Freight expectations

5 September 2007
More news

06 September 2007

Trade associations, policy units and senior figures are urging the government to introduce road pricing and unblock the nation's roads. Gareth Mytton reports

To members of the Construction Products Association, the diagnosis is obvious. The Conservatives' economic competitiveness group has come to the same conclusion. As did Rod Eddington, the former head of British Airways, in his major transport review for the government in 2005. The UK economy is suffering from a bad case of congestion.

Eddington put the annual cost to the economy of traffic jams - almost 90 per cent of UK deliveries come by road - at between £7 billion and £8 billion: "Hence my strong backing for congestion-targeted road pricing."

Road charging is also behind the headline figure in the Conservatives' proposal, from a review led by former trade secretary John Redwood: £10 billion, to be raised by charging lorries for using British roads. This would form a fund on which local authorities could bid to improve roads under the rubric of "traffic management", such as widening roads.

Trevor Whelan, transport policy director at the Chartered Institute of Logistics and Transport, backs these improvements. But he warns: "As a former highways manager, I saw that many good traffic management schemes were spoiled because local pressure groups, through their councillors, caused projects to be diluted, thereby diminishing the benefits."

The freight industry is broadly supportive of the Tory proposal, which would reduce vehicle excise or fuel duty to make the charge "revenue-neutral" (its other aim is to make UK hauliers more competitive against their lightly taxed European competitors). Would road charging automatically make deliveries more expensive, though? Perhaps.

"In that situation, I'd imagine suppliers would attempt to pass that charge on immediately," says Mark Barnett, chief operating officer at the Consortium for Purchasing and Distribution (CPD), an education and healthcare supplies company.

Barnett, whose firm makes around 2,000 deliveries a day, adds: "The nature of our business is free delivery, so we would have to swallow that delivery charge. My approach would be to work together with the supplier [the CPD outsources its logistics] to minimise those costs - combining deliveries, for example."

London, where drivers have paid to enter the city centre since 2003, may offer another pointer. Michael Lainas, managing director of drinks logistics company Octavian and a strong supporter of the London charge, builds the cost of the congestion charge into its tariffs.

"An awful lot of the times we were delivering in London [before the charge], a lot of roads were full of commuters who had an alternative method of transport," he says.

After the charge was introduced, Octavian was able to make more deliveries in central London, but Lainas says this improvement has since been "eroded". The reasons why are unclear - Transport for London attributes the gradual deceleration in traffic to an increase in roadworks - but charging might have a wider impact.

"Based in Kensington, we've just had the congestion charge extended to us," says Rick Kelsey, group purchasing manager at Associated Newspapers. "Our smaller suppliers are already having to pay it. It took a couple of months for suppliers to begin mentioning it. They are mainly smaller companies whose prices were fixed before the charge came in and are absorbing the cost themselves."


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