Motor Transport by Motor Transport

Sharp ■ Informed ■ Challenging

NEWS INSIDE Perfect delivery

Fortec appoints MD after leadership restructure p3

10.12.18

“THE QUALITY OF WORK IS EXCELLENT, AND THAT’S INVALUABLE TO US.” Michael Pedersen, Chairman - Pederson Contracting Services Ltd.

Fresh today

Kinaxia buys 11th haulier with Fresh Freight deal p6

2018 review

Collapses, acquisitions, and chicken delivery fiasco p8

OPERATORS IN THIS ISSUE Bedworth Haulage ................................p8 CM Downton .........................................p8 Fresh Freight Group ...............................p6 Gregory Distribution ..............................p8 Kinaxia Logistics ..................................p6 Lockwood Haulage ...............................p6 McHaul Haulage ...................................p8 NFT Distribution ....................................p8 Simpsons Logistics ...............................p4 Stephen Sanderson Transport .............p38 Systematic Logistics ............................p4 Wincanton .........................................p36

After pre-pack in May more than £135,000 is owed to suppliers

Canute struggles to hold back the debts By Chris Druce

Almtone-owned Canute Group has narrowly avoided being wound up by HMRC after the taxman raised a petition against it. This came as the amount the firm owed to creditors ballooned to more than £135,000. The unadvertised windingup petition from HMRC was launched on 13 November and settled on 15 November, according to Companies House, after being paid in full. However, the process prevented Pallet-Track, Canute’s former pallet network, raising its own petition against the company. Pallet-Track is pursuing Canute for an unpaid debt of more than £47,000 (MT 29 October). MT understands that following the serving of a statutory

21-day notice on Almtone in October, which was uncontested, Canute’s owner then challenged the validity of the debt after notice of a windingup petition was served. This prevented Pallet-Track from joining the HMRC petition (the process in law is to join a live petition rather than raise your own) and Canute and its former pallet network will now have to attend a court hearing to establish the validity of the debt claim. Canute Group sales director David Emslie previously claimed: “The Pallet-Track [debt] will be settled in good time before any necessity for a winding-up order.” The action came as county court judgments (CCJs) against Almtone/Canute reached 10 with a collective

value of £90,922, a total that has steadily climbed during the past few months. Ahead of the logistics firm’s pre-pack administration in May, Canute Haulage Group had 23 CCJs against it and owed creditors close to £212,000. Following the sale of the business for £1.3m to Almtone on 12 May, administrator FRP Advisory calculated that creditors of the original Canute would ultimately face a £5.3m shortfall. Eight O-licence applications by Almtone, giving the trading name of Canute Logistics, remain under consideration by the Office of the Traffic Commissioner as they have been for the majority of the year. The company was not available for comment as MT went to press.

PRETTY LITTLE THING: Clipper Logistics experienced a buoyant first half of its trading year boosted by contract wins and organic growth in its e-fulfilment operation. Its interim results for the six months to 31 October 2018 show group revenue increased 14.1% to £227.9m (2017: £199.7m); pre-tax profit was 16.9% up at £9.3m (2017: £7.9m). New business secured during the period includes an e-fulfilment operation for online fashion retailer Pretty Little Thing in Sheffield, which was launched in July, and contracts with Halfords and Sports Direct. Clipper also reported continued organic growth with longstanding e-fulfilment customers, including Asda, ASOS and Wilko, as well as contract wins including Browns and Silkfred.

News

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Gilmore named as Scots traffic commissioner Transport secretary Chris Grayling has appointed Claire Gilmore as traffic commissioner (TC) for Scotland. Gilmore, a lawyer, is the senior investigating officer in the office of the commissioner for ethical standards in public life in Scotland. She will take up the role in February next year when current TC Joan Aitken retires. Gilmore has substantial experience in regulatory litigation and is also an engineer. Senior traffic commissioner Richard Turfitt said: “I am delighted with the appointment of Claire Gilmore as the next traffic commissioner for Scotland. Claire was an outstanding candidate in a strong field. “Transport is a key priority for Scotland. That is why those involved in the operation of trucks, buses or coaches need a robust regulator; to keep the roads safe and make sure there is a level playing field for all.”

But that’s only half the story Page 5

Awards

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Pall-Ex’s Adrian Bradley named MD as role filled for the first time in four years following restructuring

Fortec delivers a new MD By Carol Millett

tor, moved to Palletways in January to take up the role of regional general manager, Fortec’s business unit director Craig Johnson took over the reins. However, Johnson left last month to become general manager of Wincanton’s Kettering depot. Bradley said he was pleased to be returning to Fortec after a two-and-ahalf year absence, adding that he will focus on maintaining high levels of service and quality at the network and expanding the business. He also highlighted the support of parent company Geodis, which he said would “help us drive the network forward against a backdrop of investment that will ensure

Adrian Bradley (pictured) has left Pall-Ex, where he was operations director, to lead Fortec as the company’s first MD since 2014. The move is part of a management restructuring at the pallet network, which has been without an MD since Neil Hodgson left. Hodgson went on to found the ultimately unsuccessful Principle Pallet Network. Following Hodgson’s departure, responsibility for running the network was shared between Bradley as general manager of operations, and David Spong, general manager of commercial, until Bradley left for Pall-Ex in 2016. When Spong, now network direc-

we continue to provide value, quality and reliability, innovation through development and IT, service and support. “It is great to be back on board at such an exciting time,” he said. Former Systematic Logistics International [newly acquired by Palletways, see page 4] MD Steve Parkes, who joined Pall-Ex in May as group project manager, has taken on the role of acting operational director at the pallet network, following Bradley’s move. Kevin Buchanan said of Bradley’s departure: “We wish Adrian well. Steve has stepped into the role and is driving change hard for the better.”

LETTER

ROYAL THANKS: Transaid kicked off its 20th anniversary celebrations with a special showcase event in London last month, which was attended by more than 150 industry supporters, partners and development organisations, together with patron The Princess Royal and the Transaid team. The event highlighted Transaid’s achievements in sub-Saharan Africa, which have been made possible thanks to the support of the transport and logistics industry. Addressing the guests, The Princess Royal said: “Thank you for being part of the first 20 years of Transaid. I hope you can all see what has been achieved and what is yet to come. Your industry expertise and knowledge has driven this success, which is making a difference in places where people are looking for change.”

Too much of a weight It was good to see the article in Motor Transport (26 November) where Rase Distribution has limited its tail-lift pallet weights to 750kg for deliveries to domestic addresses. It should be standard across all networks. I work for Palletline and sometimes the size and weights of customer consignments beggars belief. It is upsetting that the HSE refuses to enforce a weight limit, instead leaving it to companies to police themselves. How many deaths such as Petru Pop (the delivery driver killed in 2016) will there be before it acts? Tim Shenton, driver, ABE Ledbury

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Operator has been member of pallet network for 24 years

Failed SLi acquired by Palletways UK By Chris Druce

Palletways UK has purchased longtime member Systematic Logistics International (SLi) after it was placed into administration last month (29 November). A sale of the business assets of the Colchester-based firm â&#x20AC;&#x201C; a member of the network for 24 years â&#x20AC;&#x201C; was completed by Palletways UK the following day. Palletways network development director Barry Byers said: â&#x20AC;&#x153;We are delighted to acquire SLi with its motivated workforce and are working with the staff and customers to take the business from strength to strength.â&#x20AC;? Staff at SLi will continue in their existing roles and duties.

Richard Triolo, former CEO at SLi, said: â&#x20AC;&#x153;I would like to thank the staff and customers for their loyalty, commitment and contribution to SLi, Palletways and myself. I have enjoyed the past 25 years devel-

oping SLi, but it is time to move on.â&#x20AC;? In the year to 31 August 2017, the haulier had an annual turnover of ÂŁ10.5m (2016: ÂŁ10.9m) and made a loss of ÂŁ572,529 (2016: ÂŁ191,266 loss).

ON CHARGE: Finding sustainable ways to handle delivery and servicing journeys to homes and businesses was the focus of TfLâ&#x20AC;&#x2122;s LoCITY roadshow held at the CEME Conference Centre, in Rainham, Essex last month. The event invited freight operators to learn from experts, take part in debates and hear from their peers about using alternative fuel vehicles in their businesses. TfL travel demand management interim programme director Emily Herreras-Griffiths said: â&#x20AC;&#x153;Todayâ&#x20AC;&#x2122;s agenda is important. We all know how busy the road network is and itâ&#x20AC;&#x2122;s set to get busier.â&#x20AC;? â&#x2013; Search locity on motortransport.co.uk for the full show report.

Simpsons moved staff to save trade Simpsons Logistics transferred 70 employees to another company when HMRC attempted to wind it up and agreements with APC Overnight and The Pallet Express were cancelled, according to administrators. In an effort to rescue the companyâ&#x20AC;&#x2122;s trade, Simpsons Logistics moved its staff over to Logistics (Teesside) in August,

before administrators were appointed on 19 September. A report compiled by RSM Restructuring Advisory, based on information provided by Simpsonsâ&#x20AC;&#x2122; directors, said the company was under financial pressure after an accounting error was discovered in August, resulting in an additional liability to HMRC of ÂŁ150,000.

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PEAS ON EARTH: Lockwood Haulage’s annual turnover climbed by almost 20% to £17.5m in its latest reporting period, thanks to new wins and the development of existing partnerships. Key account manager Keith Allsop told MT that the growth in its haulage division was a result of “agreeing further commitment” with long-established customers. This also led to an increase in its fleet numbers, as well as winning new business. Pre-tax profit in the 12 months to 31 January 2018 rose 34.9% to £871,554 (2017: £646,055). Lockwood, a Palletforce member, is part of a group comprising seven subsidiary businesses including warehousing, dealership HVRS, vehicle service and repair and the manufacture and distribution of mushy peas. Group turnover was up nearly a fifth at £46.9m.

Acquisitions continue as operator makes 11th haulier purchase, adding first Pallet-Track member to group

Kinaxia Logistics keeps it Fresh

By Chris Druce

Kinaxia Logistics has made its 11th haulier purchase, snapping up Gateshead-based Fresh Freight Group (FFG). The buy is Kinaxia’s first in the north-east and comes after it added Manchester-based AKW Group to its ranks in the autumn (MT 15 October). Kinaxia director Peter Fields said: “It should come as no surprise to the market that Kinaxia has broadened its

reach to include the north-east. “T he group strategy remains to acquire successful, professionally operated, service-focused, family-owned companies and our purchase of FFG is evidence of this.” MD Dominic Quigley said: “Joining the Kinaxia group was a natural decision for FFG; the Kinaxia strategy is one that we can truly identify with and one that has been long awaited in the industry. We are proud to

A Hat Trick of Awards for Cartwright.

be aligned with the Kinaxia group and look forward to a fruitful, sustainable future, with access to additional services providing opportunities for growth, while maintaining the values and strengths of the business that we have expanded over the past 40 years.” Kinaxia said that as with previous acquisitions, all management and staff at the business have been retained.

Originally founded by Eamon Quigley, FFG started by delivering flowers from Holland to the UK. It now provides services including temperature controlled, general transport, warehousing and freight forwarding. FFG employs 135 staff, has a fleet of 75 vehicles, an O-licence for up to 100 trailers and operates 100,000sq ft of warehousing. FFG’s last published full

accounts recorded an annual turnover of £9.4m in the year to 31 May 2016 and a pre-tax profit of £85,221. Fields said: “So far, our purchases have been met with positivity from the pallet networks, which understand the group’s strategic intent. FFG is the first Pallet-Track member to join the group and we are excited to work with it as we have only heard good things about its network.”

The Cartwright Group’s success story continues with another landmark in winning three prestigious awards in one night.

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Commercial Motor Service to the Industry Award for our Chairman Peter Cartwright Commercial Motor Bodybuilder of the Year Award Manchester Evening News Barclays Judges Choice Award

Thank you to all our customers, employees and suppliers who have all played a key role in our unprecedented success. Our very best wishes to you all for the festive season and wishing you a successful 2019.

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06/12/2018 09:28:35 25/11/2018 21:12

News extra High-profile collapses and acquisitions, disruption and a chicken delivery fiasco… 2018 in road transport

Don’t look back in anger… By Chris Tindall

By the time the Beast from the East had done its damage and spring was finally making itself known, official figures showed that there had been 574 insolvencies in UK logistics during the first three months of 2018. This number, however, was an improvement on the previous quarter, prompting the Creditsafe Watchdog report for the period to announce that the industry had enjoyed “a great start to the year”. Inevitably, that was the cue for some high-prof ile collapses and disruption, although we also saw multimillion-pound spending sprees and acquisitions. The first major collapse came early, in January, when PricewaterhouseCoopers was appointed to handle the compulsory liquidation of

outsourcing giant Carillion. Concerns grew about the knock-on effect of its collapse, particularly as it had 18 projects on the go and a raft of haulage businesses with which it traded. By the end of January pressure from the business secretary had encouraged the company’s bankers to launch a £225m fund to help affected subcontractors and suppliers.

Pre-pack deals

During 2018, pre-pack deals were never far from the headlines and one of the first of the year was temperature-controlled firm Bedworth Haulage’s in February. It later transpired that the sale to C4-Safety, with which Bedworth director Robbie Thacker is connected, included “an antiembarrassment clause”, preventing any further sale within 12 months without paying

25% back to the administrator. Commenting on his own financial results for the year ending 31 March 2017, ARR Craib Transport chief executive Eddie Anderson said his company was in a “robust position” for the year. Within a fortnight the Palletline member had announced its purchase of fellow Scottish haulier McHaul Haulage. But what few people knew was that behind the scenes, Anderson was also busy marketing the business and in discussions with Gregory Distribution (Holdings) to purchase it, a deal that would finally come to fruition in the autumn. Eddie Stobart Logistics really got into a high gear following its return to the stock market in 2017, with acquisitions such as iForce driving turnover in its e-commerce division to more than double.

Some big wins followed with a £15m Cemex contract taken from Wincanton, as well as Britvic (again a Wincanton contract) and a slice of business with Tarmac. But within road transport, it was the £53m purchase of The Pallet Network in the summer that really got people talking. But not everything went smoothly. Visitors to hundreds of KFC restaurants were met with signs highlighting limited menus and “hiccups with deliveries” in February. As outlets closed amid chicken shortages, fingers weren’t so much being licked as pointed at DHL Supply Chain for failing to carry on where previous contractor Bidvest had left off. “It’s an absolute cock-up,” shouted the GMB,

enjoying its poultry reference a bit too much. By March, the fast food chain had stripped its new supplier of some of its distribution work and gone back to Bidvest Logistics to supply up to 350 restaurants in the north of the UK. Also that month, EmergeVest bought CM Downton for £75m. Ever since its formation in 2013, EmergeVest, led by CEO and founder Heath Zarin, has been buying UK logistics firms and counts NFT Distribution, Palletforce and Allport Cargo Services, as part of its group. This was formalised in November with the significant decision to bring them all under one roof with the creation of EV Cargo, a major new independent in the

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sector (MT 26 November). Other notable acquisitions during the first half of the year include Europa Worldwide Group’s purchase of Continental Cargo Carriers, and Matthew Kibble Transport’s purchase of Coventry’s Fullforce Logistics.

The tide has turned

the company would bounce back after “corrective action” was taken. In July the Bardonbased company entered into a company voluntary arrangement (CVA) as it was the only way some of the business, with liabilities of £8.6m, could survive. The demise of Harris Transport in Southampton in August came as a shock to everyone, not least its staff, 70 of whom were made redundant as it entered administration.

Tears at teatime

Blame was apportioned to a change in landlord, which the haulier said it hadn’t been made aware of, and when the new landlord reverted to a three-month payment demand and backdated the payment, disaster struck. “When it happened there were grown men in tears here,” said director George Harris. While some companies struggled this year, others thrived. Biffa went on a major spending spree and acquired four businesses; Weir Waste Services, H&A Recycling, Bisset Waste Management and some trade and assets of Vecta Group.

But Kinaxia Logistics won the prize for the most cumulative acquisitions, with number 11 sealed in November following the purchase of Fresh Freight Group in Gateshead, shortly after it snapped up Manchester-based AKW Group. Its tremendous growth in the past few years has been facilitated by funding from Permira Credit Solutions and HSBC, providing a war-chest of around £35m. The spending spree is expected to continue through 2019, helping Kinaxia to rise much higher than its current spot at 41 in MT’s Top 100.

9292

One of the biggest collapses and rebirths in the industry during 2018 began with an assurance to staff that wages would be paid despite a delay. In a letter seen by MT in April, Canute Haulage Group director Noel Marshall lamented the “unwarranted

speculation” about the company’s stability and insisted that the eight O-licence applications recently made by new entity Almtone, using Canute’s Gamstone address and listing a Canute director as a transport manager, was nothing to be alarmed about. However, the alarm bells did not stop ringing, and the county court judgments against the company passed the £200,000 mark before the one-time £100m-plus turnover business underwent a prepack sale to Almtone for £1.3m in May. The move saved more than 800 jobs but also led to estima-

tions by the administrator that creditors – some £7m out of pocket – could ultimately see a return of just 15p in the pound. Llanelli-based Owens Group had a happier year. A recovery in the steel sector coupled with contract wins helped boost its turnover by more than a fifth and an increase in pre-tax profits of 15%. Then in July it bought BTS Haulage in Greater Manchester, boosting its fleet to more than 550 vehicles and providing an annual turnover of around £90m. A less successful acquisition strategy over the past few years resulted in Premier Logistics enduring a much bumpier ride. Its purchase of CJ Express in Hull ended in it entering voluntary liquidation during 2017 and another, DA Clayton, closed in 2016. Premier’s financial problems were compounded by its work with Pall-Ex ending, all of which resulted in it making a loss as 2018 came to a close and drawing on financial support from its new pallet network Palletforce. MD Lee Christopher remained upbeat, predicting

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Focus: warehousing

Emissions

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LoCITY lowdown Take-up boost as firms drawn by transport links and workforce

Retailers seek good value in Yorkshire Yorkshire has seen high takeup levels this year as online and discount retailers look for warehouse locations with lower occupational costs and a ready source of labour. In the year to mid-November, take-up of buildings over 100,000sq ft was 4.7 million sq ft. This was more than three times that of the whole of 2017 and above the bumper year of 2016. Those taking space included Clipper Logistics, which leased a 615,000sq ft building in Sheffield for a contract with online retailer PrettyLittleThing. Also in Sheffield, Jack Wills signed up for a 390,000sq ft unit to act as its global DC, while Asos took 190,000sq ft in Doncaster. In Leeds, Lidl announced plans for a 645,000sq ft depot as part of its UK expansion. A number of factors give Yorkshire an edge in attracting occupiers, according to CBRE director Mike Baugh, especially along the M18 corridor. “There is availability of labour, large-scale plots of land,

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the East Coast ports and a relatively uncongested motorway network,” he said. Dove Haigh Phillips partner Simon Dove added: “We’re seeing occupiers wanting to locate here because, logistically, there are good links through all modes of transport and marginally less costs.” According to Knight Frank, rents in Yorkshire for buildings over 50,000sq ft range from £5.50/sq ft in Doncaster and Sheffield to £5.95/sq ft in Leeds. This compares to £6.50 to £6.75/sq ft in top locations in the north-west and Midlands. Knight Frank partner Rebecca Schofield said that although there is strong demand in Yorkshire, there could be a temporary dampening down of demand caused by economic uncertainty. “It could be a challenging three to six months while we find out what is happening with Brexit,” she said. Developers are keen to meet the underlying demand with

new schemes and several buildings have been constructed or are coming through the pipeline. Savills’ research shows that the amount of speculatively built space above 100,000sq ft has increased significantly in the past few years. It is 456,000sq ft, a 65.8% increase on the same point in 2016. Overall availability is 3.3 million sq ft, a rise of 22% since 2016. Among the speculatively built units available are three warehouses of 195,000sq ft, 120,000sq ft and 60,000sq ft at iPort in Doncaster. Also in Doncaster, Gazeley is constructing 278,000sq ft (below), to be available next spring, while Sladen Estates and Peveril Securities will complete two buildings of 164,000sq ft and 106,000sq ft by March. In Sheffield (above), PLP – formerly Peel Logistics Property – is developing two units of 45,000sq ft and 134,000sq ft as the first phase of a new distribution park on the site of the former Outokumpo steelworks. Developers are also active in West Yorkshire. Tungsten Developments and Barwood Capital, for example, are building the 259,000sq ft Super G warehouse in Glasshoughton. In addition, larger secondhand buildings available include a 330,000sq ft Sheffield warehouse, occupied by Marks & Spencer, which will be back on the market next year.

A monthly look at work to cut CV emissions. This month, Rob Fowler, general manager - CSR and technical planning, DPD Group UK, on piloting all-electric micro distribution for final-mile deliveries DPD recently opened its first all-electric micro distribution depot in Westminster. The TfL-owned, newly refurbished building is in a prime location, which enables an all-electric fleet to deliver parcels to the high-density SW1 postcode, with almost zero stem mileage – mileage from depot to first delivery stop. While this development is fully aligned to DPD’s long-term aim of moving to a zero-emission fleet and the mayor’s Transport Strategy objectives of improving air quality and reducing congestion, there are still a series of obstacles to be overcome as this and other similar industry initiatives move from pilot to full-scale operation. On the most basic level, the delivery industry needs the relevant vehicles to be available in far greater numbers than currently. The 3.5-tonne van is the workhorse of the delivery industry, but while there are equivalent all-electric vehicles in various stages of prototype, trial, and production, the industry’s demand is likely to outstrip supply. For example, this year DPD alone will buy 1,000 diesel Sprinters. OEM 3.5-tonne all-electric equivalents need to come forwards at scale. The added challenge for UK operators is the specific requirement for right-handdrive models. Aftermarket conversions of a handful of vans cannot deliver the quantities required, and certainly not at a price point. The micro depot model considerably reduces stem mileage. With micro depots, a driver’s first delivery may be on the adjoining street. This is rarely the case under the traditional model, with drivers often having to travel a considerable distance just to get to the start of their route. The all-electric micro depot helps to combat congestion and air quality issues, as the drivers maximise delivery time on patch, meaning they are more efficient and productive. As a result, they do less miles, and we can deploy fewer vehicles overall. But the micro depot model relies on two key variables – the availability of B8 space (buildings suitable for storage and distribution purposes) in major city centres and the electrical capacity to charge the vehicles. Local authorities, property owners and electrical infrastructure providers therefore need to work together to make sure such buildings can be made available. In London, the mayor’s office and TfL have been engaging with industry very effectively, but it is crucial that the relevant stakeholders continue to work together to ensure that promising pilots can move rapidly into full scale operations. LoCITY welcomes more contributors to the conversation at our quarterly LoCITY meetings. Contact locity@tfl.gov.uk for more details 10.12.18

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Viewpoint

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Compliance challenges speed up R Peter Millichap Marketing director, Teletrac Navman

ight now, transport operators have their work cut out more than ever. The pace of legislative change continues to increase the pressure on an already demanding and time-poor business function, struggling to manage all the requirements that ensure vehicles and drivers operate within the law. The compliance issues that affect fleets evolve over time, so staying ahead of the regulatory curve is a constant challenge, as well as being complex and time-consuming. That said, achieving compliance far outweighs the risks of ignoring it. In their latest report, the traffic commissioners for Great Britain recognised that while UK roads remain relatively safe, it is important that transport operators are not complacent when it comes to safety standards. Equally, according to a recent study by Teletrac Navman, a significant number of transport operators said compliance was a primary business

challenge. Factors such as health and safety, driver wellbeing and vehicle maintenance all topped the list for compliance concerns. For example, almost half of respondents (49%) regarded meeting vehicle safety standards as a particular challenge. It’s very clear that there is still confusion about what fleets need to do to be fully compliant. Technology has taken the stress out of manually managing compliance by allowing operators to monitor vehicle performance in real time and in turn, pre-empt faults and fix them before they lead to costly downtime, as well as ensuring they stay on top of an ever-changing regulatory landscape. As technology shapes the future of the industry, and laws evolve to reflect these changes, the role of the modern fleet manager will need to change as well, going beyond basic vehicle management to embrace the benefits that come with these innovations and elevate compliance.

“THE QUALITY OF WORK IS EXCELLENT, AND THAT’S INVALUABLE TO US.” Michael Pedersen, Chairman - Pederson Contracting Services Ltd.

The three Bs have set the tone this year A Steve Hobson Editor Motor Transport

s this is the last issue of MT this year it is a good opportunity to reflect on the past 12 months. If I was scoring 2018 it would be a B, the biggest one of course being Brexit. Two years on from the referendum and we seem no nearer knowing what the prime minister meant when she said “Brexit means Brexit”. Whichever way you voted in 2016, I am sure everyone now just wants to know what is going to happen on 29 March. Another notable B was batteries. While there is still no widely available electric 3.5 tonne van, the consensus this year was that electric – possibly with a range-extending engine – will be the way to go for urban deliveries as cities finally address the issue of air quality. One hurdle to using batteries has been their uncertain residual value after five or seven years, when they are no longer fit to power a vehicle. There is now an emerging second-use market for

12 MotorTransport MTR_101218_012.indd 12

these batteries – energy storage for wind and solar generators. If this comes to fruition it could remove a major concern over the use of electric vehicles. The final B is for biofuel, be it diesel or gas. Decarbonising HGVs on long-haul operations has seemed an intractable problem, but the technology now exists to run gas and diesel engines on nearly carbon neutral biofuels derived from waste and other renewable sources. All we need now are the market mechanisms to produce enough of this green fuel. Switching the duty differential on gas to incentivise biofuels would be a good step. Whatever 2019 brings, a merry Christmas and a very happy new year from all of us on MT.

The newspaper for transport operators

To contact us: Tel: 020 8912 +4 digits or email: name.surname@roadtransport.com Editor Steve Hobson 2161 Editor-in-chief Christopher Walton 2163 Group news editor Chris Druce 2158 Group technical editor Colin Barnett 2141 Senior compliance editor Roger Brown 2168 Urban editor Hayley Pink 2165 Group production editor Clare Goldie 2174 Deputy production editor Jo Saunders 2173 Key account manager Andrew Smith 07771 885874 Display sales executive Barnaby Goodman-Smith 2128 Event sales Richard Bennett 07889 823060 Tim George 0755 7677758 Classified and recruitment advertising Head of sales operations Julie McInally 2122 rtmclassified@roadtransport.com Head of sales Emma Tyrer 07900 691137 Divisional director Vic Bunby 2121 Head of marketing Jane Casling 2133 Head of events/MT Awards Stephen Pobjoy 2135 Managing director Andy Salter 2171 Editorial office Road Transport Media, Sixth Floor, Chancery House, St Nicholas Way, Sutton, Surrey SM1 1JB 020 8912 2170 Free copies MT is available free to specified licensed operators under the publisher’s terms of control. For details, email mtsccqueries@roadtransport.com, or call 01772 426705 Subscriptions Tel 0330 333 9544 Quadrant Subscription Services, Rockwood House, Perrymount Road, Haywards Heath, West Sussex RH16 3DH Rates UK £135/year. Europe £163/ year. RoW £163/year. Cheques made payable to Motor Transport. Apply online at mtssubs.com Registered at the Post Office as a newspaper Published by DVV Media International Ltd © 2018 DVV Media International Ltd ISSN 0027-206 X

Got something to say?

If you would like to contribute to MT’s Viewpoint, email steve.hobson@roadtransport.com 10.12.18

06/12/2018 12:00:56

THE NEW CF PURE EXCELLENCE

Award-winning versatility

Versatility is what distinguishes The New CF from other trucks in its class. Fast and easy fitting of superstructures shortens bodybuilder throughput times and reduces build costs. The new PACCAR MX-11 and MX-13 engines deliver market-leading power while the high-performance TraXon gearboxes offer excellent manoeuvrability. Whatâ&#x20AC;&#x2122;s more, the redesigned cab has clear views on all sides. For distribution, long-distance haulage or bulk transport, The New CF delivers Pure Excellence. No wonder experts awarded it International Truck of the Year 2018.

A PACCAR COMPANY DRIVEN BY QUALITY

AD_101218__P13.indd 13

06/12/2018 09:31:19

Marketplace

motortransport.co.uk

MV Commercial’s new hub puts it all under one roof

Everything in its place

By Roger Brown

MV Commercial, founded in 2001, recently opened a multi-million-pound, eight-acre central hub in Airdrie, North Lanarkshire, formerly operated by TOM Vehicle Rental – bringing its sales, hire, leasing, finance, maintenance, engineering and painting facilities, all under one roof. It includes 90,000sq ft of internal workspace with several fabrication workshops featuring 36 commercial vehicle ramps, HGV inspection pits, a paint and blast facility with eight booths, onsite ATF test lanes, tacho bay and Class 7 MoT testing facilities. Steven Cairns, group MD of MV Commercial, said the new one-stopshop site will improve the firm’s overall effectiveness and raise standards to another level.

Space and scale

“The presentation, clarity, space and scale of the new site means the customer can visualise what they want”, he said. “Customers will benefit from even better build times, and it also gives them confidence and shows the level and standards we work to. “It is transformational and gives us the platform to kick on as a business.” The facility, located off the M8 between Edinburgh and Glasgow, features 6.3 acres of vehicle storage

10.12.18

MTR_101218_015.indd 15

and display space for the company’s fleet of Ready to Go trucks for immediate hire, lease, or rent-to-buy. New additions to the company at the site include an in-house Fleet Factors parts company operating from a twostorey parts store. MV Commercial chief executive Tom O’Rourke said: “We have an experienced and friendly team of great people here that can do everything to a truck on this site from fitting cranes to MoTs.” The Airdrie depot houses most of the company’s team of 120 and consolidates MV Commercial’s three previous Scottish facilities in Livingston. It is the company’s largest investment in property yet and will create new jobs, including several apprenticeships. It operates in conjunction with depots in Haydock and Luton, ensuring nationwide reach. MV Commercial has more than 1,350 heavy commercial vehicles on hire in the UK and about 100 large crane trucks for sale or hire at any time. As well as its own defleeted vehicles for sale it provides late-registered lowmileage specialist commercial and part-exchange vehicles. Cairns said: “In stock is a range of ready to go specialist vehicles, in a market where lead times can be between three and six months.

“We look to run a fleet that is on average about 30 months old, keeping things fresh and with maintenance costs under control. Popular vehicles the firm stocks include ready to work DAF CF460 and Volvo FH 460 rigid crane trucks with a range of crane and body options, Volvo FH 540 and DAF XF510 crane tractor units, as well as premium specialist kit such as hook and tipper grabs built on DAF CF450, Scania P410 XT and Volvo FMX 410 chassis. The company supplies crane vehicles with flatbed, cheese wedge, beavertail and cabin spec bodies usually fitted with HIAB, Palfinger, PM or Cormach heavy duty cranes. Tipper bodies come from reputable manufacturers like Thompsons, with selector grabs from quality suppliers such as Kinshofer.

High-spec vehicles

Cairns said: “We provide very high spec vehicles for the top end of the market, above the general rental spec with large cabs, comfort bunks, powerful engines, air con and the best running gear. Our trucks are for operators that want to go the extra mile to attract and retain the best drivers. “Premium trucks tend to be better looked after by drivers which ultimately helps with residual values.” MV Commercial provides rental

contracts with full inspections and employs a team of mobile service engineers across the UK. This includes several of its own crane specialists, as well as 30 crane service partners. The company also offers financing. Cairns said: “The fact we are prepared to underwrite our products through our asset finance division shows the confidence we have in them.” “Rental periods can be anything from three months to five years, providing flexibility for businesses. “A popular option is our rent-to buy scheme where customers can hire for a year and then buy at a sale price set by a sliding scale of depreciation.” About 60% of the firm’s rental business is conducted out of its two sites in England, at Haydock and Luton, and over the next few months the company will also upgrade facilities there. The company employs 12 people on its service desk that, according to Cairns, provide a “top of the line premium level service”. He concluded: “This is a servicedriven sector and we need to be at the forefront of that. “Offering an end-to-end service we pride ourselves on delivering fit for purpose commercial vehicles offering maximum versatility and competitive pricing, ready for work.”

MotorTransport 15

03/12/2018 15:19:22

Marketplace

motortransport.co.uk

Dealer optimistic for next year following hike in trailer sales

It’s a bumper year end for STC sales By George Barrow

Stockport Truck Centre (STC) has been enjoying a bumper run-up to the festive period with increased sales compared with last year. The north-west’s largest independent dealer and repair agent has also taken delivery of a large batch of 2011 Cartwright curtainsiders that have been de-fleeted, refurbished and are now ready to remarket. It also has another large de-fleet of SDC Curtainsiders coming in January. STC business development manager Andy Livingstone said: “The Christmas rush began in September and continued to the end of November. We saw a massive hike in trailer sales in those three months. We cherry-pick all our stock, don’t buy from auction and search the market for trailers that we feel are going to suit our high standards. “We buy our trailers and tractors at the right time, and

the right prices, so we can pass the price on to the customer. That’s our ethos.” The recent batch of 75 Cartwright ENXL curtainsiders are 4.2m and 4.5m in height and have BPW drum brakes, but are, according to Livingstone, ready to be converted or altered to any requirements from a bespoke colour and livery scheme to a new set of curtains. “We have the capacity to alter these trailers to whatever the customer desires and have a large variety of stock, approximately 200 trailers, so can supply most requirements. All the work is carried out in-house by our bodybuilders and painters. Our standards are high and we supply a quality product at very competitive prices, giving our customers a reliable refurbished asset for their businesses.” STC aims to be a one-stopshop for customers operating over five sites in the north-west

with a DVSA ATF, large maintenance facilities, 24-hour service and two large body repair shops. STC has also appointed a dedicated vehicle damage assessor to work alongside the trailer sales team checking in the large de-fleet assets for stock, and at its accident repair centre at Atherton. “We want to speed up the process of assessing a damaged truck or trailer. We aim to get back to the insurer and customer in 24 to 48 hours. Obviously, if a customer’s vehicle is in for two weeks that’s a lot of downtime. So, the new role is exciting as we can get the repair under way with minimal downtime for the operator.” Livingstone said STC is looking forward to an exciting 2019 and anticipates a high demand for its product and services, which has led it to increase opening hours at two of its locations.

In the marketplace Buoyant used trucks sales raise hopes for strong year-end. By David Hill The current problem dealers and trade sellers have is getting the right stock for the market. With most customers switching to in-fleeting Euro-6 vehicles, every dealer, in response, is looking for the same stock. However, it is not just a case of disposal outlets opening their doors and buyers flooding in. The retail customer wants the next vehicles on the fleet to have the latest technologies and safety features, with low mileage and in as new condition. Vehicles outside of these parameters have downward price pressures or remain in stock. Used truck buyers are more aware of what their vehicle requirements are than ever before, with many becoming very particular about the vehicles that they buy. Euro-6 specialist vehicles are scarce on the used market so buyers of these vehicles will have to continue to pay penalties to enter, for example, Ultra Low Emissions Zones (ULEZ) for the time being. These companies should carefully consider the financial implications of renewing this equipment with current long lead times, the cost of replacements added to the justification of the residual value (RV) write-down. Older, non-Euro-6 vehicles still sell if they are in good condition, particularly if they have low mileage. However, high mileage on non-Euro-6 vehicles affects the price more than ever before. These trucks have a short shelf life as 2020 approaches and the impending launches of ULEZ.

Market sectors

Small rigid 7.5-tonne to 15-tonne: these are hard to find at Euro-6 and, as a result, command strong values; the longer the body the rarer they are with prices increasing with rarity. Tippers in this sector are almost non-existent, and again values are very strong. 18-tonne to 26-tonne rigids: these are rare used finds at Euro-6. In this weight range, the used market prefers curtainsiders to boxes, with Euro-6 tippers in short supply. 32-tonne and above: any vehicle with a plant body or crane is very desirable. Boxes and curtainsiders are in short supply so those available sell strongly. The slowest segments in the market are 8-wheel tippers and concrete mixers, so there is a bit of choice. However, note here that once again, there is not much Euro-6 stock, and this sector will be ULEZ-sensitive. Tractor units: Euro-6 in this sector is critical. Some dealers continue to sell Euro-5 tractors but as stated above they command lower prices and the gap between Euro-5 and Euro-6 is getting bigger. The good news in this sector is that units with big engines like V8s still have a following and continue to demand high prices. David Hill is commercial vehicles editor at Glass’s. You can follow him on Twitter @DHill_Glass or go to glassbusiness.co.uk for more information. 16 MotorTransport MTR_101218_016.indd 16

10.12.18

03/12/2018 15:18:14

Marketplace

Know your

worth

Hauliers and others in the road transport industry need to understand exactly what their assets are and how to go about valuing them correctly. Adam Bernstein reports

very business has assets. Everything from land and buildings, to equipment, tractors and trailers, goodwill, brands and intellectual property has value. The question is: how to understand the true value of those assets?

Legal principles

Chief executive at Close Brothers Asset Finance (Transport Division) John Fawcett says the Companies Act 2006 demands that a business’s accounts must show a fair and reasonable value of the cost of an asset at the outset and throughout its life. But showing this isn’t simple. “Assets are used in different ways,” he says. “A truck, for example, which is run lightly will be worth more over time than a unit run 24/7, and accounting principles allow for a business to reflect this in its accounts.” Procedurally, directors must detail fixed tangible assets at cost, less depreciation at rates calculated to write off the cost, less the estimated residual value of the asset over its expected useful life. In terms of the legal responsibility for the valuation process, Mark Nelson, director, Compass Business Finance, says this rests with the company and its directors. “Accountants will never be involved unless the depreciation policy of the business is consistently out of kilter with the market,” he says. On top of this Nelson says values should be recorded on a worst-case scenario basis with the only exception being freehold property.

The need to revalue

Why would a business want to revalue its assets? One major reason, according to Nelson, is the need to understand the equity and risk position it has against the debt owed on those assets. “It may be the company is looking to restructure its debts in order to manage monthly cashflow, release equity so it can better utilise that cash for another purpose, or understand where its personal risk would be.” He also says that it is common for any equity within the assets of a business to be used during a merger or acquisition. Fawcett’s experience has taught him that 22 MotorTransport MTR_101218_022-023.indd 22

property is the main asset that gets revalued. “In the main, leasehold land and buildings are depreciated over time at 2%, but if property has gone up in value the directors will need, and indeed may want, to reflect the increase to the correct figure, he says. As for the spur to start the process, it could be just a gut reaction, he reckons. However, another push might come from the need to strengthen the balance sheet to demonstrate that the business is worth more in shareholders’ funds than is currently shown. There are, in fact, rarely good reasons for revaluing assets, but it can be justified where depreciation rates have been aggressive or overtly prudent. That said, accounting standard IAS 36 – Impairment of Assets requires a business to review its assets for impairment at least annually. Some firms, such as listed companies that produce quarterly statements or those ceasing business, might revalue more frequently.

Failing duties

Running a business carries numerous duties, especially ensuring legal compliance. By extension, failing to keep assets properly valued – whether over or under – is a breach of the law and, says Fawcett, the company and directors could find themselves in serious difficulties. There are other risks associated with failing to keep values accurate, not least of which is access to borrowing. If assets are not valued properly it can lead to errors of judgement on credit ratings and the perception of the business in the eyes of its suppliers. The key to a good valuation is to see what auditors agree to. Where assets are over-valued, directors will rarely reduce the balance sheet and auditors will rarely insist that this is done. This means that the acid test is whether or not the auditor will sign off the accounts with a ‘true and fair view’ opinion.

Material changes in asset value

There are countless causes of fluctuations in asset values, including events such as a change in the value of an investment asset linked to the performance of an underlying investment. 10.12.18

03/12/2018 12:37:38

motortransport.co.uk

For example, an investment in a cross-border haulier could be impaired if its costs of operation rise because of Brexit, say through increased fuel consumption or waiting times. Small things, says Nelson, can also affect values. He cites the condition of equipment, access to premises, and changes in market perception of the make and model of the equipment in question. General business housekeeping is a good indicator of this. New technology can rapidly and radically affect the value of equipment making it more difficult to sell – information technology is a case in point. Businesses depreciate this type of equipment over a long period of time when actually the useful life could be much less. The list also includes asbestos that needs remediation, a lack of spares, or a change in an intangible such as intellectual property. In fact, it’s the intangibles that can increase when large firms value their brand on the balance sheet.

Impaired assets

It’s all well and good having assets that increase in value, but what if the asset is impaired and its worth is less than the book value? From an accounting viewpoint, if an asset is impaired it will affect the profit and loss and the balance sheet. An impairment will reduce the profit recorded for that period, which will affect the distributable reserves of a firm and could restrict its ability to pay any dividends, which could influence investors’ decisions and might result in the breach of any applicable covenants. In practical terms, Fawcett thinks that most of those who value assets will have an inkling of the problem from watching market values, market demands, technological changes, economic drivers and accepted obsolescence or damage.

The art of assets

The valuation of assets is not a science, it is more of an art. One thing, though, is clear, businesses that ignore the statutory requirements are heading for trouble – especially if they hit the buffers. Directors have duties and the authorities will investigate those who give incorrect information to stakeholders. ■ 10.12.18

MTR_101218_022-023.indd 23

MotorTransport 23

03/12/2018 12:37:57

Cost tables Brexit, driver shortage, and volatile fuel prices are among the unsettling factors that set the tone for this year’s operating costs. Colin Barnett reports

Uncertain roads ahead

he main economic factor in the background to road transport operation over the past year has been Brexit, a word that seems inexorably linked to another – uncertainty. With Euro-6 vehicles now making up the bulk of the first-life parc, overall running costs have been fundamentally stable over the year. However, fuel costs have been unusually volatile, with forecourt retail prices frequently on the wrong side of 150ppl. Over the 12 months to September, our figures show an overall increase just short of 20%. Another area where uncertainty has been a factor is in drivers’ pay. The task of attracting new recruits to the industry remains as challenging as ever, but the lack of home-grown drivers is now joined by the fear that the overseas staff on which the industry has come to depend will be heading home post-Brexit. As a result, many operators report that they are not only having to pay above-inflation wage increases, but are also buying higher specifica-

ARTICS Vehicle cost (£) Fuel cost: (ppl) ex VAT average montly MPG AdBlue cost: (ppl) Depreciation period: (years) Residual value: (£)

ANNUAL STANDING COSTS (£)

Driver wages and NI Vehicle insurance Establishment/overheads Vehicle tax (VED) based on no RPC but with levy Depreciation Finance cost Subtotal Profit allowance (5%) Total annual standing costs (£)

STANDING COSTS ALLOCATION

Per week (£) based on 46 weeks Per day (£) based on a five-day week Per hour (£) based on an 11-hour day

RUNNING COSTS (PPL, 80,000 M/YR)

Fuel AdBlue (at 4% of fuel consumption) Tyres Maintenance and repairs Subtotal Profit allowance (5%) Total (p/mile)

CHARGE PER MILE (P) (2017 in brackets)

60,000 miles/yr 80,000 miles/yr 100,000 miles/yr

26 MotorTransport MTR_101218_026-027.indd 26

tion vehicles to attract new drivers and retain existing ones. The effects of another momentous economic event, the 2008 financial crash, seems finally to be ending. The moratorium on interest rates has ended, although the increases are still at a level where investing surplus funds in banks comes a poor second to spending them wisely. Inflation is expected to reach a six-year high of 2.74%, before falling to 2.16% in 2019, then settling at just under 2% for the next few years. For the coming 12 months, the uncertainty over our relationship with Europe should be resolved, one way or another. One major change in these annual cost tables is that it looks certain to be the last year where we treat diesel as the only significant fuel source. The rise of alternative fuels, whether it be natural gas for long haul and electricity for urban operations, means you can look forward to some extra lines in next year’s tables.

32-tonne unit 4x2

38-tonne unit 4x2

44-tonne unit 6x2

Tandem-axle trailer (curtainsider)

Tri-axle trailer (curtainsider)

69,981 115.6 10.4 34 7 10,497

72,257 115.6 9.2 34 7 10,839

83,215 115.6 8.5 34 7 12,482

19,000

20,300

12 1,900

12 2,030

37,069 3,035 22,159 1,200 8,498 3,444 75,405 3,770 79,175

37,069 3,547 22,461 1,200 8,774 3,556 76,607 3,830 80,437

37,069 3,924 24,441 1,850 10,105 4,095 81,484 4,074 85,558

1,425 1661 3,086 154 3,240

1,523 1798 3,320 166 3,486

1,721 344 31.29

1,749 350 31.79

1,860 372 33.82

70 14 1.28

76 15 1.38

51 0.59 2.01 8.13 61.27 3.1 64.33

57 0.67 2.30 8.23 68.32 3.4 71.74

62 0.73 2.79 8.65 73.99 3.7 77.69

1.72 2.83 4.55 0.2 4.78

2.65 3.16 5.81 0.3 6.10

196 (183) 163 (151) 144 (132)

206 (191) 172 (159) 152 (139)

220 (205) 185 (170) 163 (150)

10 (10) 9 (9) 8 (8)

12 (12) 10 (10) 10 (9) 10.12.18

03/12/2018 12:19:29

motortransport.co.uk

VANS

1.6-tonne GVW (550kg payload)

2.1-tonne GVW (750kg payload)

2.8-tonne GVW (1-tonne payload)

15,740 115.6 43 5 1,769

15,967 115.6 40 5 2,084

22,195 115.6 33 5 2,458

23,289 115.6 28 5 4,043

25,921 1,144 5,377 140 2,794 360 35,736 1,787 37,523

25,921 1,219 5,377 140 2,777 424 35,858 1,793 37,650

25,921 1,447 5,377 140 3,947 526 37,358 1,868 39,226

25,921 1,608 5,377 140 3,849 653 37,548 1,877 39,426

816 163 14.83

818 164 14.88

853 171 15.50

857 171 15.58

12.2 0.59 3.48 16.29 0.8 17.1

13.1 0.71 4.11 17.96 0.9 18.9

15.9 1.07 4.53 21.52 1.1 22.6

18.8 1.42 4.96 25.15 1.3 26.4

Vehicle cost (£) Fuel cost: (ppl) ex VAT MPG Depreciation period: (years) Residual value: (£)

ANNUAL STANDING COSTS (£)

Driver wages and NI Vehicle insurance Establishment/overheads Vehicle tax, based on E5 Depreciation Finance cost (five-year term) Subtotal Profit allowance (5%) Total annual standing costs (£)

STANDING COSTS ALLOCATION

Per week (£) based on 46 weeks Per day (£) based on a five-day week Per hour (£) based on an 11-hour day

RUNNING COSTS (P/MILE, 30,000 M/YR)

Fuel Tyres Maintenance & repairs Subtotal Profit allowance (5%) Total (p/mile)

CHARGE PER MILE (P) (2017 in brackets)

20,000 miles/yr 30,000 miles/yr 40,000 miles/yr

RIGIDS Vehicle cost (£) Fuel cost: (ppl) ex VAT MPG AdBlue cost: (ppl) Depreciation period: (years) Residual value: (£)

ANNUAL STANDING COSTS (£)

Driver wages and NI Vehicle insurance Establishment /overheads Vehicle tax (VED) no RPC, E6 and levy Depreciation Finance cost Subtotal Profit allowance (5%) Total annual standing costs (£)

STANDING COSTS ALLOCATION

Per week (£) based on 46 weeks Per day (£) based on a five-day week Per hour (£) based on an 11- hour day

RUNNING COSTS (P/MILE, 60,000 M/YR)

Fuel AdBlue (at 4% of fuel consumption) Tyres Maintenance and repairs Subtotal Profit allowance (5%) Total (p/mile)

CHARGE PER MILE (P) (2017 in brackers)

40,000 miles/yr 60,000 miles/yr 80,000 miles/yr 10.12.18

MTR_101218_026-027.indd 27

205 (193) 142 (134) 111 (104)

207 (196) 144 (136) 113 (106)

219 (206) 153 (144) 121 (113)

3.5-tonne GVW (1.4-tonne payload)

224 (211) 158 (148) 125 (117)

7.5-tonne GVW (curtainsider)

13-tonne GVW (curtainsider)

18-tonne GVW (curtainsider)

26-tonne GVW 6x2 (curtainsider)

32-tonne GVW 8x4 (tipper)

44,465 115.6 17 34 5 7,017

51,585 115.6 15 34 5 8,141

66,746 115.6 13 34 5 10,485

84,461 115.6 10.5 34 5 13,641

111,580 115.6 7.5 34 7 22,012

31,232 1,794 7,500 165 7,490 1,190 49,371 2,469 51,839

32,754 2,051 10,994 200 8,689 1,380 56,068 2,803 58,871

33,925 2,277 14,620 650 11,252 1,778 64,502 3,225 67,727

35,178 2,785 15,356 650 14,164 2,313 70,446 3,522 73,968

35,178 2,785 19,810 1,200 12,795 2,985 74,753 3,738 78,491

1,127 225 20.49

1280 256 23.27

1472 294 26.77

1608 322 29.24

1706 341 31.02

31 0.36 2.30 7.39 40.97 2.05 43.0

35 0.41 2.60 8.33 46.38 2.32 48.7

40 0.48 2.72 7.92 51.54 2.58 54.1

50 0.59 3.44 8.65 62.73 3.14 65.9

70 0.82 7.95 14.67 93.51 4.68 98.2

173 (160) 129 (119) 108 (99)

196 (181) 147 (135) 122 (112)

223 (207) 167 (154) 139 (127)

251 (234) 189 (175) 158 (145)

294 (272) 229 (210) 196 (179) MotorTransport 27

03/12/2018 12:19:48

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for generously donating this advert.

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03/12/2018 16:15:03

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Patron HRH The Princess Royal

03/12/2018 16:21:10

Cartel claim

motortransport.co.uk

Operators seeking compensation in the big six price fixing claim are waiting to see if the CAT has claws. Steve Hobson reports

he claim for compensation against the big six European truck manufacturers for agreeing gross list prices for new vehicles over 7.5 tonnes sold between 1997 and 2011 has reached a crucial point, as the Competition Appeal Tribunal (CAT) will decide early in 2019 which of the competing class actions it will select to go ahead. Phil James is a partner and head of the transport and logistics team at Weightmans, one of the law firms seeking to act for the class representative. Weightmans’ client, UK Trucks Claim (UKTC), has filed an application at the CAT seeking appointment as the class representative on behalf of the truck purchasers and lessees. He outlines what operators need to know about the cartel claim and what their options are. “The background to this is that for around 14 years the major truck manufacturers colluded

30 MotorTransport MTR_101218_030-032.indd 30

to collectively fix list prices of certain categories of vehicle,” he says. “Following whistle-blowing by MAN, the European Commission (EC) launched an investigation and concluded that the manufacturers had indeed illegally colluded to fix gross list prices for their vehicles.” As a result, in July 2016 MAN, Volvo/Renault, Daimler/Mercedes, IVECO and DAF were fined a record €3.6bn (£3.24bn) by the EC, and in September 2017 Scania was fined, although it is still contesting the charges and appealing against its €880m penalty.

Restrictive practices

The origins of the cartel case can be traced back to an investigation by the Office of Fair Trading into restrictive practices among Mercedes-Benz truck dealers in the north of England between 2008 and 2010. A raid on Mercedes-Benz’s headquarters revealed that the anti-competitive behaviour went far wider than the UK, and that encouraged MAN to blow the whistle in return for its fine being reduced to zero. “The commission’s findings of anti-competitive behaviour create an environment in which operators are given a foothold in litigation, safe in the knowledge that the findings are binding proof of liability in the courts of EU member states,” says James. “These damages claims are taking place in civil courts across Europe.

Shutterstock

Ready to pounce “All the operators have to do now is to establish that the cartel caused them losses and to quantify the extent of those losses. Even the most sophisticated purchaser who would carry out a price comparison exercise will likely have suffered losses because the gross list prices had all been agreed by the manufacturers.” One justification put forward by the manufacturers for increasing truck prices during this period was the huge investment in technology they say they had to make to meet the EC’s ever-tougher emissions standards. Weightmans is investigating, with industry experts, the extent to which this technology was available across all the major European truck manufacturers and therefore could have been incorporated into new trucks far more cheaply than the manufacturers led their customers to believe. The claim against the guilty manufacturers can also include purchases and leases of trucks of other manufacturers who were not a part of the cartel, because the prices of those other trucks will likely have been inflated due to the operation of the cartel. Operators do not need to claim against the particular manufacturer from whom they purchased or leased trucks between 1997 and 2011. They are free to pursue any company that has admitted being part of the cartel, as it was the anti-competitive behaviour of all the ➜ 32 10.12.18

03/12/2018 13:02:22

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Cartel claim

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cartel members that caused the financial loss. “Truck buyers and lessees can claim against any of the parties to the price-fixing activity,” says James. “The ultimate objective of the CAT will be to identify a figure that claimants are entitled to recover collectively from all of those who participated in the cartel activity. So it doesn’t matter which truck an operator bought – each member of the cartel will be required to contribute money to a collective pot from which each claimant will be entitled to withdraw a set amount per vehicle.” It does not matter whether the operator was a haulier or own account, nor whether the operator bought the vehicle or ran it under a lease agreement, as the effect of the cartel would have been to inflate prices of both purchasing and leasing costs. The EC’s decision included a finding that the manufacturers also collaborated on the release of trucks complying with a series of emissions control standards, from Euro-3 through to Euro-6, restricting supplies and further increasing the prices paid by truck buyers and lessees.

Win on price

One fleet buyer active in the market throughout this period says: “When we tendered we would always go to at least three manufacturers, and the same one would nearly always win on price. The others would be close but not quite there. And if we were either looking to retain an old engine for longer or move to a new one sooner, we were always limited on where we could go because they were colluding on the timing of the release of those engines.” Truck buyers and lessees can go direct to their suppliers and seek to negotiate their own compensation package, but this option could prove prohibitively time-consuming and expensive for any but the very largest operators; it also means that truck buyers and lessees do not benefit from the ‘safety in numbers’ aspect of being part of a collective action. Furthermore, truck buyers and lessees seeking a ‘discount’ from their suppliers (or compensatory sum) are likely to receive less by way of compensation than via a claim process which benefits from having an expert economist onboard. Operators are free to pursue their own claim through the High Court or the CAT. Some very large fleets such as BT and Royal Mail have chosen the High Court route. However, the claimants will have to prove their individual losses to the court and the legal bill for doing that could be high. “Whether you are on your own in the High Court or part of a collective in the CAT you have to fight a really difficult battle against companies with some of the deepest pockets in Europe, but the CAT route is different as individual claimants are part of a collective,” says James. “The availability of a remedy via the CAT is made even easier by application of an opt-out scheme. We are not looking for operators to join in with our action as we are proposing the opt-out scheme whereby all claimants are automatically part of the collective action unless they choose to opt out of it. “But the easiest option for most operators is to avail themselves of one of the two class actions before the CAT, as each operator will not have to prove its own individual losses to claim a share of any damages awarded.” 32 MotorTransport MTR_101218_030-032.indd 32

The issue to be decided by the CAT is not whether the truck manufacturers fixed prices, but rather what the level of compensation payable should be, based on how much truck buyers and lessees were overcharged over the 14-year period. Previous cartel cases in other markets have found that prices are typically inflated by between 15% and 25%, meaning that the average compensation payable to UK truck buyers and lessees could be anywhere between £8,000 and £20,000 per vehicle.

Compensation formula

“The CAT will endeavour to identify a compensation formula to apply across each sub-class of claimant,” says James. “The benefit of the CAT process is that there are no upfront costs for the operators to pay and they should not have to wait for years for compensation. “Such a collective case is pursued on behalf of all members who come within the definition of the collective and all the claimants take the

benefit of the findings of the CAT. The fundamental point we anticipate the CAT will focus on is that, whatever price was ultimately paid, through whatever finance arrangement, it was rendered higher than it would otherwise have been. “The CAT may break down the compensation sum into different sub-classes, for example categories of user and/or vehicle, but the overriding principle will be the same – the price paid was higher than it should have been.” There are three class action claims before the CAT, and it will choose what it regards to be the most suitable claim with which to proceed based on a number of factors. When a similar approach was adopted in Australia, operators who joined any of the unsuccessful claims were permitted to transfer to the successful action, and operators who have not taken part in any action to date will then be able to join that class action. The expectation is that the same approach will be adopted by the CAT in this jurisdiction in this litigation. ■ 10.12.18

03/12/2018 13:02:41

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MT Awards 2018 winner profile Team of the Year Combing training and health and safety functions has paid dividends for business partners Wincanton and the Co-op

n 2016, Wincanton secured another fiveyear contract with the Co-op to operate transport functions at the RDCs in Lea Green, St Helens and Cardinal, Cambridgeshire. As part of the renewal process, Wincanton proposed a joint venture between the training and development and the health and safety departments at Lea Green. This model has proved so successful it helped other Wincanton contracts and their customers. In awarding Wincanton Team of the Year, judges commended the fact that the project had delivered clear improvements and made good use of technology. At Lea Green, the Co-op runs the warehouse, employing around 600 people, while Wincanton employs 410 full-time drivers plus 80 regular agency staff and an operational team of 50 to provide all the transport. Each department is committed to continuous improvement and best practice and the goal has been to establish the Lea Green RDC as a Wincanton leader in health, safety, training and development. Jimmy Riley, health, safety and training manager at Lea Green, started out as a driver 25 years ago and now leads a team of 16. He said: “Two-and-a-half years ago we merged the health and safety department with the training department. All training is delivered in-house, including inductions, Driver CPC, annual driver assessments and safe systems of work.

Risk assessments

“The department also covers all store risk assessments – with 500 stores things change all the time and we have a lead assessor and two others covering it on a daily basis.” The Co-op has a programme of new shop openings, focussing on the smaller convenience format, and preparing risk assessments for new sites is part of the team’s remit. The range of store types and size served by Lea Green means that while the fleet of trucks are all Scanias and DAFs, the 120 rigids range from 14- to 26-tonnes while the units pull 120 trailers of five different sizes, from 27ft to double-decks. The scale of the operation means a driver could be put on any one of 250 routes on each shift. “We have a diverse fleet delivering into diverse points where no two are the same,” said Riley. “One of our big challenges is collisions 36 MotorTransport MTR_101218_036-037.indd 36

Safety in sto at delivery points. A key measure for us is collisions per million kilometres and the induction process has be right. One day a driver could be in a 14-tonne rigid, the next they could be taking a 44ft trailer.” All store deliveries are made using roll cages and a standard design of tail-lift across the fleet so drivers are familiar with unloading procedures, and Wincanton has made further improvements to improve safety. “We have introduced a lot of bespoke safety equipment,” said Riley. “For example we use a Y-strap which has an anchor point on the load lock rail and is attached to the roll cages before they are transferred onto the tail-lift. If the end or side plates fail, the roll cage will remain on the tail-lift. We introduced that equipment in 2012 and we have seen a dramatic reduction in cage-related incidents.” Incidents involving cages falling from height reduced 79% in the past five years. Every driver is given a store information card detailing the specific features and hazards for every delivery point on their route. These include one of Wincanton’s favourite health and safety acronyms – GOAL. This seemingly simple advice – Get Out And Look – is intended to make drivers stop and assess their manoeuvre rather than assume all is clear. Lea Green has a mirror checking station at the weighbridge on the exit from the site, so drivers can adjust their mirrors for the best view behind on every shift. New rigid vehicles are also being fitted with rear-facing cameras and reversing sensors . While the Co-op retains responsibility for health and safety of its warehouse staff, there is clearly some crossover when vehicles and drivers are on-site, and Riley’s team puts together a monthly health and safety report covering the Co-op’s as well as Wincanton’s activities. “There are weekly meetings to review all accidents, whether warehouse or transportrelated,” he said. “An incident could be where the warehouse has had an impact on transport so we will work together to address the issue.” A good example of this is a new safety system that is being installed at Lea Green – the Castell key interlock which prevents trailers being pulled away from loading docks prematurely. “This will eliminate bay pull-offs,” said Riley. “When a driver reverses onto a bay he has to lock it off on the trailer suzies and that key goes into an electronic box by the side of the bay.

Only when it is inserted can the door be opened and once it’s inserted it can’t be released until the door is closed at the end of loading or unloading. It was an investment of £0.5m for this site as we have 125 bays but it is a very good system. “We only experience on average one bay pull-off a year but if we can eliminate them completely that can avoid a potentially serious injury.” Wincanton has also introduced a campaign to reduce incidences of dropped trailers, which Lea Green has adopted. “There is a strict procedure and that has had a dramatic effect on the numbers of dropped trailers on site,” Riley said.

Normal procedures

“No one, especially experienced drivers, likes changes to the normal uncoupling procedures, so it can be quite hard to land. But in the past two years our audit checks have shown that they have bought into it and the reduction has been remarkable. In 2016 we had 10 dropped trailers which may not appear high in relation to the fleet size and the volume output on a yearly basis, but last year this was dramatically reduced to two.” Wincanton is responsible for the condition of the trailers and rigid bodies including their cleanliness, and under its STAR initiative (Stop, 10.12.18

03/12/2018 14:52:20