Some call it a loophole in the legislation;others, more diplomatically, an accommodation. But whatever the name, opt-outs in the Working Time Directive, and Periods of Availability in its sister legislation, the Road Transport Directive, have given the industry much-needed breathing space. But with animminent review, could they soon be gone?
At the end of last year, transport minister Stephen Ladyman announced the road transport directive would be reviewed in the second half of the year. Brussels has promised a similar overhaul of the working time directive (see box).
At the centre of concerns are periods of availability – times set aside in the road transport directive that don’t count towards drivers’ hours – for example, queuing to unload or waiting at border control. Opt-outs for the working time directive, negotiated by the UK, allow employees, by mutual agreement, to work longer than the 48-hour working week.
The rules do not cover drivers but would apply to any other worker in a warehouse.
Removing these clauses could turn logistical operations on their heads, swelling their employment ranks, increasing operating costs, and crucially altering where, what and how their property performs.
Yet the possibility of change splits opinion. Some have changed their operations. Dixons’ model, for example, is applauded in logistics circles for its pre-emptive move to small distribution centres served by large central hubs. Others, like Exel’s Bristol consolidation centre, allow a number of operators to share a facility.
But in the main there has been a distinct lack of action as managers grapple with understanding and complying with the new rules.
For that reason, the Freight Transport Association has been lobbying heavily for no change. The association’s policy director James Hookham says: “The last thing we want is for everything to be thrown up in the air. It would be outrageous. We are not expecting anything to happen and we wouldn’t tolerate it.”
Implementation costs are already significant, says the association, with half of firms forced to change routing and scheduling, and a third taking on extra drivers.
Although it’s impossible to name a figure, Hookham says an above-inflation pay rise of 6% negotiated in part to recognise changes to hours and the increased use of agency drivers all hint at the dent made in the bottom line.
The association is so confident the government is unlikely to rock the boat, that the manager it appointed to look into the legislation has now been put on another project.
But, says Hookham, lingering in the background is the fact that the UK is the only country to exercise opt-outs from the working time directive. “There was a lot of tut-tutting from Europe. Once again the UK wasn’t being European and Tony Blair is under great pressure to remove it.”
Those disapproving noises from Brussels are worrying some. Andrew Gent at Leeds -based Gent Visick among them. Europe may not get an official say in changes to the road transport directive, but the political force may be unbearable for a prime minister trying to mend Euro relations. “The pressure from Brussels is for the UK to get in line, and they’d like nothing more than to remove our two get-out options” he says.
That would force a return to a “snowflake pattern” of distribution with many mini hubs. “That means more management, more security, and more wastage and you’ve lost the benefits of scale,” says Gent. “And what do you do with the existing stock – has it been designed to subdivide?”
Problems of a shared site
Most modern front-loading big warehouses would be adaptable, says Gent, “but then you’ve got to deal with where the toilets, car parks, and offices are and the problems of a shared site”.
Of course this won’t happen overnight. Many assessing the capital costs of surrendering leases versus extra operating costs may opt to stay put. But research shows the existing rules are beginning to bite.
NAI Fuller Peiser and the FTA have been updating research originally carried out when rules first came into force last year, with some interesting results.
In November, 5% of respondents said they felt the directive would affect their property needs. The same question in March prompted a “yes” from 25%. “The immediate response to legislation was more drivers,” says Martin Coles, managing partner at NAI Fuller Peiser. “Longer term, they are now looking at their property base.”
Worries that distribution centres would need larger yards, greater canteen facilities and more loading docks to turn around deliveries quicker, have proved largely unfounded. But there is a definite wish to be closer to urban centres in warehouses smaller than 50,000 sq ft.
Coles’ colleague, Lisa Fitch, says: “If you need to stock the high street six times a day, you’re finding you can’t do it from a distribution centre. A lot of operators are looking at their property and really wondering if it should be part of their portfolio.”
A number of hotspots are also emerging. London and the South East unsurprisingly were highlighted, but between November 2005 and March this year respondents put a growing emphasis on Birmingham. Around 13% marked the Midlands capital as a destination last year. More than 50% pointed to it in March.
Coles offers a final piece of advice. “No one is going to win by waiting until this time next year. My recommendation is to look at the drivers of change to supply chain rather than just how big a warehouse you can get on any site.”
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Confusion reigns over Brussels’ drive to regulate the workplace. Here’s what the Freight Transport Association and NAI Fuller Pieser say: WORKING TIME DIRECTIVE ● Introduced in 1993 ● Implemented in the UK in 1998 ● 48-hour working week ● Opt-outs allow the workforce to in effect work overtime – but only by mutual agreement What could change. The European Commission was unhappy at the use of the opt-out and is reviewing the Working Time Directive with a view to removing these clauses. The European parliament accepts that opt-outs would be phased out within three years. This is yet to be agreed by the Council of Ministers. Discussions in Brussels are deadlocked and could be decided during 2006. The effect Loss of the opt-out means more workers to cover shift-work. For those who genuinely want overtime, it reduces the prospect of earning slightly higher rates. The property industry is likely to see a rise in occupational costs as additional workers are employed in factories and warehouses, offices and retail outlets. ROAD TRANSPORT DIRECTIVE ● Came into effect on 4 April 2005 ● Reduces the average working week for lorry drivers and crew of heavy goods vehicles over 3.5 tonnes to 48 hours – the average was 55 hours ● Calculated over a reference period of 17 weeks, extendable by agreement of the workforce to 26 weeks ● Any night work (between 00.00 and 04.00) limits the total hours worked to 10 in any 24-hour period ● Periods of Availability (PoA) are times when a driver is free to work but not required to. For instance, queueing at a distribution centre or port. These do not count in working-time calculations ● There is no opt-out to the Road Transport Directive What could change: There is no prospect of change – 48 hours is the totem number in the main working time directive. Discussions on the main WTD will not affect the UK interpretation of the road transport directive. The UK government says it will review the RTD in the second half of 2006. However, the industry’s expectation is that nothing will change and the rules adopted in April 2005 will remain the same. The effect If the scope to work longer nightshifts was lost, more vehicle movements would be pushed into daytime, disrupting night-time trunking operations between natinal distribution centres. PoAs are critical. They have allowed many companies to maintain earnings despite a reduction in defined working time to 48 hours. Loss of, or more restrictive, definition of PoAs, would require renegotiation of many agreements and the biggest losers would be drivers themselves. |
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Source: NAI Fuller Peiser/Freight Transport Association |
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London’s air quality is the worst in Europe and mayor Ken Livingstone wants that changed. By 2008, says Livingstone, Greater London will be a Low Emissions Zone. Further reductions will be made in 2010. This means the most polluting vehicles will have to pay up to £200 to enter the zone. The result, says the FTA, is an effective ban on trucks currently operating within the M25. “The costs are enormous,” says James Hookham, director of policy at the association. Vehicles complying with a “Euro four” emissions standard will be exempt. But they cost up to £100,000 and don’t come onto the market until October. “If you are an operator based in London, suddenly you’ve got four years to replace your vehicle.The cost is huge – it might be greater than upping sticks and moving,” comments Hookham. The result is that many distribution centres could move out of the M25. But, as Hookham says: “Where is the land going to come from? You only need to look at the greenbelt around the M25 to see there is going to be huge pressure.” |
