Reports:

The impact of congestion charging on specified economic sectors and workers

3: Economic Sector Research

3.5 Logistics Companies

3.5.1 Introduction

A total of seven logistics companies were interviewed by telephone. These included logistics partners working with the two major retailers discussed in Section 3.4.

A combination of 'Solutions Providers' and 'Haulage Companies' were interviewed - all except two worked (either directly or indirectly) for retailers. The remaining two carried general goods and goods for the building industry.

Note: The road haulage industry is made up of a complex network of companies. The logistics organisations working directly for major retailers (particularly supermarkets) are usually called 'Solutions Providers'. These companies provide a range of services including warehousing and data management in addition to delivering product to retail premises. Haulage work they cannot do is sub contracted to other companies (hauliers) or in some cases, 'Owner Drivers'.

3.5.2 Overall perceptions of the congestion charging scheme

Half of the logistics companies spoken to were positively disposed to the scheme with the remaining half equally divided between having a mixed response and being negative.

Figure 3d: Logistics companies proportions of support

3.5.3 Congestion as an issue

All the companies interviewed reported that prior to the introduction of the scheme, congestion in central London was an issue that was impacting on their ability to make deliveries at agreed times and cost effectively:

'Congestion was pretty severe, it obviously had a financial impact in that journey times were a lot longer than you would want them to be.'

'Prior to the scheme, it was horrendous because we service some of the major high streets within the congestion charging zone. It was always an issue for us.'

Another issue was the inability to predict journey length:

'One journey could take us an hour one day and take two and a quarter hours the next day.'

3.5.4 Agreement with the scheme

Almost all the organisations spoken to agree that something needed to be done about road congestion:

'I agree with it for Central London.'

'The costs get passed on anyway, so it's OK.'

However, the current scheme came in for widespread criticism on the basis that it fails to recognise that goods have to be delivered and that any additional cost will ultimately be passed on to the customer - with minimal reduction in vehicle movements:

'I was in favour for people who had a choice (TO USE PUBLIC TRANSPORT).'

'It's not our choice - people instruct me to make deliveries to central London - I do so, and I am charged for doing so.'

'I was against the scheme - purely because of the cost element added to the operation, which ultimately I have to pass back to my customer.'

'I had to inform all of my customers, explaining what was happening - the price is going to have to go up. Poor old Joe Public .. we are taking retail goods that people are going to buy - goods are going to go up.'

3.5.5 Implementation of the scheme

Operational problems with the scheme appear to be relatively minor:

'Once the web site stopped crashing, it was quite straightforward.'

'Not too difficult, not arduous.'

'95% of it quite straightforward, the remaining 5% very painful' (this related to Liquid Natural Gas - see 'Criteria for exemption' below).

Specific operational criticisms of the scheme fall into two categories:

• Criteria for exemption; and
• Administrative systems.

Criteria for exemption
There is considerable concern with some companies that the logistics industry has been unable to persuade TfL that Liquid Natural Gas (LGN) powered vehicles should be exempt (quotations are below).

Administrative systems
It was apparent from a number of the interviews that the registration process has caused problems in some specific areas. One operator describes a specific problem:

'Part of the problem I have been having with Transport for London is registering my LNG vehicles as exempt. I haven't given up totally, but I am not far from it.'

'I have got ten vehicles that are almost identical, one letter different on their number plate, and I have filled in and sent off the forms three times to Transport for London only to have the majority of them come back saying 'this vehicle isn't eligible to be exempt from the scheme' and the odd one of them is exempt. I have yet to find anyone who can explain the logic behind that.'

3.5.6 Positive effects of the scheme

The scheme is welcomed in principle by a significant proportion, if not a majority, of the logistics companies participating in the research. Comments fall into two broad categories:

• General improvements to traffic; and
• Direct / commercial benefits.



General improvements
There is a widespread recognition that 'something had to be done':

'Stop Central London coming to a standstill.'

'Gridlock - if it can stop that.'

'Stop people driving in when they could use the tube or a bus.'

Commercial benefits
Some, but not a majority of companies, recognise that there are direct benefits that have (or should) flow from the scheme:

'It has given easier access in and out of the congestion charging zone.'

'Operationally, a small improvement. Traffic levels have reduced, journey times have come down a small extent and congestion seems a little milder.'

However, there are a number of companies who have yet to be convinced that the changes will actually result in tangible benefits:

'Should be a time saving, (REDUCING) down time for our vehicles.'

Others comment that whilst the congestion may be reduced, this will come at a cost:

'I believe it has eased congestion in and out of the congestion area - but that comes at a cost obviously.'

There is a recognition, by some at least, that the wider benefits possibly outweigh the more direct / commercial ones. However, there is some scepticism as to when tangible benefits will actually be seen:

'The money is meant to be ploughed back into Public Transport in the area.'

'I know they have laid on a few extra buses, but apart from that it is going to take a few years to raise enough money to have a big impact on the tube system.'

It should be noted from these findings that the general perception amongst most companies is that the direct benefits (to hauliers, making deliveries into the zone) are not seen to be great and whilst there is widespread acceptance of the wider societal benefits, they are perceived to be at least medium term aspirations.

3.5.7 Negative effects of the scheme

Whilst there are a number of specific criticisms of the scheme, the most powerful is probably the observation that its' introduction has not had a major (positive or negative) impact on the commercial operations of the companies:

'I haven't had any positive feedback about it, but then again, I haven't had any negative either.'

Specific negative comments relate to:

• Congestion on the borders of the zone;
• TfL administration; and
• On-costs.

Congestion on the border and outside the zone
There is a clear recognition that there has been a reduction in congestion inside the zone. Perceptions of this economic group are divided on whether there is increased congestion outside the zone:

'Its definitely pushed more traffic on to the surrounding area - as a result we get more congestion and more time wasting in those areas.'

'The feedback I have had from the drivers is that it is not any worse than it was before. The story that there was going to be widespread congestion around the zone is a bit of a myth.'

TfL administration
Administration is not seen to be a major issue by most of those companies consulted. A number of problems have been encountered at the registration stage, but these appear to have now been largely overcome.

On-costs
There is recognition that the congestion charge is in effect a tax, and has to be paid. Like VAT, the charge involves additional administrative and communication costs that are incremental to the cost base of the business:

'It has put up administration costs . more phone calls . takes up my time. A lot of time is involved and has to be passed on to the customers.'

3.5.8 Effect on productivity and efficiency

Companies divide into two types:

• Those that accept that congestion has reduced, at least to some degree, and that this has improved reliability and predictability - presently with unquantifiable benefits:

'Slight improvement operationally, but at the cost of increased administration.'

• Companies that deny there have been any operational benefits:

'It hasn't changed our operations in the slightest.'

'It has affected our operations (IN CENTRAL LONDON) minimally.'

This section is probably best summed up by one of the comments:

'Its marginal.'

3.5.9 Expansion of the scheme

As with so many of the issues discussed with these companies, views are divided:

• Those that see benefits;
• Those that see both benefits and dis-benefits; and
• Those that just see the additional costs.

Benefits
An extended area will reduce congestion across more of London, reducing congestion along a greater part of the route:

'If it was extended, it would reduce our downtime, and any downtime we have getting to places costs us big money.'

Benefits and dis-benefits
A significant proportion, possibly a majority see both positives and negatives to extending the scheme in London:

'Increasing cost, but whether there is a net gain is questionable.'

Most of this group could most accurately be described as 'sceptical'.

Additional costs
There is a 'hard core' of logistics companies who reject the concept of the charge, and they see only the costs, and not the benefits, this group is a minority, but are steadfast in their views and are unlikely to say anything positive that is likely to bring closer additional regulation to their business.

3.5.10 Improvements to the scheme

There is an underlying belief amongst many of those interviewed that commercial vehicles making deliveries into the central area provide a socially necessary service and have no alternative. Some therefore see the charge as an injustice.

Two specific suggestions were made:

• Reduce the restrictions on delivery service times; and
• Train call centre and helpline staff.

Delivery restriction times
A number of companies described the situation whereby deliveries could only be made to stores during specified hours. These coincide with the congestion charge times. It would be helpful if this could be eased:

'Reductions in restrictions in when we can service stores - at the moment we are constrained when we can go into the centre of London (which is at peak times unfortunately). If they lifted some of the restrictions that would be a benefit to people.'

Call Centre and Helpline staff
Helpline staff were reported by one company to be unfamiliar with the logistics industry and specifically the problems faced with the exemption of LNG vehicles. It was suggested that staff dealing with haulage issues should have some understanding of the logistics industry:

'Get some people who understand the transport industry in their help desk, rather than people who have just been trained on the telephone but don't know one end of the vehicle from another.'

Whilst an isolated instance in this research, this is an area that could potentially have a negative Public Relations impact if not dealt with.

3.5.11 Summary

All the Logistics providers interviewed in the survey accept that congestion in Central London had become an issue that needed to be addressed.

There is a widespread recognition that the congestion charge is working to some degree, however there are differences of opinion on its level of success. A small number of those interviewed opposed the system on principle, seeing deliveries into Central London as over regulated and now 'taxed'.

Congestion charge costs, at their current levels, are not seen to be a major issue.

However, there is concern in two broad areas:

• Fairness / criteria for exemption; and
• Administrative systems.

Fairness / criteria for exemption
Logistics companies provide distribution services to a wide range of companies and individuals who work, live, and come to purchase goods in the congestion charging zone. And whilst there are a few limited opportunities to be exempt (e.g. natural gas fuel), for most companies there is no (short term) realistic alternative to incurring the congestion charge. Many see this as unfair, particularly as other transportation service providers, buses, Taxis and Minicabs, are exempt.

Administrative systems
The administrative systems are reported to be working as required, however errors and non-standard problems are less well handled. TfL is not seen to be customer focused and is perceived to be bureaucratic.

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