When Donald Trump announced in June 2015 that he was going to stand as the Republican candidate for the Presidential elections in November last year many thought it was a PR stunt. A billionaire property tycoon with no previous experience of politics and a somewhat chequered past, how could he win? Once he got the Republican ticket, he alienated many with his out-spoken manner in a quest to win the popular vote. Against all odds, he won.
So, what’s this got to do with freight forwarding? Trump won because he “smashed out of the ball park” (as he might say) one of the Golden Rules of Business; get people to know you, like you and trust you.
– He was already known by everyone in the U.S,
– He was liked by many and worked relentlessly to grow his fan base,
– He was trusted more than Clinton was to do the best for America,
This is a vital lesson for small to medium sized forwarders like Espace who operate in an ultra- competitive market place where new business is predominantly won on price. Get known, be the company people are speaking about. Be liked by your customers and prospects. Build a relationship with them on the phone, by post and email or on social media. However, no matter how much prospects or customers know and like you, to get them to trust you, they have to believe that you are committed to them. The minute they realise that your commitment to your own interests is greater than it is to theirs, the trust is gone and so is the relationship.
In the U.S elections and in freight forwarding….it all boils down to TRUST.
The long awaited autumn statement has arrived. After what could be called an ‘Eventful’ year it is very interesting to see how the government will look to tackle the future obstacles brought about by Brexit. The government has promised a few things such as ‘Building an Economy for all’, ‘Investing in infrastructure and innovation to improve long-term productivity’ and ‘Providing Certainty for Business’.
Building an Economy for all
The government has done a few things which will impact the Freight Industry:
• Fuel duty will remain frozen for the seventh year. This is estimated to save £130 for drivers. This is great news for everyone! This will especially benefit everyone our freight industry since the price of fuel has a heavy impact on us. This makes it easier for our prices on our European Freight services
• The government have increased the national living wage those aged 25 and over will increase from £7.20 per hour to £7.50 per hour. That means over £1,400 a year more for a full-time worker previously on the National Minimum Wage. I think everyone supports this especially here at Espace. However it will increase the cost of all businesses which could lead to an increase in inflation.
Investing in infrastructure and innovation to improve long-term productivity
£23 billion of additional spending has been provided to invest in the infrastructure and long-term productivity. Where will this money be spent?
£390 million will be going future transport technology. This will help with the development of driverless cars, implementation of electric cars and hydrogen busses. The implementation of electric cars brings the reality of electric trucks ever closer which would help the freight industry cut emissions significantly.
Major New Investment in Transport Infrastructure As part of the National Productivity Investment Fund, this will cover:
• £1.1 billion to reduce congestion and upgrade local roads and public transport
• £220 million to tackle road safety and congestion on Highways England roads
• £27 million to develop an expressway connecting Oxford and Cambridge
This investment will hopefully have a major impact on congestion of roads which will allow our freight transport to run more efficiently.
Providing certainty for businesses
The government want to make the UK a place where businesses want to come to. They think the best way to do this is by cutting corporate tax from 20% to 17%. This will benefit over 1 million businesses including many in the freight industry.
Just mentioning a few things from the statement you can see that the aim of the conservatives it to make this country really a place for business to come and set up. From a Freight Forwarders perspective the investment of £1.1 billion to reduce congestion seems to be the most appealing in the statement since it will allow us to run our services more efficiently and reduce any delays which could occur.
Interview with Tony Shally. M.D Espace Europe, a European road freight specialist. Question : How did you feel now 5 months on from the Brexit referendum.
Tony : As the owner of a European road freight company, we rely on the free movement of goods within Europe and a strong Pound to keep our haulage costs down. The 24th June was a very grim day for me, my staff and for the majority of people working in our industry. I feel a bit more positive now. Well I couldn’t feel any worse than I did that day. We have weathered a difficult 5 months and still hit our targets but I know there are tough times ahead.
Question : What’s happened in the European road freight industry since Brexit and how has it affected Espace?
Tony : Our customers have told us that they have been getting more enquiries from their European customers and from new prospective customers. They sent out a lot of quotes and seen some small short term increases in export business.
In the 5 months since Brexit, we have seen a 7% increase in export shipment numbers compared to the 5 months before Brexit. There’s been a very small fall in import shipment numbers for us. We are mostly export driven.
As we pay over half our suppliers in Euros, we have seen our European haulage costs rise dramatically due to the 10% reduction in the value of the Pound against the Euro. We hedged our Euro currency purchases well the day before Brexit, but we have now pretty much used up this pre-bought currency.
Many forwarders did not hedge and within a few weeks had Currency Adjustment charges in place. We currently have a range of CAFs from our suppliers between 6 and 10%. Even though we hedged well, our margin has dropped by over 3% as a result of the weak Pound.
We’ve been speaking to some of our customers to see if they can now pay us in Euros. A few have agreed but most don’t hold an excess of Euros each month so have asked to stay with a Sterling charge from us.
We are now also speaking to some of our customers to try to implement a currency surcharge. Most are sympathetic, but it does not stop some going out on the market to look for cheaper solutions. It’s even worse for our import customers. Their goods are costing them 10% more now to import and we are asking them for increases to cover the increases in our import haulage costs. With import charges approximately double or even triple the export cost, these surcharges can mount into the £100s per import full load.
Question : How optimistic are you about the future for European road freight and how do you think it is going to be affected if we leave the Single market?
Tony : Espace and our competitors are all in the same boat. Companies will still need to get their goods to and from Europe by road. If we lose the free movement of goods, we are all going to get bogged down again in customs issues potentially slowing down the delivery of our customer’s freight. I am concerned about the effect the triggering of Article 50 will have on our industry. We have had nearly 24 years of free movement of goods across European borders. Many European supply chains have been geared up to work on a Just in Time basis.
Drivers haven’t had to stop for long periods of time at border crossings and customs agents. Many exporters and importers now just hold some emergency or minimum stock levels. What they need to keep production going arrives on our trailers when they need it. We could pretty much guarantee this would happen. With 25% of our business now in the European time-critical sector, if we are forced to revert to how it used to be with all goods needing to be customs cleared, there is no way we can provide any guarantees anymore on deliveries. We will be in the hands of the customs agents and border officials as to when our vehicles are released.
Also, the Pound’s volatility is a big concern. With growing concerns about what might happen and no clear Brexit plan 5 months on, I can only see the Pound plummeting further in value. Freight rates will shoot up again, customers who once valued service over price may be forced to buy solely on price, cutting out companies like Espace who sell on value-added. The biggest companies with the biggest buying power will at a considerable advantage, if rate sensitivity becomes a real issue.
I just hope our politicians realise sooner rather than later that Europe won’t let us have our cake and eat it. Free trade and 100% control on immigration will both not be granted to us. We need skilled and unskilled people to come into the UK to help our economy grow. We don’t need bureaucratic customs procedures imposed on us after 24 years of free trade. It will be a disaster for the UK and Europe, after all if they do it to us we will do it to them. I just hope sense prevails and our politicians are ready to make compromises to get us the best deal we can to maintain the status quo, encourage investment and keep our currency stable. Interview with Tony Shally : M.D Espace Europe Ltd www.espaceglobalfreight.com
In recent weeks, it has been brought into question whether the EU is a global leader in Climate Diplomacy. It has been brought to light that the EU still adopts an outdated vehicle emissions test. This doesn’t look great when put together with their extremely slow pace when introducing new CO2 regulation to minimise the ever growing road freight emissions.
Road freight trucks only make up for 5% of vehicles on the road in the EU; however, they contribute 25% of the emissions from road transport. Freight trucks consume ten times more fuel per kilometre when compared to passenger vehicles.
How does the EU look to fix this emission disaster?
Well the EU has developed a simulation tool called VECTO which will measure the emissions of new vehicles. It will be used as the basis of drafting legislation proposal which will be finalised by the end of the year.
Fuel consumption could be cut by trucks if manufacturers applied design improvements and low resistant tires. The lower fuel consumption of trucks will lead to less road freight emissions
Is electric the Future of Freight?
Mercedes-Benz and Daimler Trucks launched an electric truck called ‘Urban eTruck’ which at the moment is just a prototype, but it is capable of doing 200 kilometres a day. Other manufacturers have announced that they will be looking to develop electrical, heavy duty Vehicles.
So what other benefits are there of having electrical powered freight trucks? The electric trucks are cheaper to run when compared to petrol trucks. This will help anyone who uses European haulage companies since they will most likely pass these savings on to their customers.
Reduced noise pollution is also a benefit which comes with electrical powered trucks. This will get rid of one of the main externalities of the use of trucks. This will decrease the social cost of trucks running on the road.