UK freight transport hits rocky road

UK freight transport hits rocky road

Like the rest of the European Union (EU), the United Kingdom (UK) is facing a long, difficult road to economic recovery. GG VAN ROOYEN examines the uncertain future of the UK’s road freight transport industry.

Perhaps the most surprising thing about road freight transport in the UK is the central role that it plays within the transport industry as a whole. Two facts about the UK in particular would suggest that roads – as a means of transportation – are not as important as they usually are in other countries.

Firstly, the UK is a small island nation. And because of this, it doesn’t need to transport goods over long distances. In South Africa, for example, goods would typically enter the country through a harbour at Durban, Port Elizabeth or Cape Town and then be transported by road to landlocked centres such as Bloemfontein, Johannesburg and Pretoria. In the UK this isn’t the case. Goods enter the country through one of its three major harbours (the Port of Felixstowe, the Port of Tilbury and Southampton) and are then transported by road over relatively short distances. For instance, according to the latest road freight statistics released by the UK’s Department of Transport, 50% of all goods transported in 2008 travelled less than 50 km by road, while only 4% of goods travelled more than 300 km. So, generally speaking, goods aren’t transported over long distances by road in the UK.

The second fact that would lead one to suspect that road transport doesn’t have the relevance in the UK that it has in other countries is its very well-established rail system. In fact, Great Britain’s rail network is the oldest in the world, and remains one of the most impressive systems in use today. It consists of five high-speed main lines (the West Coast, East Coast, Midland, Great Western and Great Eastern) that radiate from London to the rest of the country and are augmented by regional rail lines and dense commuter networks within cities.

HITTING THE ROAD
Despite these two facts, however, road transport – both freight and passenger – is as important in the UK as it is in most other countries. Road transport in the UK has grown steadily in prominence since the 1950s and will continue to expand significantly in the years to come.

In 1952, when looking at the average UK citizen’s total travelling distance for any given period, only 27% of that distance was travelled by car or taxi. The rest of the distance consisted of 42% bus travel, 18% rail travel, 11% bicycle and 3% motorcycle.

By 2003, this had changed completely. The vast majority of distance was now travelled by car or taxi (85%), with bus and rail only accounting for 6% each.

Similarly, domestic freight transport is also dominated by road today. In 1953 a total of 89 billion ton-kilometres of goods were moved. Rail transport accounted for 42%, road for 36% and water 22%.

In 2002, 254 billion ton-kilometres of goods were moved. Significantly, however, rail now only accounted for 7.5%. The percentage of goods transported by water had increased to 26% and goods moved by pipeline accounted for 4%, but the vast majority of goods (62%) were now transported by road.

Goods in the UK might not typically be moved over great distances by road (the average length of haul is only around 87 km), but that does not mean that road transport is not important.

In fact, the United Kingdom has experienced such a drastic rise in road passenger and freight transport that the country’s road infrastructure will need to be greatly expanded in the near future in order to accommodate the increase in vehicles.

A report released by the RAC Foundation for Motoring titled “Motoring towards 2050: Roads and Reality” states that: “Roads carry over 90% of motorised passenger travel and 65% of domestic freight movement. Growth in population, numbers of households and incomes will drive rising demand for travel. Official estimates predict that, by 2041, the number of cars will be 44% higher than today and that car trips will increase by 24%. We estimate that traffic (the distance travelled by cars) will grow by 37%. So investment in, and efficient management of, our national roads should be a high priority. But it is not.

“Low levels of road building have led to higher congestion and more greenhouse gases,” continues the report. “Unless congestion is tackled, not only will journeys on the roads become even slower and less reliable than they are today, the country’s international competitiveness, and hence economic growth, will be damaged.”

ECONOMIC SLOWDOWN
Roads, as a system of transport, are incredibly popular in the UK, and this popularity will only continue to grow in the coming decades. Unfortunately, however, many transport operators and commercial vehicle manufacturers might not survive to benefit from this trend.

While the popularity of road freight transport is definitely trending upwards in the long run, the recent downturn in the economy has over the last two years placed many operators and manufacturers under tremendous strain.

“This is not a normal cycle,” warns Leif Östling, chairman of the European Automobile Manufacturers’ Association (ACEA) Commercial Vehicle Manufacturers Board, “we are experiencing the sharpest downturn ever. Governments must act to prevent the failing of viable businesses, and they must do so in a coordinated way.”

According to statistics released by the International Road Transport Union (IRU) after it conducted a survey in 74 countries, road freight transport has decreased by as much as 30% globally in the last year.

The report also indicates that freight rates are down by more than 10%, driver employment has decreased by 10% and bankruptcies within the industry are up by at least 20%.

Unfortunately, UK freight statistics for 2009 are not available, but the latest available information (comparing 2008 freight transport to that of 2007) shows that road freight activity within the United Kingdom in 2008 was already slowing down substantially.

According to the UK Department of Transport’s statistics, freight moved by heavy goods vehicles within Great Britain decreased by 6% between 2007 and 2008, from 161 billion ton-kilometres to 152 billion ton-kilometres.

THE ROAD TO RECOVERY
Predictably, this slowdown within the transport industry is having a very negative effect on commercial vehicle sales. The last 24 months have been very tough on truck manufacturers, and what is perhaps most troubling is that the market continues to show only slow improvement. While there are signs that the economy might be turning around, it is becoming increasingly clear that this recovery will not take place overnight. Manufacturers in the UK – and in the rest of Europe – are in for a difficult 2010.

“Demand for commercial vehicles has fallen sharply, mirroring the lower economic activity and reflecting the difficult financial situation of many transport companies. ACEA registrations data, revealed a 37% drop in new vehicle sales in Europe until August this year compared to January to August last year,” reads a statement released by ACEA at the end of September. “Order intake for heavy trucks stalled at around
25 000 in the first half of 2009, or 85% less than in the same period of 2008. This year’s commercial vehicle production is expected to halve at least. Whereas the bottom of the slope appears to have been reached, there are no signs of a rapid improvement. Manufacturers expect a flat market until late into 2010.”

UK transporters and vehicle manufacturers’ biggest immediate challenge is surviving the current economic downturn. And that won’t be easy. The UK transport industry is incredibly competitive, even at the best of times.

Consider the following, even though the amount of road freight lifted in 2008 (1 734 million t) was 6 % higher than the amount lifted in 1998, the number of goods vehicle operators decreased in that period from
111 000 to 95 000.

This is a very tough industry and considering the pressure that the current economy is placing on its stakeholders, the government will have to play a role in ensuring its survival.

The IRU has called on governments to urgently remove all neo-protectionist barriers, reassess and reduce current taxes, reappraise superfluous and inefficient environmental legislation and induce financial institutions to provide adequate credit lines so that transport operators can continue operating their businesses.

Similarly, ACEA has also called on European governments to assist the industry. “The commercial vehicle manufacturers make the products that their customers need and society wants. Ways must be found to bridge the current exceptional crisis. Europe cannot afford to stand aside and let this sector be at risk”, states Ivan Hodac, secretary general of ACEA.

And the UK is no exception. Unless economic recovery accelerates, or the UK government offers some form of assistance, many members of the transport industry will find themselves at the end of the road.

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