban on fossil fuels looms closer

Drake adds: “I think people will stick with diesel for as long as they possibly can.” If that is what buyers want, and assuming the tax burden on the fuel does not become unbearable, then it is a demand DAF will continue to meet.

If hauliers prove determined to hang on to diesel against the odds, then Scott’s prediction that there will not be a Euro-5-style cliff-edge spike in registrations just prior to the end of sales of diesel 26 tonners in 2035 could prove mistaken.

One senior industry executive suggests that manufacturers and operators could even investigate the

possibility of getting 26 tonners plated at higher weights in a bid to circumvent the ban.

The difficulty for both truck builders and hauliers is the lack of certainty about what will happen, says Drake – and that makes forward planning extraordinarily difficult.

Infrastructure planning

Exacerbating the uncertainty is the lack of a credible UK government plan when it comes to ensuring that publicly accessible charging facilities for heavy trucks are readily available. Iveco suggests that a shortage of charging points could be one factor that prompts a pre-deadline dash to secure new diesel models.

“Electric cars have been around for more than 10 years and we still haven’t got the charging infrastructure right, so how on earth are we going to get it right for trucks between now and 2035?” Drake wonders. “We need to have a road map that will tell us how many truck charging points will be available and when, and whether there is any intention to introduce overhead charging from catenaries.”

If there is, then that will affect the need for fixed en-route charging facilities.

“Government has given us the drop-dead sales deadlines but it still hasn’t given us an infrastructure plan,” he comments. “What on earth are we supposed to do?”

What does seem reasonably certain – assuming derv does not rocket in price or become unavailable – is that there will be a large diesel truck parc for some time after new sales are outlawed. “With registrations of trucks grossing at above 6 tonnes running at around 40,000 annually on average, it would take around 10 years to replace all of them with electric models,” Drake observes.

That does not necessarily mean that there will be a healthy demand for second-hand diesels though, as the appeal of zero-emission technologies steadily grows. Says Iveco: “The used market could remain strong in some areas, and for some applications, but that probably won’t last long.”

Iveco does aim to keep providing aftersales care for diesels after 2040 “in accordance with legal requirements”.

“While diesels are still in use, we will continue to support them,” agrees Drake.

EMISSION STANDARDS :

MAN would like to see a light-touch Euro-7 as diesel becomes less important and investment focuses on zero-emission technologies

CHARGING INFRASTRUCTURE STILL THE BIGGEST HURDLE

While truck makers are rolling out electric trucks in growing numbers, the charging infrastructure is not yet in place to support them in the UK, says Will Reeves, commercial vehicle section manager at the Society of Motor Manufacturers and Traders (SMMT). Its absence is acting as a major barrier to uptake, he believes.

The expansion of Project Rapid, a government-backed initiative to boost the number of charging points for electric cars and vans, to embrace trucks would be a welcome step in the right direction, he states.

Although it has been criticised for being inadequate compared with what is on offer in certain European countries, the Plug-in Truck Grant is a critically important incentive when it comes to encouraging operators to make the switch, Reeves contends. “However, there needs to be support for depot charging infrastructure too, given its high cost,” he says. “Furthermore, the current surge in energy costs is affecting fleet investment, so a long-term supply of sustainable low-cost energy to support electric truck charging is essential.”

Volvo is adopting the same stance. Says a Volvo spokesman: “We will keep backing our full range of products and offer the same services for as long as they are still in the marketplace.”

Diesel decarbonisation

What Drake would certainly like to see is government supporting the decarbonisation of diesels by encouraging the use of renewable fuels. “HVO [hydrotreated vegetable oil] makes sense because it is a drop-in alternative to diesel and can deliver a 90% well-to-wheel carbon reduction,” he says. It could offer the diesel engine a lifeline, depending on its availability and tax treatment. Although it is not completely zero-emission it could potentially have a role to play from 2040 onwards, possibly in new diesel/electric hybrids that could be deployed on long-haul work if the regulations are interpreted in that way.

Adopting such an approach would deal with any range concerns and allow smaller batteries to be fitted.

“Remember that batteries contain finite resources,” Drake observes. They include lithium and cobalt, with around half the world’s supply of the latter located in the Democratic Republic of the Congo, notorious for its political instability.

However, Swedish state-owned mining company LKAB has recently discovered Europe’s biggest deposit of rare earth metals. Containing more than 1m tonnes, it is north of the Arctic Circle, in Sweden’s Lapland province; chilly, but sitting in a stable European democracy.

■ 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

Asset or liability?

The coming year sees operators facing a number of challenges. Higher interest rates, increased fuel costs, long lead times on new vehicles and a scarcity of property are all front of mind. Perhaps it’s time to think again about the most appropriate financial strategy to meet these challenges.

Back in the 1980s there was a big move away from outright ownership towards leasing or off-balance sheet finance such as contract hire. Today, many companies have adopted some measure of off-balance sheet finance.

However, warns Andrew Galliers, director of accountancy firm Menzies: “There is effectively a potential time-bomb underway for those who have chosen not to buy assets outright on day one.

“With interest rates rising, the chances of businesses being able to renew fleets on rates similar to those they already pay are slim. This will drive up the costs of the services they provide, which will need to be passed on – and margins in the sector are already extremely tight.”

Galliers also points out that there are proposals out there for the UK accounting standard to move towards international standards around the treatment of leases. “Currently in the UK these are ‘off book’, but the proposal is that these are brought into the accounts by way of recognising an asset and corresponding liability,” he says.

We have looked at the accounts of the Motor Transport Top 100 companies to get an indication of their approach to ownership of assets and the impact on their financial performance.

BUY OR LEASE? WAREHOUSES

Last year, freehold accounted for 19% of all new warehouse deals, according to Kevin Mofid, head of EMEA industrial and logistics research at Savills: “Historically (pre 2015) freehold accounted for around 25% of all new warehouse deals but it has been trending downward since 2016. In 2021 it was 13%, 2022 is back up to 19%, but that is still down on historical norms.”

However, he adds: “In terms of who likes to freehold, it tends, in the most part, to be either budget retailers or manufacturing companies.”

Andrew Galliers of Menzies adds: “For property, our client base has been caught up in a very strange market. Demand for space (warehouses) skyrocketed in the lead-up to Brexit, and while this has calmed somewhat, there are still above pre-Brexit demand levels being seen as the impact of Covid and global shipping networks return to normal.

“In terms of owning these spaces, where clients can, they are snapping up opportunities. Outside of that, those clients with spare capacity are tweaking their operating models and now providing rental properties in their own right, or a storage/handling/shipping service to meet the extra demand.”

Mofid expects the proportion of freehold deals to continue to fall. “In the most part this is due to the fact that much of the deliverable land bank is in the control of the warehouse developers who prefer to lease space,” he says. “Moreover, there is a good reason for this from an occupier’s perspective, as the constraints of the planning system mean that it is becoming harder and harder to achieve planning permission on new sites.

“It is a fundamentally risky and expensive process with no guarantee of success. For many occupiers, it is important to take a new site and be operational quickly, which is why over 80% of the deals are leased.”

For this analysis we have used three metrics: the ratio of capital employed to turnover (CETR), return on capital employed (ROCE), and operating profit margin.

The CETR is the ratio of sales to capital employed and gives an indication of whether a company is investing its own capital in equipment and property or using off-balance sheet finance. The Top 100 have an average CETR of 3.7. The higher the ratio, the more asset-light the business.

ROCE gives an indication of the return that investors are getting for the money they have invested in the business. The average ROCE for the Top 100 is 18.9%.

Operating profit margin gives an indication of the profitability of the operations as it excludes factors such as interest payments and tax. The average operating profit margin for the Top 100 is 5.7%.

The chart, not surprisingly, shows that the more assetlight operators tend to have a better ROCE than those that rely on outright ownership. What is perhaps ➜ 18

RUNNING THE NUMBERS

Does an asset-light strategy guarantee better financial performance?

Malory Davies looks at the different approaches adopted by MT’s Top 100 transport operators, who is bucking the trend, and whether it’s time to reassess the options

Asset management

TOP 100 COMPANIES

TOP 100 COMPANIES

less obvious, however, is that the more asset-heavy operators tend to have a higher operating profit margin.

But it is clear there is no “one size fits all” solution. As our table above shows, there is a wide range of CETRs in the Top 100, suggesting that each operator is finding the optimum balance between ownership and leasing for its particular operations.

Galliers points out that the key positive of an asset-light strategy is the flexibility it brings. “By not owning the asset you are not over-committed to a particular strategy and therefore, for SMEs in particular, they can pivot their decision-making should they be heading into a difficult or crowded market.

“The cons are that in terms of cost controls, when it comes to the end of rental periods you are slightly at the mercy of the market in terms of pricing to be able to rehire the assets you need to keep on operating.

Mixed picture

Examples of companies with high CETRs include KNP Logistics Group, Abbey Logistics Group and GBA Services, which all tend to have above-average ROCE. However, all three have below-average operating profit margins.

Wincanton is a publicly quoted company, so you would expect investors to be very focused on how their money is being used and the return they are getting on it. Not surprisingly, it has an above-average CETR of 4.5 and its ROCE is also above average at 19.5%. However, its operating profit margin is slightly below average at 4.3%.

Turners of Soham, John G Russell and The Bartrum Group are all examples of operators with a lower-thanaverage CETR and ROCE but above-average operating profit margins.

However, there are plenty of operators in the Top 100 that buck these trends. For example, Meachers Global Logistics has an average CETR of 3.8. But ROCE is above average at 34% and it also has an above-average operating profit margin of 9%.

THE KEY INDICATORS

Given the changing state of the market, it is clearly important for operators to reassess their financial strategies to ensure they are prepared for the challenges ahead.

Galliers says: “Where we mainly work with SMEs and privately owned businesses, one thing we find is that owners/managers are so engrossed in the day to day, they don’t have the time to step back and think of what should be happening in one, two or five years’ time.

“Sometimes it takes that critical challenge from outside as to why things are done the way they are for people to realise that it’s not working as it should do, and through our advisory team, we have a number of businesses that we’ve helped pivot and achieve success.” n

BUY OR LEASE? MATERIALS HANDING EQUIPMENT

According to Linde Material Handling, roughly 20% to 25% of customers prefer outright purchase.

Glyn Perkins, Linde’s director pricing and commercial support, says there is a mix of companies that choose to purchase for various reasons. “It usually comes down to cash availability or if they see more value in sweating the asset over its full life compared to having a five- to six-year replacement cycle,” he says. “Recently we have seen more companies switch to contract hire, perhaps due to low costs of borrowing or the desire to have more flexibility to change their equipment. It is uncertain if things will change with interest rate increases.”

BUY OR LEASE? TRUCKS

Whether you are buying or contract hiring, getting hold of trucks is difficult at the moment. Industry supply chains are constrained and have been for some time, says Colin Melvin, commercial director of Fraikin.

“Orders placed 12 to 18 months ago are only now coming into the UK and this is putting pressure on bodybuilders.

“You can’t order a truck today and expect to take delivery in three months,” he says. “Lead times are now stretching into 2024.”

For Fraikin, contract hire is currently the most popular form of vehicle acquisition. Melvin reckons that only about 30% of operators choose outright purchase.

“We have seen an increasing shift to contract hire and leasing, particularly with the growth in alternative fuels. Operating electric vehicles is different to diesel and we can help by working with the customer,” he says.

At Scania, some 28% of deals are outright cash purchase. But Dave Hickman, marketing director of Scania Financial Services says: “If the question is around ownership versus lease the answer will be different, with around 65% preferring hire purchase, the remainder with a lease product of some description.

“There has been a change in preference, but not significantly. The change is driven by several factors, such as government Annual Investment Allowance and Coronavirus Business Interruption Loan Scheme (CBILS) and manufacturer appetite for certain product RVs.”