Motor Transport 10 July 2023

OPERATORS INSIDE

Rivals old and new move to grab best assets of struggling parcels firm

Shift snaps up Tuffnells as DX acquires 15 sites

By Carol Millett and Chris Tindall

The plight of parcels firm Tuffnells has taken another twist after techbased firm Shift bought it out of administration, with DX striking a separate deal three days later to buy 15 of its former sites.

Shift, which offers on-demand delivery services using independent drivers, is led by 29-year-old founder and entrepreneur Jacob Corlett, who is looking at reopening some of Tuffnells’ 33 depots and employing some of its former staff.

Based in London, with clients including IKEA and Homebase, Shift acquired Tuffnells via an asset purchase of its IP, brand and selected assets for an undisclosed amount.

The company provides on-demand delivery services via smart algorithms that filter through the pre-existing routes of registered independent truck and van drivers and fleets of vehicles, locating drivers best suited to take on the job. Corlett said: “We are currently in dialogue with relevant parties to enable us to reopen some depots and provide re-employment opportunities.”

The purchase follows Tuffnells being placed into administration

on 12 June with the loss of more than 2,000 jobs, after being hit by the impact of Covid, spiralling inflation and a fiercely competitive market.

An Interpath Advisory spokeswoman told MT that Shift has not bought the whole business out of administration, adding that “the administrators continue to explore options for the remaining assets, including, for example, the leases for the depots.”

News later broke that DX had struck a deal for 15 UK sites previously operated by Tuffnells.

DX said it had signed an agreement with Interpath Advisory for an initial licence to occupy 13 former Tuffnells sites and purchase the freehold of another

site for £1m. The initial licences are a precursor to entering into direct lease agreements. DX added that it had also agreed terms directly with a landlord for a long lease over a fifteenth site.

DX has hired over 250 former Tuffnells employees since the administrator was appointed. It has also engaged with Tuffnells’ clients to provide continuity in deliveries and, so far, has taken on over 550 customers.

Paul Ibbetson, DX Group chief executive, said: “This exciting development gives us significant additional capacity and will enable us to accelerate growth while also driving further operational efficiencies and maintaining our high service levels.”

WELCOME BACK: Road Transport Expo 2023 (RTX) has been welcomed back by the industry at NAEC Stoneleigh. With its ‘all about the truck’ focus in abundance across the large venue, operators from all sectors were able to explore the vehicles, equipment and services they needed for their fleets. More than 200 exhibitors supported RTX in its second year, including all the major truck makers, while a three-day Knowledge Zone programme hosted a 40-plus speaker line-up focusing on key road transport sector topics. Vehicle displays, a Ride & Drive experience, live product demonstrations and insightful stand talks were just the tip of the iceberg for visitors attending the show. “We are delighted with the way the show has continued to grow and evolve,” said Vic Bunby, divisional director at RTX organiser Road Transport Media. “Our team has worked extremely hard to deliver what is a ‘must-attend’ show for anyone connected with the road transport sector.”

Photo: Marius Bukis Photography

KPMG and PwC reprimanded after poor-quality work for logistics giant

Top auditors fined over ‘serious failings’ at ESL

By Chris Tindall

Accounting firms KPMG and PwC have been fined over their audits of Eddie Stobart Logistics (ESL) for “not satisfying the relevant requirements”.

The Financial Reporting Council (FRC) said there were “numerous, serious and pervasive failings” in PwC’s 2018 audit of ESL and “some serious failings” in KPMG’s 2017 audit. PwC was fined £1.99m and partner Philip Storer £51,000. Both were given severe reprimands.

KPMG was fined £877,000 and former partner Nicola Quayle £45,500 and both were also severely reprimanded.

All received reductions for co-operating with the FRC inquiry.

The FRC said KPMG had resigned as auditor in 2018 due to “a breakdown in their relationship with ESL’s management, following difficulties in obtaining sufficient appropriate audit evidence.” PwC was then recruited.

The FRC said the admitted failings related to audit work carried out on property transactions entered into by ESL and the disclosure in the financial statements regarding those transactions.

The FRC said: “These transactions had a significant effect on ESL’s financial performance, and without the profit generated from them, ESL would have been in a loss-making position.”

A PwC spokeswoman said. “In the years since this work took place, the significant and continuous investment we have made in strengthening audit quality has been borne out through improved inspections results.”

Janssen snaps up Maltacourt in UK expansion drive

Dutch multinational Janssen Group has acquired UK freight forwarding firm Maltacourt Global Logistics.

This is Janssen’s second logistics acquisition this year, following its takeover of Norman Global Logistics in March. Janssen described Maltacourt as a “highly respected and rapidly growing player”, adding that the deal would drive further expansion in the UK market. Runcorn-based Maltacourt has eight strategically located offices across the UK and employs 65 staff.

It provides a range of logistics services under its brands Maltacourt, Mandarin and Extraordinair.

Highland fling for 40-tonne electric truck

An electric timber truck being trialled by James Jones & Sons has made its first appearance at the Royal Highland Show.

The 40-tonne artic is being used by the Stirlingshireheadquartered haulier out of its sawmill in Lockerbie and will transport timber to its Hangingshaws national distribution centre.

Lorna Slater MSP, minister for green skills, circular economy and biodiversity in the Scottish Government, pictured left, stopped by to find out more about the project and to see the new truck.

Schmitz Cargobull charges to rescue

Reid Freight Services said it was very impressed with Schmitz Cargobull after the trailer builder promised a quick turnaround for new assets and achieved it in less than four months.

The Stoke haulage firm, which handles palletised goods in the

UK and overseas, urgently needed two curtainsiders and turned to the manufacturer for help.

Chad Smith, Reid Freight Services transport contracts manager, said: “We waited less than four months from the order to delivery, which was very impressive given the current production delays impacting the transport industry. Schmitz also did a great job speccing out the trailers with everything we needed.”

The curtainsiders are the first Schmitz Cargobull semi-trailers to join the company’s extensive fleet. They will be used for general haulage and the company’s work supporting the rail industry with the transport of equipment and maintenance parts.

The company also added a Euroliner to its fleet, customised with a rear-mounted forklift truck.

Along with Scotlog Haulage, James Jones & Sons is partnering with Volvo Group and Cleaner EV in a three year trial of electric timber trucks, which is being funded by Scottish Forestry. The vehicles will be evaluated for their achievable mileage versus battery consumption, durability, viability and total cost of ownership.

A key element of the trial is that all the partners involved are committed to sharing their experiences of running the electric lorries with others in the timber and rural haulage sectors.

DIGGING DEEP: A family-owned Stoke-based heavy haulage specialist has bought a 4.35-acre former borehole site to build a haulage depot and expand its operations. Potteries Heavy Haulage has taken on the site on the A50 at Meir from Severn Trent Water following a competitive tender process. Michael Edwards, business development manager at Potteries Heavy Haulage, said: “Once the land is developed it will enable us to reduce operational inefficiencies and grow. We’re looking forward to increasing our maintenance and storage offering to new and existing customers. We have looked at different options to relocate the business over the past few years and this site was an excellent opportunity due to its size, locality, and access to the Strategic Road Network.”

Photo: Mulholland Media

Wincanton and IKEA welcome PM to new Dartford hub

Wincanton and IKEA have hosted prime minister Rishi Sunak at their new 452,000sq ft distribution centre in Dartford, where he described the two companies’ expansion as a “huge vote of confidence” for the economy.

Located at the former Littlebrook Power Station site near the Dartford Crossing, the multi-millionpound distribution centre has the capacity to deliver almost one million orders annually.

The facility will help provide faster home deliver-

ies to IKEA customers across London and the South East – with many reaching customers within 24 hours of an order being placed.

The prime minister was told how its launch had created more than 300 local jobs for Wincanton.

n Wincanton has also announced a three-year extension to its contract with defence engineering firm Rheinmetall BAE Systems Lane (RBSL) and a new supply chain partnership with wellbeing brand NEOM Organics, also for three years.

New course highlights specialist skills needed by drivers in niche sector

Cement tanker training ‘a huge step forward’

By Tim Wallace

Aggregate Industries and its Lafarge Cement business have partnered with hauliers Simon Gibson Transport and Lomas Distribution to produce a new training package for cement tanker drivers.

The Cement Drivers Skills Qualification (CDSQ) has received Driver CPC accreditation and recognises the necessary specialist training and accreditation required for the niche skillset.

Currently all drivers undertake the Mineral Products Qualifications Council (MPQC) driver skills training as part of their CPC accreditation, a course aimed at lorry drivers in general but which doesn’t recognise the specialist procedures and risks involved in driving and operating

Moody spends big on tail-lift safety

Moody Logistics has spent £30,000 on tail-lift safety mechanisms and replaced 17 hand-operated pumpaction warehouse pallet trucks with electric versions to make workloads easier and safer.

The investment followed a review of its freight management procedures and involved sister firm Heathline Commercials installing the tail-lift protection systems, including rear door retaining arms and a retractable strap that acts as a safety barrier.

Moody Logistics has also issued its drivers with updated safety

Palletline appoints commercial chief

Steve Thorpe has been appointed head of commercial at Palletline, with a brief to help members develop new business and support their existing customers.

Thorpe joined Palletline in 2021 as a regional general manager covering the South East after holding multiple positions within transport and logistics for over 30 years, working his way up from the traffic desk.

He also sits on Palletline’s commercial steering group with a number of selected Palletline members, who investigate and introduce new products, services and initiatives to support the growth of the Palletline network.

a cement tanker.

The CDSQ will be a key part of the ongoing professional training required for Driver CPC validation and could also fit in as part of the MPQC card package.

The training covers all areas of competency but with significant content on the delivery process, with health and safety at the core.

Martin Glynn, supply planning

manager for Lafarge Cement, said: “The aim of this new training is to bridge what many in the industry have felt is a significant gap for a relevant course which recognises the hazards and pressures a cement tanker driver faces.

“We have come up with a huge step forward which can only lead to a raising of skills and standards and improving health and safety.”

One of these initiatives is the introduction of a series of new commercial support packages, which are designed to support Palletline members with their sales and marketing activity to boost brand awareness and increase sales leads. The plans are broken down into three packages: Essentials, Standard and Premium Plans.

Lau goes legal in EV Cargo battle

Logistics tycoon John Lau is suing buyout fund EV Cornerstone, managed by private equity firm EmergeVest, plus MD Heath Zarin over its portfolio company EV Cargo’s plans to operate in China.

“Without my help and financial backing, there would have been no EmergeVest today.

procedures, which include the use of additional ratchet straps to ensure pallets remain secure and pose no risk during the loading and unloading process.

The Cramlington-based firm has contacted customers to request that they use robust pallets and ensure packaging is resilient enough to withstand extra strapping to the sides and tops of pallets.

A writ of summons was filed in Hong Kong’s high court on 19 June, outlining demands that Lau’s investment of $45.5m (£35m) in EmergeVest Logistics Fund be returned, including profits and proceeds.

In a bullish statement, Lau, who is the founder of Cargo Services Group, said: “I was the anchor investor in Heath Zarin’s formation of EmergeVest in 2013.

“My investment played a critical role in the creation of EmergeVest and subsequently EV Cargo Holdings, which operates in the industry that I have had a career in for the past 30 years.

“It does not make any commercial sense for me to continue with our investment in EV Cargo, whose strategy is to compete with our business in China,” he added.

“I am prepared to pursue this legal path until my rights are vindicated.”

Hargreaves rubber stamps Prometeon deal

Mixed-fleet waste operator Hargreaves UK Services has signed a pence-per-kilometre contract with Prometeon Tyre Group for its Bulk Logistics Division.

The deal covers the Durham-based firm’s extensive fleet of walking-floor and tipper artics, together with a specialist 8-wheeler rigid fleet.

Prometeon will also take on Hargreaves’ Industrial Division, including 32 trailers and 18 tractor units that work on critical infrastructure.

Hargreaves transports household waste from local authority sites to Energy Fuel Waste plants for recycling, and to landfill locations in the North East. The remainder of the fleet transfers dry bulk products such as salt, sand, ash, aggregates and fertiliser to sites and depots around the UK.

Prometeon is suppling a mix of new Pirelli-branded tyres from their Triathlon range for the front and rear axles, alongside its premium remould tyres.

Shake-up of senior positions will allow business to ‘grow sustainably’

Howard Tenens goes for strategic growth

By Chris Tindall

Howard Tenens Logistics has said it is investing in its senior leadership team after MD Karl Hodgkinson left his role to become the company’s new group development and innovation director.

The firm said that given the current economic environment, clients required it to focus on efficiency, innovation and support more than ever.

It added that Hodgkinson’s new role “will be accountable for new business and marketing with an increased focus on operational

technology and efficiency, bringing that benefit into the organisation and enabling Howard Tenens Logistics to grow sustainably”.

Hodgkinson had been MD at

Correction: Howard Tenens (West London)

In a news story printed in the last edition of Motor Transport (26 June 2023), we suggested that Howard Tenens had been forced to close its subsidiary –Howard Tenens (West London) – due to the impact of the Covid-19 pandemic.

We are happy to make clear that, as stated in the company’s 2021 accounts, Howard Tenens Logistics acquired the net assets of its subsidiary – Howard Tenens (West London) – on 30 September 2021. Trade has since continued from the same site but

Howard Tenens since 2019 and initially started at the logistics company as group commercial director.

The company added that no-one would be replacing him as MD and Jamie Hartles continued to lead the board as chief executive.

In addition, Nigel Bayliss becomes site operations consultant: “Nigel has huge experience in delivering both large scale projects and developing operational prowess, having worked for numerous 3PLs and in-house operations,” it said.

Asset Alliance report reveals switch slowdown

Most operators have no plans to decarbonise their fleets over the next three years and half of those surveyed don’t expect this to change after 2026, according to a new study.

Asset Alliance Group’s state of the sector report, produced in association with Motor Transport and Commercial Motor and distributed free with this issue, also found battery electric vehicles are currently being run by just 6% of respondents, 7% are relying on gas vehicles, 3% on hybrids and 7% are using biofuels.

However, more than 50% of operators predict their business will perform the same or better in 2023 than 2022.

under the banner of Howard Tenens Logistics. Howard Tenens then struck off the now shell entity of Howard Tenens (West London) at Companies House as a logical next step. This was effected in 2022, simply as an administration exercise. MT would therefore like to withdraw any suggestion that Howard Tenens closed the subsidiary and can confirm that profitability for the business has increased year on year following the acquisition of the trade from the subsidiary.

“High fuel and energy costs and ongoing supply issues mean we must all think carefully about efficiency and cost control, while keeping one eye on what lies ahead,” explained Asset Alliance chief executive Willie Paterson.

“But the road transport sector remains resilient and in good health.”

FASTER FASHION: GXO has expanded its partnership with Abercrombie & Fitch (A&F Co), managing the fashion retailer’s UK e-commerce fulfillment and returns from its dedicated, newly refurbished 170,000sq ft facility near London. The expansion follows the success of GXO’s partnership with A&F Co in the US, where the company operates a high-tech distribution centre featuring advanced automation and goods-to-person robotics, intelligent analytics and AI. By moving services to the UK, GXO said A&F Co will expand its e-commerce offering, increase service flexibility and reduce inventory concentration, by placing it at one location. GXO currently employs a team of 60 at the site, who provide picking, packing and sortation services, with plans to more than quadruple that number. In addition, GXO will process returns within 48 hours of receipt, speeding up the availability of goods for resale while reducing waste. GXO also plans to increase automation and adaptive technology to improve efficiency and quality.

DONE DEAL: Neal Sowerby, Hargreaves UK Services operations director (left), with Prometeon business development manager Jamie Courtnage

Photo: Karl Andre Photography

Investing in the workforce of the future is vital, says Harper

Transport secretary Mark Harper MP opened the RTX Knowledge Zone with a commitment to bring more people into the industry through apprenticeships and training, including the government-backed HGV Skills Bootcamps, recently extended into 2024.

In a video presentation to kick off a series of Logistics UK Transport Compliance Briefings, Harper also announced the government would be providing £300,000 of new funding for the Generation Logistics programme.

“It’s a down-payment on the workforce of the future,” he said. The programme has been created in a bid to encourage career starters and career switchers to learn about the opportunities in logistics.

Harper also highlighted a £100m investment initiative by government and industry to provide much-needed better roadside facilities for drivers.

While the Generation Logistics scheme is attracting growing

Road Transport Expo 2023 (RTX) was welcomed back by industry last month at NAEC Stoneleigh. Coverage of the products and innovation at the show will appear in MT 7 August. In the meantime we’ve brought you some highlights from the show’s Knowledge Zone conference stage

support, plenty of work still needs to be done when it comes to interesting youngsters in the job opportunities logistics can offer.

“We surveyed 4,500,” said Logistics UK president Phil Roe. “12% of them said we are looking at it, 12% of them said that it wasn’t for them, while the remainder said they had no idea what logistics is.

“This is despite the fact that logistics employs 8% of the UK’s workforce.”

In a bid to boost interest, Generation Logistics has put together 100 case histories of

Owners of transport companies that liquidate their businesses on specious grounds in order to avoid responsibility for debt cannot expect to be allowed to set up another firm and re-enter the industry automatically.

Traffic commissioner Kevin Rooney told Knowledge Zone attendees: “Enabling them to do so is not fair on the honest haulier who wants to do a good job.”

Also in his sights are businesses that run many more trucks than are specified on their O-licence.

“You cannot run 36 if you only have authority for nine, just because you only send out nine at a time,” he observed.

Bridge-bashing is a problem that seemingly will not go away, and one that is clearly a common occurrence for traffic commissioners to deal with.

He cited one recent incident that caused major disruption. “It closed the main railway line to Cornwall for two days and reduced it to single-line working for seven days thereafter,” he said.

Such occurrences are often the consequence of a road closure or

people who are working in the industry, with over 40% of them from women and more than 15% from those with a BAME background. While these percentages

do not reflect the true make up of the sector’s workforce, Roe added: “We want to talk about things as we would like them to be, not as they are.”

Bridge-bashers and bad debtors catch the TC’s eye

diversion he said, and happen because the driver has not stopped somewhere in order to figure out whether the route he is now on is suitable for the rig he is driving. “Half to three-quarters of these incidents involve agency drivers, in my experience,” Rooney remarked.

Another cause is a last-minute change of trailer, with drivers being told to take out a double-deck rather than a single-deck, for example. Mix-ups between feet and inches and metric measurements represent a further factor.

Rooney is also concerned about operators who do a lot of repair and maintenance work on a truck just prior to its MoT test. That should not be necessary, he believes, if the vehicle has been regularly maintained to ensure its roadworthiness.

That said, he wonders whether the six-weekly statutory inspection interval needs revisiting.

“If you’ve got a brand-new tractor unit that has only been used on motorway work than you have to ask yourself if it is necessary,” he said.

It could be the case, for example, that some vital items need inspecting, say, every 13 weeks depending on the nature of the vehicle and the work it is on. “I think we’ve got to get a bit more intelligent about it,” he observed.

Rooney and his colleagues are also working with trade associations to develop a scheme that will make the competence of maintenance providers more transparent to their customers.

“What we could be looking at is something rather like a food hygiene safety rating,” he added.

SAFETY FIRST: TC Kevin Rooney gave a rundown of the main areas of concern for regulators

Lack of clarity over London’s updated DVS remains cause for concern

Planned changes to London’s Direct Vision Standard (DVS) were in the spotlight for a mid-morning panel discussion featuring speakers from FM Conway, O’Donovan Waste Disposal, Logistics UK and XPO Logistics.

Due to come into force from October 2024 onwards, the DVS Progressive Safe Scheme (PSS) means more cameras will have to be fitted to trucks rated at below three stars to remove remaining blind spots.

Sensors will have to be capable of distinguishing between street furniture and

parked vehicles on the one hand, and vulnerable road users on the other.

Trucks will also need to be equipped with technology that will alert a driver who is about to move off that a pedestrian is walking in front of the vehicle.

Logistics UK and the RHA have criticised the initiative because it may mean safety packages operators spent money on in all good faith will have to be replaced.

Nor has TfL released technical specifications for the sensors and cameras

needed, pointed out Logistics UK head of cities and infrastructure, Jonathan Walker. “Fortunately, as a consequence of pressure from the RHA and Logistics UK, TfL will have to provide a market readiness report to the London councils, which will assess the ability of the industry to deliver the technology needed before the decision is made to go ahead with PSS,” he said.

This could result in an extended grace period before a package likely to cost at least £5,500 per truck is implemented.

Net Zero ambitions in spotlight

Decarbonisation was the theme for day two in the Knowledge Zone, with a host of industry speakers bringing the topic to life.

Brian Robinson, commercial vehicle and sustainability consultant at Zemo Partnership, highlighted the organisation’s net zero initiatives.

He pointed to a range of things that operators can do such as using route optimisation tools, as well as exploiting the new legislation to permit longer vehicles and to campaign for 42-tonne gross combination weights on five axles.

Robinson also supported the rapid electrification of new vehicles, which he said would be total cost of ownership competitive regardless of distance or gross weight. “65%-75% of rigids and 30%-35% of artic movements operate on back-to-base routes and could be electrified without public infrastructure changes,” he said.

He also highlighted how batteries have become more energy dense and how technology trials are helping to demonstrate the benefits of electrification and bring air quality improvements.

Matt Pumfrey, CEO of the Innovation Gateway, explained how the new HGVzero23 programme can help operators.

A number of fleets have already signed up, including Tesco, CocaCola Europacific Partners, XPO Logistics and others.

Members have access to the HGVzero iHub, where shared information is lodged, providing shared tools and resources for members with information such as case studies, regulations, legislation and funding.

Colin Smith, programme manager for freight and clean vehicle retrofit at the Energy Saving Trust, highlighted the Freight Portal (freightportal.org), designed to provide operators with a range of schemes, guides, tools and blogs to reduce carbon emissions and lower costs.

The portal includes a fuel costcutter tool for diesel-powered vehicles, where operators can enter data about fuel cost, vehicle type and typical duty cycle and then choose from a list of interventions.

Gloria Esposito, head of sustainability at the Zemo Partnership, discussed the role of renewable fuels in decarbonising the existing fleet of diesel-powered vehicles.

Esposito said there is now more focus on fuel produced from waste

materials, such as biomethane gas for CNG- and LNG-fuelled trucks and vehicles running on renewable diesel fuels such as FAME and HVO.

“The next decade is critical –make or break in hitting Net Zero”, said Esposito.

Zemo has generated forward modelling to 2050 and perhaps not surprisingly, significant volumes of diesel-fuelled vehicles will remain in the fleet between now and 2033.

The DfT is due to produce a low carbon fuel strategy by the end of this year.

Esposito also discussed the Renewable Fuels Assurance Scheme, which supports the traceability of sustainable low carbon fuels. There are currently 18 renewable fuels suppliers across the UK and this is expected to rise to 25 in the coming months.

Alistair Barnes, senior programme manager for land and maritime at Innovate UK, closed the first session with a discussion about the upcoming ZERFD programme. It will provide a fiveyear programme of on-road demonstrations of battery electric vehicles and hydrogen fuel cell electric vehicles, following two funded years to source trucks and infrastructure.

The objective is to raise operator confidence and government understanding of zero-emission vehicles. Between 200 and 400 vehicles will be involved, with a focus on the heaviest.

In addition, the Battery Electric Truck Trial involving 20 19-tonne GVW DAF LF electric models working in public sector fleets across the north-west of England for a year is just coming to a close.

A series of reports on the trial is available on cenex.co.uk

Barnes also provided a roundup of infrastructure projects running in other countries.

Projects in some countries are currently small scale – six 300kW chargers at Oslo harbour in

RENEWABLES

Esposito of Zemo Partnership discussed the decarbonisation of the existing diesel fleet

Norway and six Aral public charging points at a German location, for instance. At the other end of the scale, the US is providing $5bn in infrastructure funding.

The Milence joint venture between Daimler Truck, Traton and Volvo Group is due to build 1,700 charge points for trucks across Europe, including the UK, in the next five years.

ROLE: Gloria

RAISING CONFIDENCE: Innovate UK’s Alistair Barnes talked about ZERFD and the Battery Electric Truck Trial

An increase in funding has been approved for the LGV Driver Cat C+E Apprenticeship

LGV training gets a boost

OTHER UPDATES

Warehouse operative

The revised Warehouse Operative Apprenticeship is to be submitted to IFATE for approval on 5 July. A funding review is currently being undertaken with the aim of making this a more attractive proposition for logistics operators.

Supply chain operator

The secretary of state for education Gillian Keegan MP has approved an increase in the funding band for the LGV Driver Cat C+E Apprenticeship.

This means that the new upper limit for funding the apprenticeship has increased from £7,000 to £8,000 for new starters, with effect from 26 June 2023.

The LGV Driver Apprenticeship was one of 20 selected by the DfE for an exceptional funding review due to the impact of cost inflation on training delivery.

The criteria for choosing the 20 apprenticeships were their popularity and known skills shortages in priority sectors. In the 2021/2022 academic year, there were 2,827 starters for the Cat C+E apprenticeship, the most popular in the whole of the transport and logistics sector.

The Institute for Apprenticeships and Technical Education (IFATE) worked with the Transport and Logistics Trailblazer Group to prepare the funding review submission.

There were six elements to the review for consideration:

 The learning module costs (principally the training instructor costs);

 Consumables (including fuel);

 Formative assessment;

 The end-point assessment;

 Mandatory qualifications;

 Administration costs.

The inclusion of mandatory qualifications such as driving test costs was a welcome development as a result of changes to the Education and Skills Funding Agency rules.

The Trailblazer Group submission was made on 24 February

2023, in line with IFATE’s timetable. After providing clarification for certain cost areas, it received notification from IFATE on 31 March that it would recommend an increase to the funding band to the DfE and this was endorsed by the secretary of state last week.

This 14% increase in funding should encourage more employers to adopt the apprenticeship route for the training of new drivers.

Last month, the transport and logistics sector reached the £1bn milestone for contributions in Apprenticeship Levy since its introduction in April 2017. However, it is estimated that the sector will only have recovered around £300m in logistics apprenticeship funding during that period.

Jim French MBE, co-chair, Trailblazer Group, Transport and Logistics

This apprenticeship currently has two options – one for a conventional traffic operator and one for a removals operative. This is a crazy situation as the two roles are obviously distinctly different. This causes confusion for potential apprentices and consequently restricts the number of starters.

The Trailblazer Group, in conjunction with the British Association of Removers, recently presented to the Transport and Logistics Route Panel to seek approval for two separate apprenticeships. A response should be received from IFATE before the end of the month.

To the outsider, these processes sound long-winded and dealing with IFATE can be bureaucratic. However, I do believe these three initiatives illustrate the progress the Trailblazer Group is making in working with IFATE to increase the appeal and take-up of apprenticeships in our sector.



Photo: Steve Sharp Photography

Going for bold in nervy times

The road transport industry was out in force last week at the Road Transport Expo in Stoneleigh, with 240 exhibitors pulling in thousands of visitors – helped no doubt by some sunny weather.

secure a majority in 2024. Labour has traditionally increased public spending, which should help us out of recession but won’t do much to ease inflation.

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Steve Hobson Editor Motor Transport

The mood was generally positive, despite the clouds gathering over the UK economy. Inflation and interest rates look like remaining high for some time, and that will inevitably squeeze consumer spending. Less stuff bought means less transport.

Most people now accept that the Bank of England left it too late to push up rates and the steep rise that is likely to push the UK into a recession could have been avoided.

That recession could not come at a worse time for the Conservative government, with an election looming next year and the weakness of the SNP meaning Labour could well capture enough Scottish seats to

The biggest cost inflation facing operators at the moment – now that driver wages have already gone up – is new trucks. The pandemic saw supply shortages, long lead times and large price increases, which meant operators had to run trucks longer. Older trucks need more maintenance and right now there aren’t enough skilled technicians, or replacement parts, to keep an ageing fleet on the road.

So operators face a dilemma – delay ordering replacement vehicles because they fear a recession or keep their nerve and continue to invest in modern, more fuel-efficient trucks that don’t need frequent repairs. If RTX was anything to go by, so far they are choosing the latter.

Hit pause while the fuel battle plays

For readers of a certain vintage, the haulage industry stands at a familiar crossroads – and one that will determine tens of billions of pounds of future investment.

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Ian Maudsley MD FDC Holdings

I call it our ‘Betamax moment’: we must choose an energy source other than diesel to power our fleets in the coming decades and, just as in the early 1980s and our choice of video cassette player, we’re waiting to see which way the wind blows.

If, like McDonald’s, you have a guaranteed source of biodiesel in the form of used vegetable oil, then your choice is made for you. But my team and I don’t fry that many burgers, and biodiesel’s wider production is both in its infancy and comes with concerns around food supply and the replacement of rainforest with crops.

What of hydrogen? £2bn is being pumped into the HyNet trials in Ellesmere Port, designed to produce low-carbon hydrogen at an industrial scale, but most of the projected output is slated for consumption by the petrochemicals sector. A smaller proportion will be pumped through the existing gas network to 2,000 nearby homes in a domestic trial, aiming to demonstrate low-cost distribution, but mention of hydrogen’s use in transport is hard to find. In short, don’t expect your local filling station to be offering hydrogen pumps any time soon.

Which leaves electric vehicles. At FDC we’ve already invested in a single tractor unit for use with a key client and we’re monitoring the cost/value/performance equation carefully. Cost is already a concerning factor, however, with tractor units £100,000 more than their diesel equivalent. Assuming a full fleet

As things stand, electric also delivers poorly on range and weight, not to mention charging infrastructure and the grid’s ability to provide the power we’ll need.

There are encouraging signals coming from the development pipeline, however. Over in the US, scientists at the Argonne National Laboratory have identified how to quadruple a battery’s energy density with a lithium-air unit that utilises a solid electrolyte based on nanoparticles. It’s cheaper and lighter than the current methodology and can use sodium-air too – and there are a few centuries of salt deposits in the mines just south of Ellesmere Port.

Better still, these batteries won’t use the environmentally and socially ruinous cobalt found in the Congo. We’ve all seen the images of 10-year-olds on a dollar a day laying waste to vast tracts of pristine land in our headlong rush to appear green. Not great if our industry is serious about environmental responsibility and sustainability.

For us all it’s still a waiting game: which technology will win out? And will it be the best one, across the metrics we’ve discussed here? Betamax, after all, was commonly acknowledged as the superior system, but VHS won for the simple reason it offered longer tapes – two hours, to Betamax’s one. To complete the 1980s analogy, could it be ‘Back to the Future’?

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Steering a path through uncertainty

Asset Alliance Group CEO Willie Paterson puts great store in the belief that businesses can only survive if they are on the lookout for the next big trend. He tells Steve Hobson how future planning continues to yield results

Asset Alliance Group (AAG) has been a long-term supporter of Motor Transport’s annual state of the trucking nation report Industry Monitor, and in the 2022 edition CEO Willie Paterson described himself as an “optimist”, as 70% of operators said they planned to add extra trucks to their fleets this year.

But the launch of the 2023 edition in this issue of MT coincides with inflation in double figures, rocketing interest rates and the UK economy teetering on the edge of recession. MT’s first question when we met in March this year was ‘are you still optimistic about 2023?’

“We will continue to develop and thrive and joining Arbuthnot was a really smart decision for both of us,” he says. “Covid-19 accelerated that as we needed to rethink our business model and it put us in a position of undoubted financial security. They have invested heavily in our business and expect us to take full responsibility for managing it.”

Asset Alliance was founded by Paterson in 2010 and merged with ATE Truck and Trailer Sales in 2012 to form AAG. It was acquired by 190-year-old private bank Arbuthnot Latham in 2021; that year the bank made

£4.6m pre-tax profit on turnover of £88.7m and had net assets worth £200.9m. Its 2022 results were far more impressive, with a pre-tax profit of £20m on turnover of £137.4m and net assets of £212m.

A former banker himself, Paterson is confident that, despite a handful of banking failures around the world, UK banks are solid. And, despite strong criticism of the government’s mismanagement of the economy, Paterson says financial services remain a key powerhouse for the UK.

“The financial sector is incredibly strong,” Paterson says. “That is the only thing really propping up the UK economy. We have huge businesses that support the automotive sector – do we manufacture anything? No. Do we assemble things? Yes, lots.

“The thing that galls me as an economist is that we have to be taxing people better. No one wants to be taxed but we have to pay the bills and too many young people think they can have what they want when they want it. All we are doing is passing debt down the line.

“If government thinks all they need to do is take on more debt and inflation will deal with it, that is commercial suicide.”

Buy and by

But AAG’s UK business remains in good health and, with the help of Arbuthnot’s backing, it is slowly catching up on its asset replacement programme, which was delayed by Covid-19. It currently has 4,200 owned vehicles on the road plus another 1,000 on fleet management contracts, all managed from five sites. Paterson takes pride in having the youngest contract hire fleet in the market.

“We replaced 1,700 vehicles last year and we are planning to do another 1,700 to 2,000 this year,” he says. “A lot of that will be replacement of existing fleet plus some growth.”

AAG is expanding its presence in the bus and coach market it acquired in 2016 when Forest Asset Finance was merged into the group. The PSV market is adopting zero-emission technology much faster than HGV operators, helped by public subsidies and local authorities keen to clean up air pollution.

Photo: David Wylie

“We have hydrogen, electric, hybrid and gas buses and have had for years,” says Paterson. “We’ve just done our first replacement cycle on electric buses with a battery swap after seven years. So there is learning there.

“The reason it works is that it is a subsidised market sector where the councils have control over or own those fleets. TfL has a mandate to meet certain objectives and will make it happen. I had hoped what was happening in London would spread to other cities with low emission zones. It hasn’t happened as quickly as I thought but it is starting to happen now.

“Glasgow has moved the First Bus fleet to electric, Edinburgh has hybrids and Manchester is the next major conurbation to go.”

In the 2022 Industry Monitor 61% of truck operators said they expected to be operating alternatively fuelled vehicles soon and Paterson admits that electrification is moving faster than he expected.

“We are playing catch up and have had something of a rude awakening,” he says. “I had thought the change was a little further away but in the last year things have been happening quicker than we expected. We speak to all the major manufacturers at European level and are guided by them.

“Some are still in the dark and don’t know how they are going to reach the targets – but they simply have to reach them because the fines will be huge. So some are driving the change and we are very close to that.

“We are actively looking at the supply of green hydrogen as we think it is the only economic substance available. We have a small taxi business in the group with 1,000 taxis in London and looked closely at putting a hydrogen generation system in there. The numbers stacked up but the risk was that we would need to put in around 10 small containerised generation stations that would be plugged straight into the mains. That was the deal breaker for us as the big variable is the cost of electricity.”

Paterson now believes AAG will at some point be able to offer its customers a turnkey green hydrogen solution encompassing vehicles and fuel.

“We think we can potentially move to supplying a vehicle and a fuel supply contract at a fixed price,” he

says. “If you have wind turbines and solar panels plus battery storage that can be a solution to the problem, as it gives you fixed price hydrogen for a long period of time.”

Empowering change

While some observers believe only government can decide which direction to take the UK energy sector in to deliver net zero carbon emissions by 2050, Paterson is not waiting for the politicians.

“I wouldn’t want to trust the government to make that decision,” he says. “I don’t think they are capable of making it. They are capable of incentivising it and acting as a catalyst – regulation is the biggest catalyst and the manufacturers have signed up to it and have to deliver.

“The innovation will then come from the manufacturers, possibly helped by government or university-funded research and grants, for example. In Glasgow there is a new hydrogen truck business that has had huge grants given to it and that hopefully will lead to something.

“We don’t want to be the first adopter but we definitely want to be an early adopter. I want to be able to go to my customers and say ‘if you want electric, we can give you electric. If your payload is high and you are not back-tobase, then you are a hydrogen customer’.

“In the space of three months, I changed my view from thinking I was a year away from having to do anything about this. I am now seeking a senior individual to come into our business to steer us through this period of change.”

AAG needs to be able to offer its customers the right tool for the job and recently placed an order with DAF Trucks for 1,500 vehicles worth more than £160m, which will include at least 75 trucks from DAF’s electric range.

While the bulk of the order will be a mix of diesel New Generation DAF XF and XG tractor units, there will also be a tranche of XD tractors and rigids with both electric and diesel drivelines.

Deciding what zero emission vehicle is right for which application won’t just depend on range and payload, however. “We have just started a data management project with some consultants, looking at how we analyse the data we have in the business to better understand the needs of our customers against the capabilities of the products available,” says Paterson. “Then we can go back to the manufacturers and say ‘we think we are best placed to do this, you need to give us the data on what you can do and keep working with us’.

SPLASHING THE CASH: AAG has put its faith in DAF recently with a £160m order for 1,500 vehicles, including at least 75 electric trucks

“The benefit we have is that we own a massive used truck business – probably one of the top three in the UK – so we are agile enough to take more commercial decisions on residual values. We are not a bank that has to have a fixed price at a fixed time. We can steer through that in a way that some of the vendor finance companies just can’t.

FREE WHEELING: CEO Willie Paterson (above) says AAG’s takeover by private bank Arbuthnot Latham has given it the financial security needed to build for the future

Photo: Nigel Spreadbury

“I previously ran a bank’s commercial lending division and I know how difficult it is for them to be flexible. The model for our business is to deliver that flexibility and agility.”

While Paterson understands the view that banning the sale of all new diesel trucks from 2040 is not feasible, he points to the rapidity of technical developments in recent years.

Holding up his smartphone he says: “We run our lives with these. They’ve only been around for 20 years. We have lived through an incredible 20 years of progression and battery technology is moving dramatically. So I think we will be there in 17 years – we will have to be. It is coming so much faster than we thought it would.”

Power game

Paterson also points out that the parc of diesel vehicles will continue running for “seven to 10 years” after the 2040 deadline and predicts there will be a surge in internal combustion sales in the run up.

“I am seeing buying patterns slowing down at the moment and I’m convinced it is to do with people pushing that churn back to one or two times,” he says. “If you look at residual values, they normally follow a five-year wave. Depending on what happens in the next year with

IS THIS THE END OF IN-HOUSE R&M?

TREND SPOTTING: Diesel vehicles will continue to play a major part in the sector well beyond the 2040 ban on new sales, and Paterson believes operators will prefer to ease slowly into the switch to alternative fuels

new vehicle pricing – and they are starting to soften – I think we will see an unusual residual value curve in the next five to 10 years.

“Residual values are at their peak at the moment. I believe that, while they will soften, they won’t go back to previous levels and will hold up for the next three to five years. Depending on how efficiently the change is introduced, they will then either hold up or even go back up again.”

A lot of operators were spooked into buying Euro-5 trucks ahead of the switch to Euro-6 in 2014 only to see residual values crash, and Paterson believes lessons may have been learned about investing too heavily in outgoing technology. “That has spurred some of the larger businesses to say ‘let’s just adopt this and use it as a USP for our customer base’,” he says.

“We are owned by a private bank and people have a choice of where they invest their funds. ESG definitely has a role and I am being asked ‘What part are you playing in our zero-carbon agenda?’ That is why I’m employing someone to steer us there faster and smarter.

“But we have to be pragmatic and understand we can’t fix the problem overnight. There is a balance in there somewhere.”

This new world order will present particular challenges to the contract hire sector as upfront costs of zero-carbon vehicles will be much higher, while running costs in theory should be lower. How will this shift be shared between the funder and the operator?

“Over the past 10 years we have seen new truck prices double,” Paterson says. “We are bullish on residual values because we have to be, but if I have to pay £300,000 for an electric truck and my customers are in the habit of paying £600 a week for a truck, they are not all of a sudden going to be able to pay £1,000.

“Some of them have an agile model and can, but the majority can’t. So we have to work with the manufacturers and say for the first period we will take a commercial decision on it, try to hedge some of that initial risk with our back book and hope it will all balance out. The change in technology can’t be too rapid – we have to find a safe pace to do it.

“I can’t go out and order 1,000 electric trucks right now but I can order 150 and start placing them through our business.”

■ The 2023 edition of Industry Monitor is free with this issue of Motor Transport. It will also be online at motortransport.co.uk

While electric vehicles are said to be simpler to maintain than their diesel equivalents, it will be a brave workshop manager who wants to mess with high power 400V or 800V battery packs, let alone hydrogen fuel tanks pressurised to 300 bar.

The arrival of Euro-6 with its complex electronics had already seen many operators and leasing specialists withdraw from in-house R&M and AAG was no different. It rented out its 120,000sq ft Wolverhampton workshop five years ago and now relies on dealer R&M packages for its fleet.

“We have moved entirely to buying fully maintained contracts from manufacturers,” says Paterson. “We monitor them very closely and gather the data so we can manage the relationship with our suppliers. We think it is the right thing to do and a natural hedge against inflation. It is just one less thing to worry about at the moment.”

This approach helps reinforce the close working relationships AAG needs with its suppliers as the industry enters a period of unprecedented change and maybe instability.

“The major manufacturers we work with understand what we are trying to achieve and it ticks their boxes,” says Paterson. “To get the supplies we need we have tried to understand their needs too, and we have had a meeting of minds on this. I can’t use their finance because we are a bank and I’m cheaper than them, but I will buy their maintenance and look at extended warranties. That helps them to help us.”

By and large Paterson is happy with the R&M service he receives and says the six-week waits for service slots are starting to ease. His key priority remains communication from the dealer.

“If the vehicle can’t be fixed, as long as we have absolute clarity in that communication, that can be dealt with,” he says. “What you can’t do is tell someone who has a £2m load of salmon on the back of his truck that it will be fixed in three hours when it clearly won’t be. The biggest challenge is when they don’t trust what they are hearing and start interfering. Then everything goes wrong and we have tried to use technology to shorten those lines of communication.

“We had a period of having major issues with supplying relief vehicles to customers because we simply didn’t have vehicles to give them. But ordering large numbers of new vehicles and taking a lot of used ones back has given us the ability to support those customers and the dealers better.”

Photo: Alisdair Cusick

Working on sunshine

UK warehousing has the roof space for up to 15GW of new solar power, which could double the UK’s solar capacity, cut carbon emissions by 2 million tonnes a year, and slice between 40% to 80% off warehousing electricity costs, according to research by the UK Warehousing Association (UKWA).

With the climate crisis and Russia’s invasion of Ukraine highlighting the urgent need for clean energy and security of supply, fitting solar panels to warehouse rooftops appears to make sense, particularly in an industry transitioning from diesel to electrified fleets and increasing its use of electric forklifts and robotics.

So why are so few warehouses kitted out with rooftop solar panels in the UK? The UKWA research shows that just 5% of warehouses currently have solar panels, most of which only cover 10% to 25% of the available space.

UKWA points to the distribution network operators (DNOs) as the largest fly in the ointment – these regional, privatised entities are responsible for connecting homes and businesses to the grid.

With high energy prices and an urgent need for renewable resources, why are so few UK warehouses fitted with rooftop solar panels? Carol Millett investigates

The association does not pull its punches, describing DNOs as “extortionate and highly ineffective monopolist gatekeepers that are preventing businesses from investing in energy generation and connecting to the energy grid – controlling who can get access to the electricity grid, when, and at what cost”.

Time for change

Clare Bottle, UKWA chief executive, adds: “We need a fundamental rethink of the way in which DNOs hold power over access to the grid, how they get renewable schemes connected to the grid, and the prices they charge.”

UKWA is not alone in its concerns. Last month, the Environmental Audit Committee wrote to the govern-

ACROSS THE BOARD: Renishaw fitted solar PV to its entire UK estate after discovering the financial benefits

CASE STUDY: IRON MOUNTAIN

Information management services giant Iron Mountain has 10 on-site solar installations in the UK. Phil Shepley, vice president and UK head of commercial, says ensuring the facilities can adequately support the installation of on-site solar is key.

“For example, we must guarantee the additional weight on the roof can be supported, check that electrical systems are updated to support solar panels, and secure landlord permissions,” he explains.

“In addition to this we have to finalise designs with our insurance company and ensure that the design accounts for connecting to the grid.”

Shepley says the environmental benefits are clear. “In 2022 we generated approximately 919,710kWh of electricity, which is equivalent to approximately 652 tonnes of CO2 avoided emissions in 2022,” he says. “Furthermore, panels offer financial benefits because the solar power generated costs less than the grid, providing instant utility savings.

The company used a PPA to fund the project. “The cost for power is set for the contract term, enabling predictability on utility spend month over month,” says Shepley. “We are currently working to set up electric vehicle charging stations at our buildings that have solar roofs, which further reduces our dependency on the grid and keeps costs low.

“Finally, solar panels offer greater resiliency. If the grid incurs any outages, solar panels will continue to function and supply energy to the warehouses. To support this, we are also currently evaluating on-site battery storage options.”

He explains: “The problem is the vast majority of warehouses are built speculatively by developers who aren’t prepared to invest in something their tenants may not need. So they mostly fit an element of solar to help their BREEAM rating, usually covering office consumption, but not the warehouse.”

Gresty says this is changing, pointing to the rising use of robotics and electric vehicles. This is prompting tenants to demand the fitting of solar panels, and landlords are in turn looking to the likes of ASG.

IN

ment criticising the snail-like pace of DNO grid connections. It said: “In some cases, developers are having to wait 10 to 15 years to secure a connection for solar installations.”

Much of the problem lies with a lack of grid capacity, complicated by the DNOs’ inefficient queueing system for connection, clogged up by “zombie” applications that are either defunct or nowhere near ready to go.

To add insult to injury, DNOs can charge developers thousands of pounds towards having the network upgraded, if there is insufficient capacity in their area, before they can be connected.

In its defence, the Energy Networks Association (ENA), which represents DNOs, argues the grid was never designed to handle smaller, scattered solar installations and is struggling to meet soaring demand.

Last year, DNOs received a total of 164GW of new connection requests, which the ENA points out is “an entire grid’s worth of capacity”.

Nonetheless, urged on by regulator Ofgem, it has pledged to ensure faster grid connections, clear the backlog of applications and implement a “first ready, first served” rather than a “first come, first served” system, which National Grid estimates could shorten connection times by two to 10 years for many projects.

Rise in robotics

However, DNOs are not the only drag factor, says Tony Gresty, MD of ASG Energy Services, which provides solar power to the warehousing sector.

COUNT

Tim Cook, commercial energy consultant at solar panel installer SolarSense, echoes this view: “We’ve seen increasing numbers of commercial landlords looking at deploying solar across their portfolio over the past couple of years, prompted by tenants needing to save on electricity.”

He adds: “Once landlords see how it adds value to their real estate, gives them a revenue stream by selling tenants discounted electricity, and a return on investment of around 10%, it’s win-win all round.”

Then there are those businesses whose clients are demanding their suppliers meet Scope 3 targets on their emissions.

“Particularly firms dealing with big retailers or large PLCs,” says Gresty. “Those clients are asking for their carbon strategy – that’s going to incentivise a lot of operators to use solar to cut their Scope 3 emissions.”

Planning requirements

Engineering firm Renishaw has used SolarSense to fit its UK warehousing with rooftop solar panels. Ben Goodare, head of sustainability, admits Renishaw’s first scheme was driven by the need to meet planning requirements. He recalls: “It proved very quickly it’s a great way to save lots of money,” prompting Renishaw to fit solar PV to its entire UK estate.

“I don’t believe we actually have a viable roof in the UK left without solar panels on it,” Goodare adds. “The business is fairly energy intensive, so the panels provide about 15% of our electricity demand – but 15% off our electricity bill is a significant amount of money every year.”

Goodare says solar will also play a key role in the future, helping Renishaw reach net zero and achieve energy independence to protect it from geopolitical events.

Another hurdle is the cost of fitting solar PV. Options range from: capital investment up-front, which allows a business to directly benefit from the savings; leasing

DEMAND: Tony Gresty of ASG Energy Services says more tenants are asking landlords to fit solar panels

THE COST: Tim Cook of SolarSense says solar panels add value to real estate

Warehouse power

or hire-purchasing the equipment, which can be structured so the payments are covered by the savings on electricity; or signing up to a power purchase agreement (PPA).

Under PPA, an investor pays for the system and the landlord or tenant agrees to buy the power generated by the solar system for a given period – typically over 10 to 15 years.

Cathie Eberlin, founder of net zero consultancy Leading Energy, says there has never been a better time to invest in solar panels, whichever funding route companies choose. “You’ll save so much on your electricity, and remember that by doing nothing you will be haemorrhaging money, spending 45p/kWh before the discounts,” she says.

“I’ve just worked with some commercial customers who, if they carry on doing nothing, will see their electricity bills double – they can’t create four times their turnover to cover that. So you’re kind of forced to make an investment anyway, really. For me, it’s a no-brainer. Everybody needs to do it now.”

Economic considerations

Nor should the lack of government subsidies be a disincentive, says Cook, dismissing fears that the closure of the feed-in tariff (FIT) scheme in April 2019, which paid a guaranteed amount for every unit generated, has made installing solar panels less economically attractive.

Cook says: “FIT gets brought up quite a lot by companies concerned they’ve missed the boat. It was designed while prices were very high, to help the transition to renewables. However, the price of panels has reduced and their performance has improved dramatically over

CASE

Kent-based logistics firm The Salvatori Group has invested £600,000 in solar photovoltaics (PV) systems at its Sittingbourne and Aylesham sites.

The two systems are predicted to generate a combined 295.8MWh of electricity annually, the equivalent to a saving of 65.21 tonnes of CO2 a year.

The project was funded through Percy Finance and installed by Dover-based Energy Saving Specialist (ESS).

ESS technical director Nick Arnold, who led the project, recalls the difficulties of getting a grid connection. “Permission took a long time to come back, mostly due to the huge volume of new connections the distribution network operator (DNO) is currently receiving, but also because there were constraints at the Aylesham site due to the ageing local network infrastructure,” he says. “We

the past 10 years, so they still offer a good ROI without any government subsidy.”

Renishaw’s Goodare can attest to this. The company fitted its first rooftop solar panels 10 years ago and has recently built car ports on its sites, equipped with chargers and fitted with solar PV.

He says: “We were astonished to find that, despite the cost of all the civils work and all the steel that goes into these carports, the ROI was better than our original solar installation – which receives the FIT.” 

reduced the export of the system to comply with the DNO requirements in the end. This limits the exported power so the site itself can still benefit from the full solar output.”

Savings kicked in immediately, says David Tobin, Salvatori Logistics MD: “Power from the panels is used before power from the local grid, so every kWh of solar used saves a kWh of imported power.

“Exported power can be sold via a PPA once the export metering is in place. This additional income can vary from year to year, so isn’t generally relied upon when assessing the viability of the project, but is a bonus income stream once set up.

“Our predictions show that 22% of the sites’ annual power can be supplied by solar PV and the estimated cost of this over 25 years is 6.5p/kWh. This doesn’t rise with inflation, so provides some cost certainty for us. Once the capital cost of the project is recouped, the site effectively receives 22% of its power for free, minus any ongoing cleaning or maintenance costs required.”

As more electric vehicles, forklifts and other plant comes online, Salvatori’s ability to use the currently exported power increases, which improves the ROI and investment case for these projects.

Salvatori would like to see more government support for solar installations. Tobin says: “Grants are a very important consideration for businesses undertaking sustainability projects. Salvatori was awarded a grant of £10,000 for this project. However, HMRC imposed a 25% tax rate on this, meaning we were effectively awarded only £7,500.

“We would urge government to consider revisiting the taxation applied to these grants, to maximise the investment and improve future returns in renewable energy for business across the UK.”

Photo: Navin Tar / Shutterstock

STUDY: THE SALVATORI GROUP

Lowering emissions with leftovers

A high-quality fuel that offers a 90% reduction in greenhouse gases and can be used in a diesel engine without modification – John Kendall considers whether HVO is too good to be true

One of the strengths of the diesel engine is that it can run on a range of fuels, because the heat needed to start the combustion process is generated by compressing air in the cylinders until it becomes hot enough to ignite the fuel. Rudolf Diesel’s earliest experimental engines were designed to be fuelled by coal dust, for instance. One of the drawbacks with fossil fuels like conventional diesel is that they consist of a range of chemicals that are present in the fuel, which means

that when burnt, substances present in the fuel that we don’t particularly want to also ignite as they can cause toxic air pollution.

Biodiesel showed that we could produce diesel fuel from a range of substances including animal fats and crops like rapeseed, which contain fewer of the polluting elements. On the other hand, the obvious problem with crop-derived fuels is that they compete for land use with food crops.

If we take a step further along the chain, instead of using fuels produced from crops, we could use oils produced from crops that have already been used in food production. Instead of pouring the waste oil away, it can be treated and turned into a high-quality diesel fuel.

That is the principle behind hydrotreated vegetable oil (HVO) – a renewable biodiesel fuel without the main drawbacks of conventional biodiesel. Although burning the fuel produces carbon dioxide emissions, the theory is that this is offset by the CO2 absorbed while the crop was growing. That ignores the energy needed to turn the waste oil into diesel fuel, but it is arguably better than extracting oil from the ground and processing it solely for the purpose of burning it.

The attractions of HVO include the fact that it produces high-quality fuel which burns well and with fewer emissions than conventional diesel. It is also a ‘drop-in’ fuel that can be used as a direct substitute for conventional diesel fuel without any need to modify engines.

Polluting sectors

There are some potential clouds on the horizon, though. The EU is considering a proposal that would promote the use of HVO for aviation and maritime fuels, to the exclusion of road. There is some logic to this. These sectors are likely to prove the most difficult to de-carbonise and restricting use of HVO to these, while road transport transitions to electric, would help to clean up these heavily polluting sectors.

Photo: Garry Killian / Shutterstock

“You’ve got to think about all the properties of HVO,” says Magnus Hammick, chief operating officer of HVO supplier Green Biofuels. “You’re going to get 90% reduction in greenhouse gases. That’s brilliant. We know we need to do that. The other aspect of burning paraffinic fuels like HVO & GTL [gas to liquid fuels] is that they offer cleaner burning, so you get a local air quality benefit. Now personally I would rather see that local air quality benefit in inner-city areas and rural locations with fragile habitats, rather than being put in a plane that’s flying over the Atlantic Ocean.

“Then you’ve got to think about the feedstocks. Are there enough feedstocks to feed the trillions of litres of aviation fuel that are required versus a more achievable target, which is road and non-road mobile diesel replacement?”

Now that the UK is outside the EU, there is no reason to think that this EU proposal would automatically be taken up by the UK government, although Andrew Scott, head of electric mobility and product development at Renault Trucks UK and Ireland, does not see the possibility as much of an issue: “The EU’s recent policy announcement reflects its long-standing commitment to reduce and in time eliminate the use of crop-based materials in the production of fuels. Renault Trucks does not consider this to be a change in policy, rather the expected confirmation of previous plans.”

Alternative components

All major truck manufacturers’ recent models can operate on HVO and some customers have been keen to adopt the fuel. Builders’ merchant Travis Perkins has a large nationwide vehicle fleet, which accounts for over 70% of the company’s Scope 1 and 2 carbon emissions. “Having explored the decarbonisation opportunities of HVO, we decided to use it as a stepping stone in the implementation of our net-zero

RESTRICTED USAGE: The EU is considering limiting HVO to the aviation and maritime sectors, with road transport encouraged to transition to electric

STEPPING STONE: Builders’ merchant Travis Perkins is using HVO to lower its emissions while electric and hydrogen technologies develop

carbon delivery,” says head of environment James Vance. “It is a great low-carbon alternative component that will play an important role in reducing the greenhouse gas emissions from our vehicles until the infrastructure for electric vehicles improves and the development of more long-term solutions, such as hydrogen, becomes a reality.”

Hackney Council has a long track record of being an early adopter of low-carbon transport fuels. The local authority first ran electric vans on its fleet in 1998 and began trials with B30 biodiesel in 2008, opting to run vehicles on 100% biodiesel in 2010. Corporate fleet manager Norman Harding has been involved in using low-carbon fuels since before he joined the local authority in 2007.

Photo: Craig Eccleston

He first heard about HVO when on a biofuels working group with the Greater London Authority. He then persuaded TfL and the GLA to pay for testing of the fuel at the Millbrook Proving Ground in Bedfordshire, using fuel supplied by Green Biofuels, then a much smaller company.

“We set a baseline using pump diesel, then we cleaned the fuel systems out and changed the filters, so there was no contamination from normal diesel,” Harding explains. “The first test results we got were just unbelievable. We got a 12% CO2 reduction at the tailpipe, and because it’s made from a recycled waste product – cooking oil, animal fats and organic matter – it’s 80% efficient before it goes through the combustion process, but we also got a 69% NOx reduction at the tailpipe.”

Refuse collection vehicles

The working group was so surprised by the results that it repeated the exercise to make sure it hadn’t made a mistake – and got exactly the same results. Harding then got involved in a working group for refuse collection vehicles including Veolia, Biffa, Dennis Eagle and others: “We created a test cycle that replicated a refuse collection round. Everyone agreed it was representative of a bin collection; we even had granulated rubber in the compaction compartment to simulate the compaction of waste. We did a number of bin-lift movements and we allowed for transit time from the end of the round to the tipping site and back again, so it was generic,” says Harding.

The results showed a 12% reduction in CO2 emissions at the tailpipe and a 28% reduction in NOx. As Harding observes, the CO2 reduction seemed consistent, but the drive cycle inevitably makes a difference to any reduction in NOx. Today, Hackney Council uses HVO for all its heavy trucks and wheelchair-accessible buses, most of its agricultural and civil engineering plant and around 40% of its LCV fleet. Access restrictions to the fuelling site limit further take-up for LCVs at the moment, but most of the council’s 520-strong vehicle fleet operates on the fuel.

“We saved just over 2,500 tonnes of CO2 by using HVO last year and I’ve got a potential further 1,000 tonnes of CO2 if I can get the rest of my light commercial fleet into my depot where we’ve got the bulk fuel tanks, or if I can find an alternative depot,” says Harding. The only downside of using HVO is the price, which works out more expensive than forecourt diesel.

This echoes Travis Perkins’ experience. The company highlights challenges around procurement costs for HVO, lack of fiscal stimulus, market availability, an

EARLY ADOPTER: Hackney Council has been using biodiesel since 2008 and, according to corporate fleet manager Norman Harding, it saved 2,500 tonnes of CO2 in 2022 by running most of its vehicles on HVO

OVERCOMING OBSTACLES: Travis Perkins powers 215 vehicles across 34 sites with HVO, but highlights several challenges along the way

immature regulatory framework and standards that are not yet well formulated.

Travis Perkins uses HVO across 34 sites to power 215 vehicles. The fuel used is supplied under the Zemo Partnership Renewable Fuels Assurance Scheme (RFAS). As James Vance at Travis Perkins explains: “This means we can use the UK government’s carbon conversion factors to report on CO2 emission benefits with confidence. As a result, we have full visibility of the true ‘well to wheel’ benefit per litre of HVO versus fossil fuel.”

Travis Perkins has reduced consumption of conventional diesel by around 1.3 million litres per year. Using the RFAS calculations, this translates into a 92% CO2 saving compared with conventional diesel.

Transparent production

Magnus Hammick at Green Biofuels attaches some importance to the RFAS: “It’s a bit ironic, isn’t it? You buy a litre of diesel which has 7% FAME [fatty acid methyl ester biodiesel], as all forecourt diesel must. You don’t ask where the FAME has come from or what the feedstocks are that went into the FAME. You buy a litre of HVO and you want to know who used the cooking oil, which frying pan it went in, and everything about it.

“It’s really important, though. No one wants to say that you’re doing something good and to inadvertently add to the deforestation or land use change and things like that, so that whole chain and the pathways to customers are vital.”