Ontruck analyses the current road transport situation and outlines the challenges for the sector in 2019

• Identify the main difficulties this work faces, which is key to a proper functioning UK economy.

London, 27 November 2018- Ontruck, a Spanish company operating in the UK specialising in regional road transport, has provided a snapshot into the current situation which this sector is facing, with the aim of identifying the challenges which will be faced in 2019.

The transport sector currently contributes £20bn towards national GDP according to “trading economics” carrying 1.4bn tonnes of freight by road in 2017. This is a significant factor in supporting the UK consumer based economy.

The industry is becoming increasingly polarised with larger operators completing acquisitions and dominating the marketplace whilst other operators are reducing fleets and becoming increasingly reliant on multiple subcontractors.

We are currently seeing a steady decrease in traded crude oil prices but this is not yet translating to lower diesel prices at the pump. This is more likely to impact smaller operators who may not have access to fuel deals directly linked to platts traded prices for crude. It can be very difficult to seek increased prices from customers when competing with a larger operator.

However, by far and away the issue concerning hauliers the most is the current skills and driver shortage - the average age of a UK HGV driver is 55. In the 2017 paragon survey 46% of respondents cited this as being the biggest industry problem with rising costs just 13% in the same survey. Many hauliers have commercial opportunities to grow their business but the lack of quality drivers prevents them from doing so. This impact is being felt by hauliers of all sizes however again larger operators are best placed to invest in solutions.

The Mobility Package legislation promoted by the European Commission remains in deadlock. The European Road Hauliers Association advocates the incorporation of measures to encourage fair competition and social protection. The proposals were originally made in the European Commission’s May 2017 Mobility Package, which covered driving and rest times, as well as the posting of workers and cabotage. All are aimed at improving both the working conditions for truck drivers and the enforcement of rules that are all too often broken. However it has not reached the necessary consensus for approval yet.

Transportation of goods by road is gradually moving towards digital transformation, and technology is increasingly being incorporated into the sector: trucks are equipped with geopositioning and navigation systems allowing them to find out about traffic incidents and to optimise routes; mobile applications such as Ontruck’s application in order to manage loads and fleets; tracking systems allowing them to know the status and location of loads etc. at all times.

Finally, the growing demand of e-commerce and home delivery generates some uncertainty, particularly regarding the last mile. Many cities are considering the introduction of clean air or low emission zones aiming to improve air quality and encourage alternative fuel vehicles. At the same time access and delivery restrictions are often inconsistent across boroughs with little understanding of the problems faced by hauliers. This leads to increased congestion and hold ups at drop off points.

The main challenges for 2019

Ontruck has identified four challenges that the Road Transport sector will face over the coming year:

1. The driver and skills shortage will be the biggest challenge to the industry going into next year. With costs to obtain a C+E licence reaching £3,000 plus and an estimated 45,000 drivers required to sustain the industry the cumulative investment is colossal. In addition attracting new recruits into what is considered an un sexy industry creates further challenges to overcome.
2. Disparity in competitiveness between large and small operators continues to be a problem. Larger operators carry more leverage in the market for procurement, can negotiate better payment terms and and get access to larger customers. There also continues to be a threat from international hauliers with significantly reduced operating costs obtaining a slice of the UK market particularly impacting continental operators. Businesses like Ontruck are well placed to help re balance this disparity by engaging with a wide range of hauliers bringing collective benefits to all of their partners.
3. Society is calling for greater responsibility from all economic sectors with respect to climate change. Transport is being directed towards a more efficient use of resources, priority being the optimisation of loads and reduce empty mileage that vehicles have. In this way, emissions and driver costs will be reduced, through few kilometres being travelled to move the same volume of goods. In addition influencing national and local government to develop policy to support these efficiencies will be needed to avoid additional journeys whilst navigating delivery window restrictions.
4. Alternative fuel vehicles in the transport sector are becoming increasingly important particularly between distribution centres and the last mile delivery. Using alternative fuels reduces CO2 emissions as well as sulphur oxides (SOx), Nitrogen oxide (NOx) and particulate pollutants in comparison to traditional fossil fuels. Furthermore, these vehicles will be able to access the centres of big cities without penalties applied to higher emitting alternatives. The problem once again will be vehicle prices and the productivity of electric trucks.