Motor Transport 20 January 2020

Sharp ■ Informed ■ Challenging

20.1.20

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NEWS INSIDE

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16/01/2020

All change

LGV Driver Apprenticeship to be replaced with two schemes p3

Challenging times

Pre-tax profit down 75% at Fred Sherwood

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Safety first

Mircrolise conference puts safety top of the agenda

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OPERATORS INSIDE Clipper Logistics ........................................... p3 Erith Haulage ................................................ p8 FedEx ........................................................... p4 Fowler Welch ............................................... p6 Fred Sherwood ............................................. p4 Jack Richards ............................................... p8 McDonald’s .................................................p18 NFT Distribution ............................................ p3 Pro Freight Solutions .................................... p4 Reed Boardall Group ..................................... p6 Wincanton ................................................... p4

Pallet weight debacle prompts haulier to quit network ahead of schedule

Rase leaves Palletways EXCLUSIVE By Carol Millett

Rase Distribution has quit Palletways bringing an end to a troubled relationship that saw the Lincolnshire haulier challenge the 13:00 network’s guidelines by refusing to deliver pallet loads weighing more than 750kg to residential addresses on the grounds of safety.

T h e m o v e s e e s Ra s e Distribution exit its 10-year contract with Palletways almost two years ahead of its October 2021 planned exit.

Rase Distribution introduced a pallet weight ban in November 2018 following a risk assessment that led it to conclude that tail-lift deliveries of pallets above 750kg to residential addresses posed an unacceptable risk to drivers.

However, Palletways refused to acknowledge the limit, which left the Lincolnshire haulier shouldering thousands of pounds of courier costs for the delivery of pallet loads above 750kg, which it refused to handle under its safety policy.

Confirming the haulier’s exit from Palletways, Rase Distribution MD Geoff Hill said: “My only regret about coming out of Palletways is that we have lost our voice on pushing for pallet weight legislation.”

Pointing to the death of HGV

driver Petru Pop in November 2016, who was crushed by a 1,400kg pallet of tiles he was delivering to a domestic address in High Wycombe, Bucks, for Palletways member Reason Transport, Hill added: “I cannot believe it has taken so long for legislation to be put in place and that it is still not in place more than two years after the death of Petru Pop. Drivers are at risk when making these deliveries and something needs to be done urgently.”

The long-awaited HSE guidance

on the handling of tail-lift delivery pallet weights has been in discussion for more three years and has failed to meet a number of deadlines, including a plan to announce it at last year’s CV Show.

Areas covered by Rase, which is owned by HW Coates, will be split between George H Kime and East Trans.

MT helps cities prepare for clean air zones This year sees the rollout of the first clean air zones (CAZs) outside of the capital, with both Leeds and Birmingham poised to go live this summer and Bath expected to follow by late 2020. Further cities, including Manchester, Sheffield and Newcastle, are also working on plans to follow suit and Oxford has announced plans for a 7am to 7pm zero-emission zone to include HGVs into its charging remit.

To help operators know what to expect in the next year, MT has teamed up with rental and leasing firm Ryder to produce a Clean Air Zone 2020 guide, which is free inside this week’s issue and available online.

■ Operators wanting to find out more about Sheffield’s CAZ plans are invited to a free half-day roadshow on 17 March.

To register, go to motortransport.co.uk.

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Focus: warehousing p10 Viewpoint: new decade and phone laws p12 Interview: Willie Paterson p14 Alternative fuels p18

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08/11/2019

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BUYER LOOKOUT: NFT Distribution is looking for a buyer following a review to address “operational challenges”. The EV Cargo business declined to give details, but a spokesman said: “The company has concluded that, at this stage, it is appropriate to explore what interest may exist in the business.” The comments came just a few months after the ultimate parent undertaking, NFT Distribution Holdings, filed accounts showing it had made a pre-tax loss of £30.8m in the 18 months ending 29 September 2018, on group revenues of £334m. During the previous period, in the 12 months to 31 March 2017, it posted a restated loss of £14.1m on a turnover of £202m. Last month its most recent accounting period was extended again, to 31 December 2019. The NFT spokesman added: “Over the past few months, NFT has undertaken a strategic review of its business with a view to addressing some operational challenges and repositioning for the future. NFT has the ongoing support of all its stakeholders and expects the usual high quality of service to be maintained and trading to continue as normal.”

■ Go to motortransport.co.uk for updates as more developments were expected as MT went to press.

A new LGV Driver cat C+E Apprenticeship should be ready this summer

LGV Driver Apprenticeship to be scrapped and revamped

By Carol Millett

The Large Goods Vehicle (LGV) Driver Apprenticeship is set to be torn up this summer and replaced with two new LGV Driver Apprenticeships, one of which will include the cat C+E licence for the first time, while the other will focus on urban driving skills and only include the cat C licence.

The move, approved last month by the Df T and the Institute for Apprenticeships and Technical Education (IFATE), the body that oversees apprenticeships, follows widespread criticism that the current LGV Driver Apprenticeship standard is not fit for purpose because it only offers a cat C licence while most operators need drivers with a cat C+E licence.

FTA head of skills Sally Gilson told MT that the move to include a cat C+E in the LGV Driver Apprenticeship standard was approved last month by the Df T and the IFATE. She said: “It was agreed that the amended LGV Driver Cat C+E Apprenticeship would be submitted and ready to use by the summer. During this time another apprenticeship that will provide an alternative route for cat C only will be developed with the help of the Df T and will focus on more urban driving.

“We are hopeful that both apprenticeships will be available by the autumn. The Trailblazer group is meeting on 29 January 20.1.20

to discuss the proposition further.”

IFATE member and chief executive of the Skills Group David Coombes said: “In essence, the existing apprenticeship standard will be amended to include the cat C+E licence by the summer.”

However he warned that there could be some time before an LGV apprenticeship offering a cat C licence is on offer. “The challenge will lie with the new cat C licence.

T he existing LGV Driver Apprenticeship standard containing the cat C licence will be scrapped when the new LGV Driver Apprenticeship standard containing the cat C+E licence is launched. It could be months before rigid operators will have the new urban-focused LGV Driver Apprenticeship standard offering a cat C licence. It will be a challenge to launch that by the autumn.”

RHA policy director Duncan Buchanan welcomed the inclusion

of cat C+E in the LGV Driver Apprenticeship, but criticised the time it has taken. He said: “It has been a mission from hell to convince bureaucrats that the transport sector needs two LGV apprenticeships.

“We and others in the industry have been pushing very hard for this outcome for years and it is lamentable that it has taken so long, particularly when the industry has paid so many millions into the Apprenticeship Levy.

“This delay has been particularly frustrating because it is selfevident that an apprenticeship that trains to cat C+E standards is badly needed in an industry suffering a severe driver shortage.

“Even now there is no clear end date [for the launch], so while we are hopeful that this will happen by the summer, bearing in mind previous delays, we are exercising a cautious optimism.”

Sun Capital walks away from Clipper Sun Capital Partners has abandoned its interest in making a bid for Clipper Logistics.

Clipper executive chairman Steve Parkin, who founded the company in 1992 and owns nearly a third of its shares, was understood to be preparing a £300m bid with the Florida-based private equity firm to take Clipper off the stock market.

However, following an extension to the bid deadline to allow further discussions, Sun Capital has announced it is no longer considering an offer.

Sources suggest the deal stalled when some of the existing institutional investors wanted a higher share price than Sun Capital was prepared to pay.

It has been reported that Parkin is still interested in taking the company private after becoming frustrated with the need for City procedures, which have hampered the day-to-day running of the firm.

■ Clipper has landed a five-year contract with fashion retailer Joules. In a joint statement the two companies said the deal will involve a fast-moving fulfilment and logistics operation involving inbound deliveries from a variety of UK-based and international suppliers seven days a week, fulfilling orders for Joules’ stores, e-commerce and wholesale customers.

Clipper will take over the operations of Joules’ DC in Corby, Northamptonshire, in the next few weeks, following a staff consultation period.

MotorTransport 3

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Pre-tax profit falls 75% at Leicestershire firm after a decline in activities in ‘challenging’ market

Sherwood profit tumbles

By Carol Millett

Bulk haulage firm Fred Sherwood & Sons saw pre-tax profit tumble by three quarters to £644,000 last year as it battled declining asset resale values, rising fuel prices and pay rate pressures.

While the Leicestershire family firm reported a turnover rise in the year to 31 March 2019 to £33.9m (2017: £33.4m), this was attributed largely to recharge sales,

with haulage turnover declining slightly in the period, according to its latest annual results.

In the same period, pre-tax profit fell 75% to £644,000, down from £2.6m in the previous year when it was boosted by an additional £2m of income from shares in “group undertakings”. Without this additional income pre-tax profit for the year to March 31 2018 would have stood at £626,000.

In its review to the annual results, the group said the year had brought challenging market conditions that saw a slight decline in haulage activities, prompting directors to scale down the fleet.

It said profit margins had been hit by increased lorry depreciation charges due to the level of asset resale values, pressure on pay rates and increasing fuel prices.

Net assets decreased by £3.8m

to £18.4m, after payment of dividends to the holding company.

Despite these headwinds, the company continued to invest heavily in revitalising the fleet with more than £2.5m invested in HGVs and trailers. The group said it had also invested in driver training and technology to deliver greater efficiencies, cut the risk of incidents and reduce the firm’s environmental impact.

Wincanton builds on Wickes’ efficiency Wincanton has secured a threeyear contract renewal with home improvement retailer Wickes to provide efficient home delivery of HIAB items to UK customers.

The operator will continue to deliver Wickes’ heavier items, such as sandbags and plasterboard, to homes and trade customers using its own fleet and subcontractors via a planning system developed in conjunction with Wickes. It will continue to oversee the management of the vehicles and drivers, ensuring vehicles make the most efficient delivery routes.

Paul Durkin, director of home

and efulfilment at Wincanton, said: “The opportunity to continue our award-winning relationship with Wickes is an exciting one. We have worked over the past three years to evolve Wickes’ delivery solution and we will continue to build on these developments over the next three years, with a route map of further developments already in place.

“Our position in the marketplace, our operational experience and commitment to safe practice means we are well placed to ensure Wickes meets its customers’ needs.”

Doors shut at Pro Freight Solutions Staffordshire general haulier Pro Freight Solutions has entered administration.

The company, which traded out of two premises in Burntwood and Walsall and held an O-licence for 30 HGVs and 32 trailers, called in insolvency experts from FRP Advisory on Christmas Eve. Incorporated in 2008, Pro 4 MotorTransport

Freight Solutions specialised in nationwide same-day delivery, operating out of a 125,000sq ft hub with capacity for 12,000 pallets in its racked warehouse. It employed approximately 47 staff.

The haulier ran a mixed fleet of artics, rigids and vans, as well as straight-frame and double-deck trailers.

Change in operating model fuels fall in profit for FedEx UK Pre-tax profit at parcels giant FedEx UK plummeted by more than a quarter last year, the parcels company has revealed.

Reporting its latest annual results to 31 March 2019, the company, which operates more than 800 trucks and 700 trailers from numerous UK depots, revealed a 27% fall in pre-tax profit to £13.7m (2018: £18.7m). Turnover in the period fell by 12.27% to £218.5m (2018: £249m).

In its strategic report on the results, the company said the profit plunge was “predominantly due to the decrease in turnover as well as the adoption of a change in the operating model introduced on 1 September 2018”.

During the period, the company continued to integrate its operations with TNT Express, which was acquired by parent company FedEx Corporation in March 2016

at a cost of €4.4bn (£3.4bn) in a bid by the US parent company to expand its presence in Europe.

However, almost four years later, the two businesses are continuing to integrate, with the cost of integration continuing to soar from a predicted $800m (£600m) to nearly double the original figure.

TNT Express, which reported its annual results for the year to 31 March 2019 in September last year, also saw a fall in pre-tax profit to £32m (2018: £34.3m), while revenue rose to £670m (£664m).

■ FedEx UK has been fined more than £500,000 after failing to ensure safe pedestrian access at a site that resulted in an employee being seriously injured by a reversing forklift truck. An HSE investigation concluded that there was inadequate segregation of forklift trucks and pedestrians in the workplace.

20.1.20

News

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Yorkshire haulier ‘confident’ despite tough competition and rising costs

Boardall profit increases

By Carol Millett

The Reed Boardall Group has defied rising costs and fierce competition in the transport sector to deliver a 13% rise in underlying pre-tax profit.

Reporting its latest annual results to 31 March 2019, the Yorkshire-based cold storage and distribution business unveiled a 3.85% rise in underlying turnover to £62.8m from £61.6m.

The company said: “Turnover increased by 1.89% compared with the previous year, but 2018 was longer than 2019 because of an extra week. Turnover increased 3.85% after adjusting for this difference.”

There was a 13.17% rise in underlying pre-tax profit to £970,057 after adjusting for a £527,658 rates rebate in the previous year. This compares with a pre-tax profit of £1.4m the previous year.

“Pre-tax profit was lower than 2018 but the previous year included

a rates refund. After adjusting for this item, profit is 13.17% higher,” the company said.

The family firm also struggled to control costs, which rose 3.3% to £56m (2018: £54.2m). It invested £2m in new trailers in September 2018 and reduced the average age of its fleet to less than three years.

Turnover in 2018/19 was boosted by higher volumes through its 142,000-pallet cold store and in its

transport operation and the provision of increased ancillary services to existing customers.

“This, together with rising use of its ancillary blast freezing, picking and packing services, has helped improve financial performance compared with the previous year,” the group added.

Marcus Boardall (pictured with group finance director Sarah Roberts), promoted to chief executive of The Reed Boardall Group and son of chairman Keith Boardall, said: “While continued tough competition has made it difficult to recover increased costs, with more than 25 years’ experience behind us, we have established a sound formula for success.

Roberts added: “It is encouraging to see another year of improvement and we are confident our next financial year will show further growth as we have seen high levels of demand over the past nine months.”

Hambleton to crack down on HGV parking Hambleton District Council, in North Yorkshire, is stepping up enforcement on HGVs parking overnight on an industrial estate.

The council said its Public Space Protection Order on the Leeming Bar Industrial Estate, introduced last year, had led to a reduction in lorries parking up and “incidents of anti-social behaviour”. But, it added, numbers were beginning to increase again and so the order is to be tightened up with £100 fixed penalty notices for repeat offenders.

The council said it recognised there was a national shortage of secure parking sites, but that it believed some drivers were choosing to park on the industrial estate rather than make use of nearby sites such as Exelby Services.

Rob Exelby, operations director at Exelby, told MT its truck park was full or almost full Monday to Thursday most weeks.

However, he added: “We’re expecting to begin construction on an extension that will add a further 45 spaces, which we hope will be complete by the summer.

We hope that will help alleviate some of the situation.”

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PERFECT PARTNERS: Fowler Welch’s partnership with Mercedes-Benz Trucks was cemented further in December last year when the chilled and ambient supply chain logistics specialist took delivery of 21 tractor units from the new generation Actros range. The trucks were supplied by dealer Sparshatt Truck & Van and are operating from a depot in Teynham, Kent. Like the units that joined the company’s fleet in 2018, all are Actros 2545 models with flat-floored BigSpace cabs and 330kW in-line 6-cylinder engines. The new arrivals are from the fifthgeneration Actros range, which in November won Mercedes-Benz a record ninth International Truck of the Year title. New features include MirrorCam, which replaces conventional mirrors and promises increased safety as well as reductions in diesel consumption thanks to the compact, streamlined profile of the camera housings; a state-ofthe-art Multimedia Cockpit; and an enhanced version of the Predictive Powertrain Control system, which boosts economy by using digital 3D road maps and GPS information to help optimise gear selection and cruise control speed.

Pay-as-you-go planning from MT Motor Transport is proud to announce a collaboration with route optimisation specialists The Algorithm People that aims to improve the efficiency of transport planning.

The UK’s leading news publisher for commercial fleet operators is bringing an innovative software solution to the sector. My Transport Planner is a unique, on-demand transport planning tool that will allow companies of all sizes to increase vehicle utilisation, cut costs and reduce emissions from transport.

Using the Software as a Service (SaaS) model, My Transport Planner is a pay-as-you-go solution, and costs less to use than the savings it generates. It is more efficient than manual planning and does not require any of the integration or installation of many route optimisation solutions.

Andy Salter, MD of DVV Media International, which owns MT, said: “My Transport Planner is a truly disruptive product that has the potential to transform the efficiency of road transport and logistics operators. An on-demand, web-based, user-friendly solution takes away any potential concerns over long-term contracts, training and installation. And best of all, it delivers a near-instant return on investment.

“We are delighted to be the official partner for My Transport Planner in our industry. We’ll be publishing some exclusive previews of the solution in the run-up to the official launch and have some exciting plans for the rest of 2020.”

The official launch of My Transport Planner will take place in the spring.

Colin Ferguson, CEO of The Algorithm People, which helped develop My Transport Planner, said: “As a former transport planner I know the challenges that transport managers face. There is constant pressure to increase vehicle utilisation, cut costs and reduce emissions – and our software delivers on all three counts.”

20.1.20

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25/11/2019 11:03

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Hauliers will be legally accountable for associated damage to bridges

Safety is on the agenda

By Tim Wallace

Vehicle safety will be one of the key issues discussed at this year’s Microlise Transport Conference, after the organisers revealed two of the key speakers at the event on 20 May at The Ricoh Arena in Coventry.

Sir Peter Hendy CBE, chair of Network Rail, (pictured), will explain how the organisation is working to reduce bridge strikes.

There are an estimated 2,000 bridge strikes annually across the UK, each costing an average of £13,500 in train delays and bridge repairs.

Network Rail puts the wider cost to the national economy as high as £23m once the value of undelivered goods, loss of productivity, vehicle damage and road congestion are taken into account.

Hauliers are now being held

legally accountable for associated damage to bridges and compensation costs to train passengers.

“The prevalence of bridge strikes and the resulting danger they pose, combined with the disruption they cause, should be a major concern for us all,” Hendy said.

“T he transport sector must therefore make every effort to work together to actively reduce incidence levels.”

Microlise CEO Nadeem Raza said: “The safety of all rail and road users is a critical issue for fleet operators, so we’re delighted to welcome Sir Peter to speak at the conference.”

The second confirmed speaker is Caroline Hicks, head of the National Enforcement Group at

the DVSA, who will provide an update on the Earned Recognition scheme and explain how it enables the DVSA to target major cases of serial non-compliance among vehicle operators.

Earned Recognition was introduced in 2018 and is designed to prove operators meet driver and vehicle standards by regularly sharing performance information with the DVSA. As a result, vehicles are less likely to be stopped in roadside inspections.

Hicks will outline the scheme’s progress so far, the DVSA’s plans for the future, and how the scheme is being used to more effectively target non-compliant operators.

Microlise said this year’s conference would offer a thoughtprovoking programme of speakers complemented by four workshop areas, an exhibition, and the opportunity to network with an audience of 1,200 people.

Turnover and profit up at Erith Haulage Erith Haulage Company has attributed its increased turnover and profit last year to the scale and type of work it carried out.

The Kent-based haulage contractor increased turnover by 9.4% in the year ending 30 September 2019, to £27.04m.

Pre-tax profit increased seven-fold, to £1.09m.

In a review of its performance, the FORS Gold company, which has an O-licence for 65 HGVs, said the results were in line with forecasts.

It said: “Turnover increased mainly due to the boost in both the scale and type of works carried out for [group firm] Erith Contractors. Gross profit margins increased during the year, from 11.6% to 13% reflecting a stabilisation of costs and cost efficiency practices.”

Jack Richards & Son results show healthy gains in turnover and profit Rumours suggesting Jack Richards & Son was in a parlous financial condition before its sale to Turners (Soham) in August last year have proved unfounded.

The haulier has recently released end-of-year figures showing turnover increased by more than 7% to £57.5m while profit rose 52.7% to a shade more than £1.2m. Profit for the overall holdings company came in at just under £1.5m.

At the time of the sale, Lisa Richards, a director of Jack

Richards & Son, was reported as saying: “In a time of economic uncertainty, our industry is venturing into unknown territory, but this investment from Turners puts us in the strongest possible position to maximise the opportunities ahead.”

The deal, which was closed for an unreported sum, pushed the Turners Group into the Top 15 UK road transport companies with a projected turnover of £475m in 2019.

WEDNESDAY, JAN. 21st, 1920

Motor Transport was launched in 1905 as Motor Traction. We look back at a story published 100 years ago last week

How Gas Producers Work: The Leading Principles governing an Economical Source of Power that Promises to come to the Front During the last few months developments with a view to using producer gas for motor transport have been going quietly and steadily forward, and in the near future a good deal more may be heard of this source of power. A good many people who hear of these developments, however, are, or will be, handicapped by a lack of knowledge of elementary principles. They have a sort of general idea of what a gas producer is like, and of its working, but the idea is as indeterminable as its accuracy is uncertain.

The great point about producer gas is its cheapness; it is the cheapest source of power known. The fuel cost works out to only about ½d. per horse-power hour. The cost for a petrol engine of similar power works out to 2 ½d. to 3d. a horse-power hour.

8 MotorTransport

20.1.20

Focus: Warehousing

motortransport.co.uk

Stable demand for smaller warehouses keeps regional market strong as developers keep building

Yorkshire has the edge Agents in Yorkshire said last year’s political uncertainties led to a slight decline in the take-up of large warehouses in the region. But they believe that the underlying strengths of the market remain and that developers are keen to build warehouses to meet demand.

CBRE senior director Mike Baugh said that the final take-up figure for 2019 will be approximately 2 million sq ft – lower than the record-breaking figures for 2018 and the long-term average of

2.4 million sq ft. However, he is hopeful about the prospects for this year. “Some large-scale decisions were delayed into the new year because of the uncertainty around the economy and the political situation. But there are occupiers looking,” he said.

He believes that Yorkshire’s motorways, including the M1, M62 and M18, along with a plentiful workforce, give the region an edge over some parts of the UK when it comes to warehousing.

GOOD MIX: PLP’s 855,000sq ft Gateway 45 in Leeds will consist of four units

“We still have a relatively uncongested communications network, while the demographics provide value for money,” he commented.

Simon Dove, a partner of Dove Haigh Phillips, said that while there has been a slowing of the market for large warehouses, this is not true of other size ranges.

“There has been a good, stable level of demand for small to medium boxes up to 150,000sq ft,” he said.

In fact, the market is struggling to keep pace in terms of supply.

“There aren’t that many developments coming forward and more land needs to be allocated for industrial and logistics by councils,” he commented.

Where sites do become available, developers are certainly keen to take advantage. For example, in West Yorkshire Caddick Group and investment firm AEW are developing a 512,000sq ft ware-

house in Wakefield. This is due for completion by Q4 this year and will be known as Wakefield 515.

In Leeds, PLP has receiv planning consent to construct 855,000sq ft at the Gateway 45 development. This will consist of four units and will be a mixture of speculative and build-to-suit development, with the first buildings available from Q1 2021.

PLP is also involved in the South Yorkshire market and is building a 343,000sq ft warehouse at Smithywood Business Park. In addition, a 409,000sq ft speculative unit is being built by Trebor Developments and Hillwood at Gateway 4, off junction 4 of the M18.

Some existing large buildings are also available. These include the 546,000sq ft former Poundland DC in Normanton and a 278,000sq ft speculative building constructed last year by Gazeley in Doncaster.

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20.1.20

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Focus: Warehousing

Urban delivery points are a worthwhile investment Despite the expense of setting up an urban delivery point, often in areas where property costs can be high, there are many advantages in reducing the time taken to travel from the depot to the final delivery point.

“Adding another link to the supply chain effectively reduces drivers’ time and therefore wages, uses less fuel and optimises van usage,” the report stated.

Cushman & Wakefield has created a model that analyses total last link cost savings – for example, an extra facility could be beneficial in larger cities but may not be worth it in smaller urban locations.

Generally, the report argues, ensuring the customer can be reached in 30 minutes is crucial.

“A rental premium paid by occupiers to gain a foothold closer to customers results in a tremendous benefit in reducing overall costs while increasing overall customer satisfaction,” it concluded.

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LOCATION IS KEY: NWF Group has taken a 240,000sq ft warehouse at Crewe for its Boughey Distribution subsidiary. The company has signed a 12-year lease for the building, which was built speculatively by Panattoni at Crewe Commercial Park. Boughey, which specialises in ambient grocery storage and distribution, will use the building to provide a consolidation hub for a major new contract. The facility will be fully operational within six months and will increase NWF’s food division capacity from 100,000 to 137,000 pallets. Rob Andrew, NWF Group company secretary, said: “The high-bay, high-specification unit provides a strategically located distribution facility for the expansion of the Boughey business, with the proximity to the M6 and our existing main warehousing hub at Wardle being a key driver in our decisionmaking process.” Panattoni has submitted a planning application to build a further 305,000sq ft speculative unit on an adjacent 14-acre site.

The transport benefits gained by setting up an urban distribution facility to service online shopping far outweigh any extra property costs, according to research from Cushman & Wakefield.

Its ‘Last link quantifying the cost’ report found that transportation typically comprises 50.3% of total supply chain costs, while rents make up just 4.3%. This means that any transport improvements can be significant, particularly in dense urban areas where it is more difficult to operate efficiently.

“Rising home delivery expectations enhance the risk of encountering inefficiencies that, in turn, drive up last link costs,” the report said.

These include: incomplete first delivery attempts; routes and drive times not being optimised; underutilised van space; and return pickups not being integrated into the delivery route.

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20.1.20

MotorTransport 11

Viewpoint

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New decade, new thinking?

W Steve Hobson Editor Motor Transport

elcome to the first issue of MT of 2020, a new year, a new decade and only 30 years to go until the UK is legally obliged to be net-zero carbon emissions.

Thirty years may seem a long way off, but bearing in mind just about every single one of the 500,000 HGVs running on UK roads today is powered by diesel no one should under-estimate the scale of the change the road transport industry is facing.

The average age of those trucks is 7.5 years and nearly 40% of them are between six and 13 years old. While most UK operators may turn their noses up at a 6x2 tractor unit that is more than 10 years old, up until now these vehicles have at least had some

residual value in export markets. Where will they go in 2050?

More importantly, where will the money come from to pay for a new fleet of low-emissions trucks? New Euro-6d vehicles aren’t exactly cheap, but they will be compared with the first generation of electric and hydrogen HGVs. There is a huge opportunity to start decarbonising heavy trucks today by switching to biofuels, but their use is not being encouraged by EU and UK policy.

The UK has a 50% duty discount on gas compared with diesel and the EU allows a 15% allowance for gas trucks when calculating its 2025 and 2030 CO2 reduction targets. But neither incentivise the take-up of biofuels, which is a crazy situation.

Drivers must comply with phone laws A Regan Peggs Director Regan Peggs Solicitors

proposal to extend the ban on using hand-held mobile phones while driving to include all hands-free devices sent shockwaves through the industry last year. While an immediate extension of the ban has been ruled out, it raises questions about the legalities of using mobile devices on the road – including the extent to which operators are responsible for ensuring employees remain within the law.

The current rules for HGV drivers regarding using a hand-held mobile phone are the same as those for drivers of any other vehicle. However, enforcement is typically more stringent for commercial drivers, with increasingly creative strategies being developed by police to catch offenders – including a recent operation using unmarked HGVs for surveillance.

Those caught breaking the law can expect to be prosecuted, and a disqualification can be imposed.

The rules for hands-free communication are different: using a Bluetooth headset, voice command or a dashboard holder to make and receive calls and messages with a mobile phone is allowed, providing no contact is required with the device. However, drivers using these tools can still be stopped by the police, on the basis of

12 MotorTransport

being distracted and therefore not in control of their vehicle.

For many HGV drivers, this risk extends to the use of other terminals, including sat navs and tachographs.

While there is no specific offence covering the use of these items, drivers can still face prosecution for careless or dangerous driving if they use them in a way that compromises safety. Similarly, any operator that regularly expects its drivers to use non-essential devices while on the road could potentially be prosecuted under health and safety laws in the event of an accident.

Of greater concern for employers is how their response to such a situation can affect their status as a licensed operator.

Traffic commissioners require operators to have systems in place to monitor drivers’ conduct, including taking appropriate steps when an individual driver breaks the law. If an operator fails to put these systems in place, they can be called to a public inquiry. With these potential consequences for employers, developing appropriate systems to ensure they remain within the law should be priority.

The newspaper for transport operators

To contact us: Tel: 020 8912 +4 digits or email: name.surname@roadtransport.com Editor Steve Hobson 2161 Head of content Tim Wallace 2158 Deputy head of content Hayley Pink 2165 Group production editor Clare Goldie 2174 Deputy production editor Jo Saunders 2173 Key account manager Andrew Smith 07771 885874 Display telesales Barnaby Goodman-Smith 2128 Event sales Tim George 0755 7677758 Classified and recruitment advertising rtmclassified@roadtransport.com Head of sales Emma Tyrer 07900 691137 Divisional director Vic Bunby 2121 Head of marketing Verity Cullum 07823 440821 MT Awards Katy Matthews 2152 Managing director Andy Salter 2171 Editorial office Road Transport Media, First 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.

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Got something to say?

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Interview: Willie Paterson

The best of both worlds

The contract hire sector has seen some high profile failures in recent months, but Asset Alliance Group continues to go from strength to strength, as chief executive Willie Paterson tells Steve Hobson

W

ith 5,000 owned assets plus a further 1,500 under fleet management contracts, Asset Alliance Group has grown steadily since it was founded in 2010 in Wolverhampton by Willie Paterson.

In 2011, private equity investor Cabot Square Capital put up £25m to kickstart the growth strategy of the group which started with the acquisition of ATE Truck and Trailers Sales in what the company calls “a unique coming together of two sides of the industry, combining the expertise of a CV leasing company with a highly successful retailer of used commercial vehicles”. Cabot Square retains a majority stake in Asset Alliance Group, which acquired assets worth £78m in 2018 and earlier this year added £20m to its existing £155m asset-based lending facility with a group of banks led by RBS. Despite the concerns surrounding the UK truck market, Paterson – a former director of commercial asset finance at the Alliance & Leicester, which later became part of Santander – remains a perennial optimist.

“I’m very definitely a glass half-full type of guy,” he says. “For sure there’s uncertainty in the market, more in the last few months than in the previous two-and-ahalf years. There’s been an element of ‘let’s just hang on and see where this is really going to go’, but we’ve seen that before, with Euro-6 and the Scottish independence referendum.

“Do I know what’s going to happen? No, I don’t. Do I know the impact it’s going to have on the supply chain of my product? No, I don’t. Do I know what’s going to

14 MotorTransport

happen to the cost of my funds? A little bit.

“We have invested as heavily as ever. We’ve invested in systems, in people and in our geographic positioning.”

In keeping with its model of combining contract hire with truck sales, Asset Alliance Group acquired wellknown truck dealership Hanbury Riverside in August 2018 and has since relocated it to premises more than four times the previous size.

“It’s going really well and has integrated well so we want to push it forward,” says Paterson. “Whatever happens with Brexit, you’re going to want to have your sandwiches the next day, and I want to be able to supply the truck to the guy who’s bringing those sandwiches.

We’ve made quite a lot of changes to our business in the last three years to shorten the lifespan in our assets.

“We’ve got the youngest fleet in the market. It’s entirely Euro-6, it’s entirely positioned to be able to react quickly to environmental controls and financial changes. We’ve got it as nimble as we possibly can, and we’ve tried to make sure that the relationships we have with our suppliers are as close as possible.

“Yes, there’s going to be change and uncertainty. Has it stopped me investing? Absolutely not. I’m investing maybe slightly differently, but we’ve upped our investment to a significantly different level.”

Duty calls

The threat of 22% import duties on new vehicles meant many operators brought forward purchases ahead of the original Brexit date of 31 March. Since then Brexit has been delayed and the proposed tariffs cut to 10% and Asset Alliance Group has responded accordingly.

“We always forward buy,” says Paterson. “We had done a deal with as many of the manufacturers as we could, to bring in as strong a number of assets as we could without putting us in a prejudiced position.

“I spoke to two very big commercial manufacturers and said, ‘what do we need to be doing differently? Would it be better if I give you a three-year commitment?’ There’s been a lot of worry in the industry for the last two or three years. We’ve seen three of our competitors fail. I spent a lot of time talking to the manufacturers, to the banks, to our investors, to our customers, to absolutely assure them that we had a completely different business.

“We’re a long-term player. We’re working on our next four-year plan at the moment. There is a huge number of variables in there, but we should have a strategy for everything.”

While cost is one of those variables, Paterson says it is not the be all and end all. “I don’t think price is the biggest issue,” he says. “Certainty of supply, parts and support, and confidence in longevity are the biggest 20.1.20

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issues. We’ve come through a period where customers are getting phone calls out of the blue and being told that their assets are going to be repossessed, after they’ve paid the bills perfectly. We’re seeing customers who just say, ‘how could this have happened?’

“For me, it’s all about certainty, confidence and understanding that you’ve got a partnership. We’re in a fortunate position; our business has grown to a reasonable size now, and our job is to leverage those relationships and distribute them through our network of customers.”

The longer Brexit dragged on in 2019 the greater the risk the uncertainty would cause an economic slowdown and a consequent increase in failures among hauliers already working on wafer thin margins.

“We monitor the portfolio very closely and I have a very good balance in my portfolio with manufacturers,” says Paterson. “That’s actually a good thing because it forces me to remain independent and spread the portfolio concentration across various manufacturers.

“We look at customer exposure and we have internal guidelines and parameters. We look at our residual risk portfolio and we try and make sure that we don’t have too many of any one type of truck coming back at any one time in the future.

“The issue is not when you put the deal on the road, the issue is when the deal’s coming back. Most of the bank funders don’t get that. I have an RV system that we’ve developed and it shows me what my residual exposure is to every manufacturer and to every customer.

“So, if a big customer comes to me and says they want 100 6x2 tractors, push axles, automatic gearboxes, etc, for a certain period, I would go and pull the data and see what we’ve got coming back in that period. If we don’t have an awful lot I think ‘yes, great, that balances it’. We can then be a bit more competitive than we may otherwise have been.”

Despite the industry seeing three business failures in recent times, Paterson says there are still some “crazy” offers out there.

“One of the biggest banks in the UK has just put out a crazy rate because they are clearly not making targets,” he says. “I’ve worked in banking all my life and I under20.1.20

stand what the drivers of that behaviour are. We will do the best deals we can and offer the most competitive package we can. It’s a robust package. It works. If you pay your bills, that truck is yours for the period, and the way I’ve structured my business is that it can’t be taken off them.

“The way we fund our business and the way we invest is entirely different from those three businesses, and in fact, most of our competitors.”

BANKER’S BONUS: Asset Alliance Group chief executive Willie Paterson says he is applying analytic skills gained from his career in banking, plus a closeness to customers and suppliers, to drive the business

The young ones

The model is clearly working as the business has grown 50% year-on-year for the last four years. It benefited from one of the recent contract hire failures in Scotland, buying out about 1,000 assets “pretty much overnight”. “We’ve grown in Scotland significantly,” says Paterson. “In fact, Scotland had its best month ever in the summer, and it did better than anywhere else in the country.”

He says the firm also has “a very strict target” for growing the national fleet in the next three years.

“We’ve been very deliberate in the way we have changed the fleet renewal, so we’re a finance company as well as a contract hire company and a small rental company,” he says. “Getting that balance right is the really important bit. We deliberately wanted to get the fleet as young as possible. Think of change as a sine curve – from Euro-5 to Euro-6 or from diesel to electric – and we have a strategy that says, ‘I have a fleet of 5,000 vehicles that we change every three years’. At certain points, it’s spot on and at some points you get a bit of an advantage. At other points you can be miles out.

“Our strategy is to try and stay as close to that curve as we can, so that there’s a maximum level of risk at any point in time. That’s the banker in me!

“As my fleet’s all Euro-6, which I think is the right place to be right now, certainly in the heavy area, then my risk is very low, which means I can invest in other areas.

“If my assets are funded in a way that I can flexibly change them, then I can change my customer’s fleet very quickly. We’re trying to be as close to the market as we can. We forward-order vehicles every year, based on a new business pipeline from my divisional heads. ➜ 16 MotorTransport 15

Interview: Willie Paterson For custom-specified assets, we go and speak to the customer and then it’s a specific order.

“We would be a very large buyer of slots with manufacturers and we try and predict which manufacturers are going to peak at a certain time.

“Mercedes-Benz was the early adopter of Euro-6, and we went very heavy with Mercedes at that point. We continue to buy a lot of Mercedes product.

“Then DAF came out with a new range of vehicles that became more fuel efficient, so the market followed that.

Volvo then reacted to that. We are not tied to any manufacturer, we are independent, to give our customer exactly what they need, and exactly what’s right for them.”

While the shift from Euro-5 to Euro-6 was not without its issues, the rate of change from diesel to alternative fuels will be even harder to predict. While local authority ultra-low emissions zones will force some operators to adopt low emissions vehicles, the national picture is less clear. “We have got electric vehicles in our fleet,” says Paterson. “We’ve got hydrogen vehicles and smart hybrids, mostly in the bus business as our bus business has a big exposure to TfL. That’s really good for us because we can have a peek over the fence and try to understand what’s happening.

“We sit down with the technical director at companies like Alexander Dennis and say, ‘what do you think is happening? Where are the changes? What do we need to be thinking about? What do we need to learn? What’s going to jump me to the front of the queue of change?’

“For most of our customers, there is no one fix. The only safe option at the moment is Euro-6, hence why we have a complete brand new fleet of Euro-6 vehicles.

“Electric will work in the light truck area. It doesn’t work for everybody and we believe there’s a big future in hydrogen. I was a banker for 30 years, so I’m trained to be sceptical. I would be the first guy to say, ‘no, that’s not doable’ but I’ve changed my opinions rapidly in the last two years. We’ve spoken to the manufacturers and we’ve spoken to the fuel companies.

“They are rapidly changing what a fuel station looks like. There are already three hydrogen stations in Scotland, and by the end of the year there will be 15. I don’t think it’ll change with the majority of fleets but with some fleets it’ll change very quickly.

“I am being told that is the only option that will hit those [EU carbon reduction] targets, and I know one manufacturer is committing to it.”

Take a break

What this means is that customers are increasingly demanding contracts with break clauses so they can take advantage of new technology as it appears.

“Customers with four-year contracts have been replacing vehicles at 18 or 24 months because it can improve efficiency,” says Paterson. “The truck’s not necessarily cheaper, but it gives a better whole life cost.

“It also helps me keep my fleet younger. Because of the way I fund my business, it allows me to do that. I can be a lot sharper and a lot more reactive to the customer’s needs than some of our competitors.”

Because Asset Alliance Group includes used vehicle retailing it is able to get the maximum residual value from vehicles coming back from contract hire and leasing customers.

“I think we’re the only player in the truck finance market that is using every single channel,” says Paterson. “We bought ATE and Hanbury Riverside, we have a rental proposition, we have export and trade capabilities, we sell at auction. We are able to use every exit strategy.

“I am looking at how we can become more efficient and retail is a key part of our growth. We’ve invested heavily in Hanbury because I want to expand what they do. They’ve just moved to their bigger, purpose-built premises and added trailers, we are seriously looking at opening another retail depot.”

16 MotorTransport

MODERN FAMILY: All the firm’s conventional fuel vehicles are Euro-6, maximising options for disposal

In the last two years, Paterson has “significantly changed” the way Asset Alliance Group handles the maintenance and refurbishment of its fleet from the Wolverhampton HQ. “When we bought the ATE business, we set up a 120,000sq ft VMU with an ATF, sandblasting, fabrication and paint shop,” he says. “In the last few years, I’ve significantly changed that, so the facilities are still here but we’ve brought in experts in every sector instead of us trying to manage all that. The old ATE business was traditionally bringing back an eight-year-old truck, refurbing it and selling it. My fleet won’t be any older than five years typically, so we don’t need to do that.

“We brought C&C on board to take over the workshop and the fabrication. Another company has taken over the ATF and the VMU, but we have great relationships with every manufacturer. I’ve got a 24-hour call centre based here, so all the fleet management is done in-house. We’ve invested heavily in the technology and the people that run it, and we will grow that and utilise our network of third-party vendors. Our new computer system is very focused on that. We’re partnering with R2C and CLS to link their networks with our platforms.”

Asset Alliance Group’s headcount fell slightly when it outsourced its workshops but has since risen back to 107 with its consistent growth.

“The strategy is to take that up by 25% over the next two-and-a-half years,” says Paterson. “That’s what we think we’re going to need to grow the business.”

Numbers game

As operators look to work trucks harder, even if they come back after two years rather than three or four, they often have more miles on the clock than before.

“We’re a specialist commercial vehicle lender, so we understand the impact of mileage and use, so our return conditions are very specific,” says Paterson. “Our factfinding, when we speak to customers, is very specific.

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360º Camera Monitor Systems 4 cameras, 1 image, 0 blind spots

We want to know what they’re using it for because you’d be surprised how many customers just do what they’ve always done, and we like to challenge that.

“We like to say, ‘hang on a second, I know you’re asking me for this spec and I know you’re telling me that you want 160,000km per annum, but for the last two years you’ve been doing 250,000km, and it’s not cost-effective to do it that way’.

“It used to be 120,000km per annum and that was a big mileage. Now it’s 160,000km to 250,000km and so the end of life value in a truck is changing too.

“It’s only retail if it’s three years old and under 500,000km now. Hence, I’ve made my fleet younger. If I’ve got a customer that’s clearly heading to mileage above that, we monitor it every six weeks. We’ve got the data coming into our business. It sends up flags that say, ‘Mr Customer, are you aware that something’s not right?

You’ve got one vehicle that’s an anomaly.’

“We don’t want an argument after three years because I’ve got a truck that’s done 900,000km when I thought it was going to have 450,000km on it. They’ve got a bill, I’ve got a difficult asset to sell. So we’re better having that conversation on day one.”

The technology required to achieve Euro-6 means that these vehicles will not run on high sulphur diesel found in many traditional export markets such as Africa, closing off this particular disposal route for returning Euro-6 trucks.

“It’s been difficult,” agrees Paterson. “The exchange rate didn’t help. I’ve got a lot of Euro-6 Mercedes. We were the first adopter, and we bought a lot of the early Actros MP3. It was the best tractor in the world to export.

“For the later Euro-6s we have worked very closely with Mercedes and we have come up with a solution. We’re changing the specification of the truck, and they’re changing the availability of parts in that region to do it. By working in collaboration we’re now managing to export Euro-6 Mercedes into Africa.” ■ 20.1.20

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MotorTransport 17

Alternative fuels

Believe in biofuel What role can renewable fuels really play in decarbonising heavy goods vehicles?

Laura Reeve finds out

D

ecarbonising HGVs is one of the greatest challenges facing the industry. While no single solution can achieve the required carbon reductions (zero emissions by 2050), biofuels offer an immediate improvement, without the requirement for large capital investment.

Biofuels derived from living matter or waste are classed as renewable because, unlike fossil fuels, they are not a finite resource and are less harmful to the environment.

Biofuel is either blended with conventional fuel to lower greenhouse gas (GHG) emissions or can be used as standalone 100% renewable fuel. While biofuel is renewable in theory, it relies on the feedstock (the raw material used to make the fuel) being produced in a sustainable manner – more important since the inception of the Renewable Transport Fuel Obligation (RTFO) in 2008.

The RTFO supports the UK government’s policy on reducing GHG emissions from vehicles by encouraging the production of biofuels that reduce environmental damage. Under the RTFO, large suppliers of road transport and non-road mobile machinery (NRMM) fuel in the UK must demonstrate that a percentage of the fuel supplied comes from renewable and sustainable sources.

These targets mirror the Renewable Energy Directive (RED), the EU policy covering the production of energy from renewable sources.

In 2018, there were 1,518 million litres equivalent of verified renewable fuels supplied to the UK market (58% biodiesel, 36% bioethanol, 2% biomethanol plus others in small amounts). Biodiesel had risen to a new peak.

Biodiesel can be classed as first or second generation.

Jonathan Murray is policy and operations director of the Low Carbon Vehicle Partnership (LowCVP), an independent body aiming to accelerate the transition to low emission transport. He says: “While there are shades of grey in the definition, the main differences between first and second generation biofuels are in the feedstocks and production processes.”

HARVEST FOR THE WORLD: Prax Group includes Harvest Energy, which aims to be the leading fuels supplier to independent retailers

AVAILABILITY IS EVERYTHING Sourcing biofuel is location-dependent and no reliable list of suppliers or refuelling stations currently exists for blends exceeding B7 or for paraffinic fuels.

LowCVP is working on a low carbon fuel certification scheme, which will verify fuel suppliers and fuel to give transport operators an extra layer of confidence in the supply process. There is also a balance between supply and demand – biofuel suppliers can only increase supply if there is a market demand, but market demand is driven by local availability.

Suppliers are vague on pricing and availability but higher-blend biodiesel is cheaper than standard diesel while HVO is understood to be more expensive.

HVO can be sourced from suppliers including Crown Oil, Green Biofuels and Prax in the UK. Supply is also more accessible for companies with their own source of UCO. McDonald’s, for example, says that it “recycles” UCO from its kitchens into biodiesel blends B30, B50, B70 and B100, depending on the time of year and the ambient temperature. McDonald’s estimates that it makes 532,000 litres of biodiesel from approximately 618,000 litres of collected UCO, which fuels approximately half of its delivery fleet, but due to increased efficiency of its frying vats the amount of waste oil it produces has decreased.

18 MotorTransport

First generation biodiesels, including fatty acid methyl esters (FAME), produced from edible feedstocks such as rapeseed oil or other oil yielding crops, are in decline.

FAME can also be classed as second generation if it is produced from feedstocks that are not suitable for human consumption (classed as waste products) such as animal fats and tallow or used cooking oil (UCO).

Current pump diesel meeting the RTFO contains up to 7% FAME (B7), a blend of 93% fossil diesel and 7% biodiesel. Much higher blends – up to 100% (B100) – are also available.

Second generation biofuels also include synthetic natural gas to liquid (GTL) or biomass to liquid (BTL) and are sometimes referred to as ‘XTL’ or ‘paraffinic fuels’. A second generation type gaining popularity is hydrotreated vegetable oil (HVO) but it is typically more expensive than standard diesel and is in limited supply in the UK. HVO is produced from vegetable fats and oils, but unlike regular biodiesel, hydrogen is used as a catalyst in the creation process instead of methanol.

Often referred to as ‘drop-in’ biofuel, HVO is interchangeable with conventional diesel since the chemical composition is comparable.

While algae show potential for third generation biofuel production, it is so far difficult to produce economically.

Carbon reduction

When biodiesel is produced from crops, it results in reduced GHGs, but these feedstocks take up land and water resources which could otherwise be used for food.

Peter Zonneveld, VP sales, Europe and APAC at Neste Oil, explains: “The smallest carbon footprint, a reduction of 85% to 90% compared to traditional diesel, is achieved when fuel produced from wastes and residues is used.”

Using waste products offers many benefits – the ability to produce fuel with lower GHG emissions, without using crop land, and the possibility to do something useful with products that are otherwise difficult to dispose of safely. In many cases, waste products converted to biofuels provide higher energy output than crop-based feedstocks.

Initially the RTFO set out to ensure that at least 10% of transport and NRMM fuel was to be from renewable sources by 2020, in line with the RED, but the criteria set for fuel suppliers and the incentives offered to them have advanced over the years. In the early years of the RTFO, there was a high proportion of crop-based feedstocks. The DfT admits that indirect land use change (ILUC) occurred, where agricultural land previously 20.1.20

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destined for food and feed markets was diverted to biofuel production. Taking ILUC into account, the total GHG savings for these years was low and was even negative during the first year. A move to waste feedstocks was accelerated in 2011 when the RTFO introduced mandatory sustainability criteria and other incentives for noncrop based feedstocks. Obligated fuel suppliers (those supplying more than 450,000 litres) gain tradable Renewable Transport Fuel Certificates (RTFCs) under the RTFO – one certificate is claimed for every litre of renewable fuel supplied. In 2011, suppliers were further incentivised to contribute fuels produced from waste by receiving double the certificates per litre, known as double counting. As a result, in 2018, waste feedstocks reached 69% of all verified renewable fuel supply, with UCO accounting for 77% of total biodiesel.

Figuring it out

The Fuel Quality Directive (FQD) works alongside the RED to regulate biofuel sustainability. Together they outline that GHG emissions from biofuels must be lower than from the fossil fuel they replace (at least 50% for installations in operation before 5 October 2015 and 60% for installations after that). The biofuel feedstocks must not be sourced from land with high biodiversity or high carbon stock, to incentivise those feedstocks with the least energy intensiveness. Under the RTFO, those supplying renewable fuels must meet these targets to be entitled to RTFCs. In 2018, all suppliers met their GHG obligation and renewable fuel in the UK delivered an average GHG saving of 78% compared to fossil fuels, reducing to 72% when ILUC is accounted for. Prax Petroleum, a leading importer, blender and wholesaler of petroleum products in the UK, had the highest GHG saving with 86% in 2018, with all of its verified fuel produced from waste feedstocks.

The DfT reports that verified renewable fuel supplied in the UK in 2018 constituted 4% of total transport and NRMM fuel, and although 2019 figures are incomplete, because companies have up to seven months from the end of the year to apply for RTFCs, the second provisional report states that the 1,561m litres of renewable fuel supplied constituted 4.9% of transport and NRMM fuel for the year. If double counted fuel from waste feedstocks is included, however, the 2018 figure is 6.76% and the provisional 2019 figure is 8.13% (based on 66% waste feedstocks), meaning the target of 10% is closer to being achieved than it initially appears.

In 2018 the RTFO refined its policy again to reflect amended targets. This set a maximum cap on the cropderived biofuels that could be counted towards renewable transport targets (a cap of 4% of fuel in 2018, reducing annually from 2021 to reach 2% in 2032) and set an additional target for advanced waste-based renewable fuels (starting at 0.1% in 2019, rising to 2.8% in 2032).

The amendment included renewable fuel volume targets, increasing year-on-year to 12.4% biofuel mix by 2032.

Interestingly, the volume target for 2020 was increased from the original 4.75% to 9.75%, which can be made up

20.1.20

DO ENGINES NEED MODIFYING FOR BIODIESEL? Truck manufacturers agree that paraffinic fuels such as HVO can be used in standard diesel engines without modification or warranty implication – provided they meet EN15940 – but in most cases FAME biodiesel is limited by maximum blend percentage and has implications for the maintenance regime and warranty. When biodiesel above B7 is permitted, some vehicle modification may be required.

DAF

DAF approves FAME biodiesel use but limits maximum blend percentage and says it has implications for maintenance. The PX-4, PX-5 and PX-7 engines are limited to B20 and the MX-11 and MX-13 are limited to B30.

IVECO

IVECO approves HVO/XTL but limits FAME biodiesel to 7%. The brand is concentrating its efforts on promoting the use of natural gas.

MAN

Above B7 FAME and up to B100, MAN offers an option on its most popular D26 engine only and specifies more frequent service intervals. MAN also puts an extended warranty on the engine.

Mercedes-Benz

Mercedes-Benz no longer authorises its new trucks to run on blends higher than 7% FAME (previously the 450hp OM471 engine could be ordered with factory biodiesel preparation). The manufacturer is concentrating on electric drive.

Scania

Above 7% FAME, factory order preparations are required but are limited to Euro-6 320hp and 360hp 12-litre engines, 410hp and 450hp 13-litre engines and to the 580hp V8 engine. Trucks must be ordered with complete preparation kits and undergo a specific service regime.

Volvo

Volvo offers an adapted engine for trucks to operate on FAME biodiesel between B7 and B100 but the manufacturer says that it does not “push or promote” this option because it believes alternative second generation biofuels are “the way forward”. For higher blend FAME fuels, the engine must be ordered as a specific design, the service intervals are more frequent and the exhaust after-treatment system life is reduced. In most cases where higher blend FAME is permitted, there are no warranty implications provided the fuel adheres to the relevant European standards and the recommended servicing regime is followed.

of double counting waste-based fuels. The revised RED includes targets for specific advanced ‘development’ fuels and £22m of UK government funding is available for waste-based, low carbon fuel development.

While biofuel production legislation has been gradual, it has come a long way since 2008, with suppliers being motivated to come up with better ways of reducing GHG emissions. The DfT expects UK transport sector renewable fuel use to double within 15 years. LowCVP’s Murray sums up: “The relative ease of use, accessibility and cost effectiveness of biofuels offer practical solutions for operators seeking to reduce carbon emissions, since these fuels can be used in existing truck fleets.” ■

MotorTransport 19

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