Sobering statistics about export and the EU have been given many road haulage companies food for thought. 44% of all UK exports go to EU countries, many of which are carried by road. A combination of concern about the outcomes of Brexit, a decline in recruitment and substantial pain points in the road haulage world have led to some smaller organisations failing to ride the tide, so what’s the future for road haulage and how do you find a partner you can rely on?
New challenges for old supply chain routes
Supply chain experts have spent most of the last year pointing out that political change happens much faster than changes in patterns of trade – this means that long after Brexit has changed the political landscape, the economic benefits of road haulage are likely to outweigh any substantial changes to transport. However, over time Brexit will inevitably create bottlenecks for road hauliers as increased administration around borders slows down transport, with knock-on effects for the entire logistics industry
Pain points for road haulage internationally
Home Office figures show 3,522 fines for ‘clandestine entrants’ were issued to HGV drivers or their employers in 2016/17. This is a 12% rise on 2015 and shows that illegal immigrants are making life hard for drivers entering the UK from most European ports, although Calais is still proving to be the bane of drivers.
Pain points for road haulage inside the UK
London Mayor Sadiq Khan has implemented a £100 daily charge for HGVs driving in the Low Emission Zone in London. Five other cities: Birmingham, Derby, Leeds, Southampton and Nottingham are set to introduce Clean Air Zones by 2020. Many believe that these Zones disproportionally affect smaller road hauliers and make it a struggle for them to manage cashflow.
Driver shortages may impact the supply chain
One potential negative impact of the Brexit vote is that the road haulage industry, which relies strongly on drivers from EU member states, may find it difficult to fully service the supply chains it’s currently involved in. Steps already in place include boosting the apprenticeship programme through a Trailblazer initiative, encouraging more women to enter the road haulage industry, and training existing drivers to be able to handle a wider range of vehicles.
Fuel duty still the highest in the EU
While the Chancellor has extended a freeze on fuel duty rate, UK diesel fuel is still the highest in the EU. The cost of diesel impacts road haulage cash flows, organisational profits and limits competitiveness outside the UK as well as inside it.
Bad debt burdens road haulage firms
A rarely discussed factor is the amount of bad debt that haulier companies are carrying. It’s become increasingly common for clients to default on their road haulage expenses and often this leaves a haulier with a load – sometimes perishable – that they need to dispose of, as well as with an unpaid bill. Defaulting customers are more likely where the client business has no track record but sadly, it’s difficult for a road haulage company to conduct enough due diligence to be sure they will get paid in an industry where picking up contracts at speed is the norm.
International order fulfilment hampered by airport constraints
Customers increasingly buy from China or the USA with an expectation of domestic delivery times. Air freight is the limiting factor on order fulfilment, but it’s not just the amount of freight flights to and from the UK that cause problems. Logistical difficulties in getting freighted goods to and from airports are commonplace. Received wisdom suggested that whenever demand exceeded capacity, EU airports could be used as the ‘receiving port’ with the goods then being transported overland or by ferry to their UK destination, or vice versa. Brexit has made this idea largely untenable and led to a focus on the amount of international air freight that can be managed through the UK’s current airports – a figure that has not increased since 2013, while online commerce has doubled during the same period.
How to beat the road haulage blues
International third party transport providers are likely to experience increased costs as Brexit pushes up operating costs. Flexibility is key to keeping costs in balance, so being able to choose between in house and 3PL services may make the different to success with logistics.
3PL warehousing gives organisations the chance to disperse their stock across a range of locations – this can reduce haulage costs and allow for more rapid order fulfilment.
Whilst avoiding Low Emission Zones may not always be possible, sophisticated logistics planning can allow many firms to benefit from skirting such Zones until last mile delivery. Exploring warehousing and transport options that might not currently be familiar could help many organisations reduce costs and avoid bottleneck congestion.
Choose a road haulier who has expertise in packing and transporting, like DMG Freight Services – police claim that badly packed loads attract the attention of illegal immigrants because they offer hiding places. Similarly, experienced road haulage firms always ensure they have good vehicle parking and outside storage to prevent damage or pilferage so look out for this service when choosing who to work with.
Pinch points for order fulfilment include ports and airports, and conditions can vary by season as well as from local road works or infrastructure changes. Learning to utilise a range of ports, airports and warehousing offerings can give both importing and exporting organisations the scope to manage business cost and time effectively.