May 17, 2017 - There are a number of questions currently unanswered. When will we trigger article 50? Will the Supreme.
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INDUSTRY PREDICTIONS 2017 VIEWS ON THE YEAR AHEAD FROM TRANSPORT & LOGISTICS LEADERS
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INTRODUCTION
CONTENTS
We’ve asked leaders from across the transport industry for their thoughts on 2016 and predictions for the year ahead. Let’s face it, 2016 saw plenty of challenges and unexpected issues, but will 2017 be a year of opportunity for the transport industry? Read on to find out...
RAY ASHWORTH
Each individual was asked the following three questions:
ANDY BOYLE
Managing Director, DAF Trucks UK
RICHARD BURNETT Chief Executive, Road Haulage Association Managing Director, A.B.E.
++ What was most unexpected about 2016?
VERITY CULLUM
++ What will be the biggest challenge for the industry in 2017?
PAUL DUGGAN
Marketing Manager, MAN Truck & Bus UK
++ What do you see as the biggest opportunities for the industry in 2017?
Company Director, Paul Duggan Consulting
NICK HAY Managing Director, Fowler Welch
ANDY JENKINS
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Director, SE Davis & Son Ltd
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GRAHAM LACKEY Managing Director, Brit European
RONAN QUIGLEY Head of Central Operations UK, Aryzta
NADEEM RAZA Chief Executive Officer, Microlise
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KEVIN RICHARDSON Chief Executive, Chartered Institute of Logistics and Transport
CHRISTOPHER WALTON Managing Editor, Road Transport Media
DAVID WELLS Chief Executive, Freight Transport Association
RAY ASHWORTH Managing Director, DAF Trucks UK
BIGGEST CHALLENGES The impact on costs of Brexit. We have seen an 18% increase in costs since Brexit due to the fall of sterling against the Euro. We are concerned over London’s plans for a ULEZ in 2019, and its Direct Vision standards for Vulnerable Road Users with the focus yet again on HGVs. Some 9,400 deaths in London are blamed on poor air quality. TfL’s own figures show that only 400 trucks enter the congestion zone each day, compared with 7,000 cars and 2,000 vans. London is focussing on achieving lower emissions from the same number of polluters rather than lowering the number of polluters, which has the benefit of reducing congestions as well. Freight cannot rely on public transport, but people can. ULEZ is based on Euro VI emissions standards. Euro VI HGVs meet the emissions standards at all operating cycles, yet Euro VI for diesel cars and vans, miss the standard at all operating cycles even when empty. Direct Vision standards are focused around an expensive option from a German truck manufacturer. We are also concerned that cabs with low level seating do not provide the optimum position for longer distance driving on motorways at 56 mph.
BIGGEST OPPORTUNITIES FOR 2017 The truck market will continue to be strong; it is becoming increasingly resilient to major changes and announcements. We predict the market for trucks over 6 tonnes will be 42,000. The industry will continue to rethink specifications of vehicles for urban operation, including diesel/electric hybrids in the medium term and new cab designs for 2021 that incorporated direct vision standards.
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RICHARD BURNETT Chief Executive, Road Haulage Association
MOST UNEXPECTED
BIGGEST CHALLENGES
Failure to see that the UK would vote Leave, given the vigour of the Brexiteers compared with Remainers and the unpopularity of Brussels; an unexplained sudden fall in cyclist/HGV deaths in London - seven of nine deaths in 2015 to just three in eight in 2016 (to November 18); all three artics, none turning left; the discovery that buses have as many cyclist fatalities per mile as trucks in London, even with their to-the-ground windows.
Re-branding itself. The RHA made a start with National Lorry Week, which can grow in 2017, and helping to get the Trailblazer apprenticeships in place with accessible funding. We need to change the image - seen by customers, government, the public and people we would like to recruit. And the industry needs to use peer pressure to help consign to history two behaviours: aggressive tail-gating; and the use of hand-held mobile phones while driving.
BIGGEST OPPORTUNITIES FOR 2017 The new Trailblazer apprenticeships - new, well-funded schemes for HGV driver, traffic office and warehouse operative. They open opportunities for all businesses, from owner-drivers upwards, to get more involved in recruitment, setting expectations and driving up quality. The other area is IT and telematics, key enablers for driving up productivity - the key economic concept in 2017 - not to mention cutting congestion, carbon and pollution. The RHA is pressing government to help with modest funding. We could do a lot with just a small fraction of the £25 million it has wasted on promoting methane as a lorry fuel.
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ANDY BOYLE Managing Director, A.B.E.
MOST UNEXPECTED
BIGGEST CHALLENGES
The vote for Brexit. It was the answer which I voted for, but was very surprised when 17 million odd voted for out versus 16 million odd to remain. Further, the Remoaners proved to be very bad losers, but no matter how much they preached the Gospel of Doom, the wheels did not fall off the economy.
Making sure that the wheels do not fall off when negotiations to leave get under way - assuming the Remoaners do not manage to derail Brexit with legal challenges before getting to the starting gate. Politicians and civil servants need to realise that the vote for out was not just an isolated aberration by the electorate - look what else happened in 2016. Did they not notice what occurred in the USA or Austria and Italy (nearly).
BIGGEST OPPORTUNITIES FOR 2017 If you believe in fairies it will be that the transport industry works collaboratively i.e. to stop cutting the ground from under each other’s feet and by trying to understand that profit is not a dirty word. There are many hauliers who already understand this theory and have made sound profits and moved forward these last three years or so. Let us hope there will be more in 2017. When Brexit negotiations get under way we may well see some slowdown in the economy, but don’t let those who see their glass as half empty rule the day. Over the horizon when we are free of the unelected Eurocrats in Brussels the outlook will look much brighter and we WILL forge trade deals with the rest of the world.
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VERITY CULLUM Marketing Manager, MAN Truck & Bus UK
MOST UNEXPECTED
BIGGEST CHALLENGES
Obviously there were some unexpected political results, especially relevant for us in the UK was the vote to leave the EU and the effects of the referendum result are starting to be seen in the economy and exchange rates.
In 2017 there will be continued economic challenges presented to us all as a result of the political Brexit process. The uncertainty created will impact the size of the market for vehicle sales and currency fluctuations will effect profit margins. The biggest challenge will be to provide stability, but this was achieved during the last economic crisis and we hope that as an industry we have learnt from that experience.
BIGGEST OPPORTUNITIES FOR 2017 With profit margins in focus, reducing whole life vehicle cost and decreases in capital investment will offer massive opportunities for suppliers to offer more value from their products, by offering smarter ways of working and flexible solutions. 24 / 7 working as a result of more mobile and tablet usage and increased connectivity see new ways of thinking across the industry from changing the way we share and consume news, to product demonstrations, to smarter dialogue and customer focus; the possibilities here are endless.
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PAUL DUGGAN Company Director, Paul Duggan Consulting
MOST UNEXPECTED
BIGGEST CHALLENGES
In my mind, the decision to leave the EU was a surprise given most people think that it will cause major disruption. I feel we now face a few bumpy years while we negotiate the best possible relationship with the EU. In terms of the effect on the transport industry, uncertainty over for instance customs changes, foreign drivers and warehouse staff needs clarification. Long term I believe the future will be bright for the UK outside the EU.
I don’t see one major challenge but I do see a number of trends: 1. Fuel prices are uncertain. In all probability they will increase, which given the tightness of margins in our industry means increased pressure on profits. 2. Brexit will have an effect and is a wild card that we all need to be mindful of. 3. Safety will continue to be a focus as more people take up cycling with the almost inevitable clash between those and HGV’s in our already crowded urban areas. More regulations will no doubt follow. 4. The environment will force operational challenges. In London regulations will change and other cities look likely to enforce low emission zones.
BIGGEST OPPORTUNITIES FOR 2017 I would see the major opportunities around embracing new technology to effect step changes in operations. This needs to be done in a managed way through proper projects. With telematics now being able to deliver major changes if implemented properly, I see this as a major opportunity.
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NICK HAY Managing Director, Fowler Welch
MOST UNEXPECTED
BIGGEST CHALLENGES
It is hard to single out one event given the Brexit vote and Donald Trump’s success. Regardless of your preference on either of these outcomes, most would agree they were a shock. What is perhaps the more unexpected is the inability of the pollsters and press to read the mood of the electorate - the days of forecasting political outcomes accurately appear to be over for now.
Uncertainty - the speed and detail of Brexit remains unclear this is uncharted territory for all involved. This has the potential to create two challenges in 2017; the impact on exchange rates and the attractiveness of the UK as a place of work. Exchange rates and willingness to invest by our customers will lead to commercial pressure in the year ahead. Combining this with the need to re-assure our workforce will be a challenge whilst the detail of Brexit unfolds.
BIGGEST OPPORTUNITIES FOR 2017 The adage that the only certainty in life is uncertainty is as true as ever; the political landscape, increased connectivity and associated data, legislation and for Fowler Welch, new entrants to an already competitive food retail market place with Amazon and the rise of the discounters. Each of these factors will allow opportunities to innovate, collaborate and improve. The first key opportunity will be to positively react to the apprentice levy in order to continue our journey toward being an employer of choice and creating exciting logistics careers. The second key opportunity will be to provide innovate solutions to our customers to improve their service and costs through understanding their business.
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ANDY JENKINS Director, SE Davis & Son Ltd
MOST UNEXPECTED
BIGGEST CHALLENGES
Given that much of our work revolves around aggregates washing and thus construction, and that our sector is usually the first casualty during any period of economic uncertainty, it was a pleasant surprise that our sector remained busy after the “Brexit” vote for the UK to leave “Europe”. In fact if anything, since the vote, we have seen our workload increase significantly.
I believe that the biggest challenge for our industry during 2017 will be the ability to continue to recruit sufficient numbers of good quality staff across all functions within our organisations to enable them to prosper and grow.
BIGGEST OPPORTUNITIES FOR 2017 Assuming that the UK does begin it’s “Brexit” during 2017, the industry should actively seek to shape any changes in regulation to its own benefit, to increase its flexibility and reduce ‘red-tape’. This may include working to our current (or amended) drivers hours regulations instead of also having to adhere to the Working Time Regulations/Road Transport Directive; increasing vehicle weights and dimensions to reflect engineering advances made over recent years; or increasing flexibility for the delivery and content of the Drivers CPC.
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GRAHAM LACKEY Managing Director, Brit European
MOST UNEXPECTED
BIGGEST CHALLENGES
The reactions post the Brexit vote and US Presidential votes. What I mean by this is that clearly a narrow majority in both cases want change and voted accordingly, yet there remains almost 50% on the losing side of the vote who seem unable to embrace change or see it (change) as a bad thing. This is surprising for me given that we live in a world where change driven by technology and globalisation happens faster and faster. As an economy and as a transport sector, this is holding us back and part of the reason we have such significant structural issues such as decaying transport infrastructure and severe HGV driver shortages?
Human resources...both qualified, good quality drivers and the same for staff and junior management. The industry as a whole needs to attract new people in at all levels and appeal across gender and social backgrounds better than it has done for many years.
BIGGEST OPPORTUNITIES FOR 2017 Cross company collaboration giving a more dynamic approach to logistics supply chain engineering. I believe we have been slow to work together as an industry with those who have complementary skills and resources to deliver a better (economic and environmental) service to customers. The shortage of human resources will necessitate this in my view as expansion of industry resources will be difficult.
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RONAN QUIGLEY Head of Central Operations UK, Aryzta
MOST UNEXPECTED
BIGGEST CHALLENGES
The impact that our deployment of the Microlise platform to the wider business was very much more than expected. Whilst achieving our core targeted results, it has made us step back and think about our approach to all things technology across the wider business. Now more than ever, we need the incremental results and continuous progression to satisfy our customer experience and employees ability to do their jobs well.
Aside from the impacts of Brexit and price of commodities and fuel, the recruitment and retention of Drivers will remain to be the challenge for 2017. Various initiatives are progressing and many businesses are being innovative in the approach. However, the digital age is having its impact; when you can start to learn to code at junior level in twelve weeks at relatively low cost and tech business can’t fill positions for six figure salary senior coders, it makes you think long and hard as to how you can engage the right audience into our industry and retain them when it’s done.
BIGGEST OPPORTUNITIES FOR 2017 The industry must look for the opportunities within the problems Brexit has caused. Businesses must act on their commitments to employees now more than ever, retention & engagement being key, neither can be forced or demanded so innovation in the creation of an attractive environment will be key elements to the success of this. Use and adaptation of the right technology remains crucial across the board, from end to end of supply chains, delivered well we can reap benefits for customers and employees alike.
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NADEEM RAZA Chief Executive Officer, Microlise
MOST UNEXPECTED
BIGGEST CHALLENGES
It all started with Leicester City winning the Premier League, then we had Brexit, and all of the politicians who had taken us there resigned. The currency market reaction quickly followed and then the Conservative Party leadership contest completely evaporated. Donald Trump got elected. OPEC and particularly Saudi Arabia reduced production, leading to oil price increases. It is certainly a challenge to choose the most expected of these events.
The greatest challenge for 2017 will be preparing for and reacting to the uncertainty. There are a number of questions currently unanswered. When will we trigger article 50? Will the Supreme Court challenges put a spanner in the works for the government? Will the uncertainty created by another Scottish referendum appear on the horizon? What will Donald Trump do in his first 100 days?
BIGGEST OPPORTUNITIES FOR 2017 Advanced systems that make driving safer will continue to evolve towards automated driving. Unfortunately the UK government is not investing enough to make UK plc a real competitor in the space. More things will be connected in real time to the internet. The “Connected Vehicle” already includes the vehicle, the engine management system, cameras, temperature sensors and tachographs; all of which produce data sent back to our servers. In the next 12 months, we will also have a host of other sensors such as asset tags and tyres sending in data, giving even more opportunity to create value.
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KEVIN RICHARDSON Chief Executive, Chartered Institute of Logistics and Transport
MOST UNEXPECTED
BIGGEST CHALLENGES
The outcome of the Brexit referendum took us by surprise and we, along with many other professions, are now facing an uncertain future. As well as managing the uncertainty we must acknowledge the opportunities that can arise from this changing environment and we need to ensure that we are prepared to grasp them. Now is the time to champion the great work that we do in serving our society and UK plc.
Attracting, developing and retaining talent is now more important than ever as we prepare to go it alone and rise to the many challenges we will face. We must make sure that we continue to deliver the outstanding service and productivity within logistics and transport that underpins our economy and its standing in the world. Our future depends on young professionals and we have a responsibility to attract them to the profession and develop them.
BIGGEST OPPORTUNITIES FOR 2017 Logistics, freight and passenger transport are essential to our economy. Autonomy and technology will help push our profession into a new and exciting era and we must anticipate, embrace and adopt the fourth industrial revolution. Our sector prides itself on its ability to adapt to continual change, increasing demand and societal factors and we must continue to position ourselves as the great enablers of success that we have always been, while increasing our standing in the World Bank Rankings. We must make the most of these opportunities to ensure we are competitive and efficient in the markets we serve.
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CHRISTOPHER WALTON Managing Editor, Road Transport Media
MOST UNEXPECTED
BIGGEST CHALLENGES
The level of support in the road transport industry for Brexit. The result shocked the country but I was astonished that so many operators wanted to turn their back on free trade and the free movement of labour. So many wanted to scrap the rules that govern the industry.
The availability of skilled labour is a major concern. There are simply not enough UK nationals willing to take a career in transport and logistics. This will only be compounded by the loss of Eastern European workers thanks to Brexit.
BIGGEST OPPORTUNITIES FOR 2017 Selling up! Seriously, there is a wave of consolidation sweeping the industry as major players look to shore up positions in growing markets. And, thanks to the weakness of the pound, there are keen buyers. If you have a transport or logistics business that has a niche offering or a strong market share, the time to cash in is now.
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DAVID WELLS Chief Executive, Freight Transport Association
MOST UNEXPECTED
BIGGEST CHALLENGES
The political fall-out from Brexit. I didn’t anticipate the Brexit vote leading to a new government and I was surprised that David Cameron was cornered and had to resign.
Fuel duty and driver shortage remain top priorities. We still have a shortage of 35,000 HGV drivers across the logistics industry and the duty charged on fuel continues to be an issue for operators who trade on such tight margins. However, we must also work hard to ensure that the requirements of the logistics sector in a post-Brexit world are prioritised and not traded for some other benefit in the Brexit negotiations.
BIGGEST OPPORTUNITIES FOR 2017 Brexit provides as many opportunities as it does challenges and it is important to ensure that the profile of the logistics industry remains high. Throughout the Brexit debate we need to make UK plc aware of the sector’s vital importance to the economy and seize new opportunities in Europe and further afield. The government’s decision to back a third runway at Heathrow was a positive signal to the rest of the world that Britain is open for business.
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