As long ago as November 2020, the British government set the UK on track to become the fastest nation in the G7 to decarbonise cars and vans. The target is for all new petrol and diesel cars and vans to be phased out by 2030. The government’s stated aim is to improve air quality in towns and cities, and to make electric motoring cheaper than petrol or diesel. The target here is for price parity to arrive by 2025. There has been a nil tax rate on zero emission vans since April 2021, and zero emission vans are also exempted from Vehicle Excise Duty. There’s a new derogation in this area, around driving licences too; any driver with a Category B (normal car) driving licence who undertakes a minimum five hours of mandatory training is allowed to drive an ‘alternatively fuelled heavy goods vehicle (HGV) of up to 4.25 tonnes. This is designed to prevent any penalisation for fleet operators switching to low emission vans. The Government also has a Future of Freight plan, designed to inspire millions of people to consider a career in logistics. Until quite recently this has been the extent of clear government intervention in logistics and warehousing, but things have just changed.
HGVs, zero emissions and warehousing
This spring, the UK government outlined an increased weight limit for HGVs which is designed to “support the transition to alternatively fuelled and zero emission vehicles (ZEVs)”. A number of bodies have called for axle weight to be included in the new proposals, to ensure that increased cargo loads can be used. ZEVs are generally heavier that traditional vehicles, which means a loss in payload for fleets transferring to zero emissions. This has a knock on effect right through the supply chain, including for warehouse operators, because lower volumes coming into and going out of warehouse space increases operating costs and reduces profit margins. There are around half a million goods vehicles in the UK, and around 98.8% of them use diesel, not only to make deliveries, but also to collect household waste, transport fuel etc.
Currently the government has increased the gross weight limit (GWL) of an HGV to 2 tonnes for a range of ZEVs and for certain alternatively fuelled vehicles (AFVs) the weight limit has been raised to one tonne. But without a proportionate increase in axle weights, this still limits payloads. This could affect the entire warehouse and logistics sector, causing price increases and even delivery delays.
Warehousing is also likely to be affected by the implications of tax breaks for ZEVs, because of the charge point issue. The government has also stated it will invest £1.3 billion into charging infrastructure for electric vehicles, including street, home and workplace charge points and that it will continue to provide grants for charge points in homes, workplaces and on-street until at least 2024/25.
However, that points to a problem for many warehouse spaces that aren’t in one of the 117 local authorities that have sought central government funding for on-street EV charge points. Warehousing may be limited in effectiveness by a partial approach to EVs, especially ZEVs, as these become more common in areas that have moved faster in this field. As an example, British start-up Tevva has been producing an electric 7.5-tonne truck with a range of up to 141 miles since January 2023 and by the end of the year, the company is planning to produce 1000 new trucks annually, a figure boosted by the launch in six months’ time of a hydrogen-electric range-extender variant, to be followed at the end of the year by a 19-tonne version using the same technology. This would be a substantial change to the HGV market in the UK, as in 2021 there were only 520 battery-electric powered lorries registered in the UK.
Zero Emission Vehicles and HGV drivers
There’s another substantial impact on warehousing, logistics and last mile delivery systems, and that is range and infrastructure. The Government has recognised this too – and in a recent initiative they committed to an £100 million investment from both industry and government to improve roadside facilities.
HGV drivers have long bemoaned the increasing sparseness of truck-stops and roadside services. ZEVs have a further limitation in delivery in that the driver has to recharge his or her vehicle – which may limit how long they can be on the road, the routes they can take and even queuing for access to charge points. It takes a long time to recharge a 2 tonne vehicle!
As a result, current operators of such services can bid for a percentage of the £52.5 million that the government is providing, as long as they agree to match fund that amount. It’s one of 33 actions to improve HGV stops and driver welfare, which is part of a larger campaign to improve recruitment and boost retention of drivers.
Hauliers are also highly concerned about security, as charging points can be in isolated and ill-lit areas and having vehicles static for long periods while they wait to charge can leave them open to attacks. In 2022, there were more than 5,000 recorded reports of freight crime in the UK with an aggregate value around £66 million.
High profile warehouse burglaries, such as the Sports Direct attack in 2020, with its £1 million haul, get all the headlines, but cargo theft is a constant problem for supply chains, and it increases insurance costs, reduces driver willingness to transit certain problem areas, and can inhibit business development on high risk routes. Warehouse rental can be heavily impacted by these issues, increasing rents in popular and ‘safe’ areas and making other areas into no-go zones. In addition, ZEVs will further influence logistics, one the one hand making it cheaper to run ZEVS on certain routes that have good infrastructure and making other routes, without that infrastructure, dependent on diesel transport which – in turn – will cost more and require offsets from other areas to remain competitive. Where warehousing has to service a full national, and often international, customer base – planning for order fulfilment will become increasingly complex and, potentially, costly.