Wheels of Covid-19 recovery begin to turn

By Categories: NewsPublished On: Tuesday 16 June 2020

Some elements of the haulage and distribution industry that had ground largely to a halt during lockdown are back on the road this week, following the government decision to give non-essential retailers the green light to reopen for business on 15 June.

However, with the beleaguered hospitality sector still mostly on hold at least until July, those operators previously reliant on work delivering supplies to pubs and restaurants are among those still experiencing severe uncertainties about the future.

Those heavily involved in sectors such as exhibitions and other large-scale events will also continue to be significantly affected, with major shows such as IAA Commercial Vehicles – originally scheduled for September in Hannover – now cancelled, as social distancing requirements continue to make such gatherings impracticable.

IAA bosses said it was “a difficult decision to make”, but that: “in view of the overall situation in Europe and around the world, we do not see any possibility of holding the IAA this year in its familiar form as a platform for exhibitors and visitors.”

Meanwhile, though some fleets had been at the forefront of ensuring vital food and medical supply over recent weeks and thus benefited from a spike in demand for services, the UK transport sector as a whole was counting the cost to business of the coronavirus pandemic.

On 1 June, the Road Haulage Association (RHA) released findings of a survey it undertook on behalf of the Department for Transport (DfT) in May, based on responses from more than 600 firms. Nearly 70 per cent reported that they had accessed government furlough funding, RHA said, and 17 per cent had received ‘bounce back’ loans.

But despite this, 16 per cent were concerned they could become insolvent within four weeks, with falling work volumes to blame in the vast majority of cases. 43 per cent of hauliers said volumes had decreased by 75 per cent or more.

Other problems highlighted in the survey included reduced cashflow, problems accessing funding from government, and delayed or non-payment of invoices.

Over the next six months, 30 per cent said they expected to face challenges in booking roadworthiness tests, 27 per cent in securing access to finance, and 17 per cent from driver health issues. In terms of measures the government could take to ensure operators’ survival, 57 per cent called for a weekly furlough scheme, 42 per cent wanted a new scheme to contribute to standing costs for trucks parked up or subject to SORN (statutory off-road notification), and 38 per cent called for suspension of all business rates.

Concluding its findings, the RHA warned that the road transport sector remained “in great difficulty” and that, while government aid had “softened the blow for many hauliers”, more support was needed. In a recent letter to the chancellor Rishi Sunak, the association called for a 100 per cent government-backed invoice financing package for debt support; a weekly staff furlough; a suspension of fuel duty and a rebate for hauliers; a business rates holiday for all haulage sites; and a sector-specific lorry retention scheme for vehicles not in use.

In late May, the government announced various changes to the furlough scheme, including that part-time working would be allowed from 1 July, with employers being required to pay wages accrued while in work.

From August, employers would then need to begin paying national insurance and pension contributions, while the government contribution to wages would begin to taper off from September, with employers required to pay the remainder.

The entire furlough scheme would then close at the end of October, and would also close to new entrants from 30 June, HM Treasury announced, meaning that from this date, only employees who had already completed a full three-week furlough period before then (starting on or before 10 June) would be eligible.

The Freight Transport Association (FTA) had earlier welcomed government commitments to add levels of flexibility to the furloughing scheme, but warned that the option to allow part-time working should be introduced immediately, rather than waiting until the summer.

“The furloughing scheme has been a lifeline for logistics businesses across the country, many of which have suffered a dramatic loss of all revenue thanks to the shut down in a number of sectors,” said David Wells, FTA’s CEO.

“But as the economy starts to return to normality, it is vital that a flexibility that accommodates part-time work by furloughed workers is included as part of the scheme, to enable our member organisations to increase their revenue streams and reduce their reliance on furloughing payments from government.

“With limited work for the past two to three months, many businesses will be facing a significant break in their cash flow in June and July, and furloughing has been and will continue to be a vital part of maintaining businesses solvency during this time.”

Meanwhile, the maximum size of loans under the Coronavirus Large Business Interruption Loan Scheme rose from £50 million to £200 million from 26 May. Full details of available government aid can be found at: gov.uk/coronavirus

A Corporate Insolvency and Governance Bill had also been put before Parliament, aiming to assist businesses with challenges arising from the crisis. Measures in it include a new moratorium period for troubled firms to give ‘breathing space’ from the demands of creditors, while they seek a rescue; and measures to prevent suppliers from ceasing to supply goods and services, or asking for additional payments while a company is going through a rescue process.

Creditors will be bound to new restructuring plans; and the threat of personal liability for wrongful trading will temporarily be removed from directors who try to keep their companies afloat through the emergency.

Elsewhere, a gradual return to normality was reflected in the DfT’s withdrawal of the previous relaxation of EU drivers’ hours regulations at the end of May, and GB drivers’ hours relaxations on 14 June.

Truck manufacturers across Europe were also returning to a degree of normality, having reopened facilities in late April and May but at reduced capacity, and with a raft of new health and safety protocols in place.

These include increased cleaning schedules, social distancing measures and personal protective equipment (PPE), to minimise the Covid-19 risk to staff.

With coronavirus still very much in circulation, trade groups continued to reiterate driver welfare messages, with the RHA backing government reminders about drivers’ rights to access toilet facilities, and FTA highlighting the related issue of access to safe parking spaces during rest periods, including access to sanitation.