NEW EU PROPOSAL MAY CAUSE SLEEPLESS NIGHTS
Statistics from the EU earlier this year showed that road transport accounted for 74.9% of all trade between EU countries, with trucks travelling 2,200 billion tonne-kilometres a year along the main roads and motorways that connect buyers and sellers of goods, and consumers. It begs the obvious question, what would we do without this fast and efficient method of transportation?
Transport operators, however, are facing an ever-growing list of commercial challenges; falling yields, increasing competition, environmental issues, the impact of the migrant crisis, a dwindling population of ageing drivers and the struggle to recruit a new generation of young people willing to get behind the wheel of a 40-foot articulated lorry and live life on the road.
Now comes a new and growing challenge, described by the owner of one of Europe’s leading road transport companies as the biggest challenge the industry that he has seen in over 30 years. It is already causing costs to rise and disruption to supply chains, as well as the prospect of added risk. With just five types of truck-related crimes accounting for 87.8% of the record number of cargo thefts recorded by TAPA EMEA’s Incident Information Service (IIS) in 2016, it may just be about to give supply chain security professionals even more to think about.
So what’s it all about?
It stems from a new EU proposal designed to prevent drivers from lower wage countries from undercutting better paid workers when they travel to other member states. It proposes that truck drivers can travel outside their home country for three days and still be paid under their home country’s rules but that after this time period they will come under the rules of the country where they are delivering the goods. It also proposes that drivers will no longer be able to spend long weekend breaks in their trucks, stating instead that employers will need to pay for accommodation for their drivers.
In Belgium, the second part of the EU proposal is already part of Belgian law and the authorities there have been increasingly active in enforcing penalties on drivers and hauliers that fail to comply with the ruling. One update shared by a TAPA EMEA member stated that over a single weekend, Belgian law enforcement officials targeted around 200 trucks at the Port of Zeebrugge. It stated that drivers were forced to pay a fine of €1,800 each if not in compliance with the law. The total sum reportedly collected was in the region of €113,000.
Vigilant spoke to Jason Breakwell, Vice Chair of TAPA EMEA and Commercial Director of Luxembourg-headquartered Wallenborn Transport about the EU proposal, the current national picture across Europe, and the potential impact of further changes on supply chain security.
When is this EU proposal likely to come into force?
At this stage it’s only a proposal. In the meantime, some member states have introduced their own regulations. It’s important to note that the shipper, freight manager (for example airline or forwarder) and truck operator are jointly responsible for ensuring 100% compliance with national legislations and will also be jointly liable for penalties in case of infringements. Penalties can be between €10,000 and €30,000 per infringement. Drivers and their employers need to be able to prove they complied with all laws, for example that they did not take illegal rests in the trucks.
What is the cost impact for companies and their customers of drivers not being allowed to take long weekend breaks in their vehicles?
It can be significant- two nights accommodation in a hotel are not covered by standard driver expenses. Many transport companies are re-routing their trucks and changing their operations to avoid resting in certain countries. More and more transport companies are avoiding or minimising their operations in some countries and this has had a substantial impact on capacity availability and market rates in the past year.
The majority of drivers prefer to rest in their trucks and the policy of forcing them out of their cabs is likely to make their jobs less attractive which is a serious concern given that the road haulage industry is already unable to attract sufficient new recruits.
What are the supply chain security implications? Could drivers of loaded trucks that have ignored the ruling be told to leave their vehicles unattended to take long rest breaks?
Yes. The legislation applies to all drivers regardless of the cargo they are responsible for. At the route planning stage, buyers and suppliers need to ensure legislation in each country and its impact is fully considered.
This is already having cost and operational effects but it is clear that transport companies have so far not passed on all costs, partly because they are still coming to terms with the full impact.
Furthermore, many East European transport companies have fixed contracts with logistic providers. Further and significant cost increases will occur in the second half of this year as (1) new contracts are agreed, (2) operations are relocated to Western Europe or (3) contracts are awarded to operators based in Western Europe.
There are other important factors to consider. Hotels are generally not adjacent to secure truck parks and loaded trucks must not be unattended so it is essential that trips are planned so that drivers do not take their weekly rests in certain countries. This is restricting trade and adding operational costs.
In addition to the legal implications of non-compliance mentioned, transport buyers need to be extra vigilant that their suppliers always respect national legislation. Otherwise, trucks can be stopped en route and drivers can be forced to leave loads unattended. As capacity in certain markets has become scarcer, buyers also need to ensure their logistics providers are not working with unknown or invalidated truck operators.
In relation to the fines mentioned, when do these have to be paid?
Penalties must be paid on the spot, so the driver may need to leave their truck unattended.
A lot of transport companies use independent self-employed drivers so who is liable – and, again, how could this impact customers?
All three parties are liable, the shipper, the freight buyer and the transport company. Buyers and shippers must conduct due diligence to ensure their transporters have taken all possible measures to (1) register according to national requirements (see the information in CURRENT REQUIREMENTS) and (2) to comply with all legislation in all affected countries.
Are you aware of LEAs targeting trucks to enforce national laws relating to drivers’ rest breaks?
Yes, authorities have stepped up checks at borders and within countries and are forensic in their investigations.
Is it the tachograph that provides evidence of how long a truck has stopped etc?
Yes, but authorities also need to see evidence that a driver has stayed in a hotel and can also demand to see telematics data to confirm where and when a truck was driving and the driver was resting.
Vigilant also talked to Paule Mayoh, Consultant Risk Surveyor at RSI Insurance to get an insurer’s view on the proposed EU requirements. He said: “The most obvious issue relates to the accommodation rule, which could potentially see loaded vehicles left unattended while the driver is sleeping in separate accommodation; and connected to this is the consideration of where the vehicle will actually be parked. We can only assume that drivers will stay in guest houses, motels or hotels which are unlikely to want to accommodate HGV trucks in their car parks or are incapable of doing so. This could mean there is a potential for trucks to be parked road side or elsewhere in the vicinity in an unsecured location. As we know, the lack of secure parking is already an industry problem, and this will simply compound that issue.
“This scenario is most likely to provide difficulty with meeting insurance policy requirements, as a number of policies will have clauses or warranties on them [mainly from a GIT perspective] excluding claims/losses for theft when the vehicle is left unattended and/or the policy will require the vehicle to be parked in a secure location, which will be defined in the policy as to what this would look like; including some or possibly all of the following depending on the goods - controlled entry and exit, wall or fenced compound, locked gates, security personnel, CCTV or under constant surveillance and well lit. This is more likely to apply if the goods are considered as theft attractive or high value cargo.”
He adds: “This could also give rise to an increase in changeovers at border crossings. Both scenarios could have implications regarding security, due to increased levels of subcontracting, and, in turn, this could impact insurance considerations and/or possibly recovery opportunities from responsible carriers further down the chain for CMR transits in the event of a loss.
“The CMR Convention is in itself another hurdle to consider. Under these rules financial limits of liability can only be broken or set aside in the event of “wilful misconduct” [or negligence]. If more drivers/carriers leave unattended vehicles parked in inappropriate locations – and their policy is silent on this currently - in order to comply with the EU proposal and to avoid fines then it is possible that in some jurisdictions, in the event of a claim, that this act could be considered misconduct or negligence – increasing legal fees and claims costs on policies. This could either lead to increased premium on a case by case basis, or the wider application of such warranties/ exclusions referred to, so that carriers need to comply with safe/secure parking or find alternative methods of delivery.”
With trucks almost certainly going to remain the target of cargo criminals for the long-term, this added level of regulation and complexity is, from a supply chain security point of view, yet another hurdle for TAPA EMEA members to be aware of and to have to negotiate. For cargo thieves, it may just present yet another opportunity that’s prime for them to exploit. Only time will tell.
Austria - LSD-BG implemented 01/01/2017
Regulation of the minimum wage in Austria. It is the same principle as in France. The legal representation of the company can be located in a different country than Austria. The working contract must be established in German or English
Click here to read more (note: access under Google Chrome browser only)
Belgium – Limosa implemented 01/04/2017
System of online declaration for Belgium. All the drivers must be registered as soon as a mission is made on the Belgian territory and the attestation must be in the vehicle. For the moment no obligation of minimum wage but it is expected soon.
Click here to read more
France – implemented 08/08/2015
The law 2016 / 418 obliges to register the posted workers online on the French site Sipsi. This online registration costs €40 per employee. As this registration is only valid for a maximum period of 6 months, it is a sum of €80 per employee and per year that the company must bear (décret 2017-751)
In addition to this point, the company must have a legal representation on the French territory. This person is responsible for the company towards the French authorities and bodies of control. The mandatory documents in the vehicle are:
· A1 Form
· pay slips, showing that the driver was paid to the French minimum wage for the time he spent in France (in theory the last 12 pay slips)
· working contract in French or English
· attestation of posting
The shippers and order givers must control these documents.
Click here to read more
Germany – Milog entered in force 01/02/2015
Regulation of the minimum wage in Germany. It is the same principle as in France. The only difference is that there is no attestation to show. The legal representation of the company can be located in a different country than Germany but must speak German and be in possession of the requested documents.
Click here to read more
Luxembourg - implemented 14/03/2017
The order giver remains responsible for the carrier and operator used on the Luxembourgish territory. The order giver must therefore make sure the carrier and operator are in possession of their “social badge” and the employees/drivers must be paid in conformance with the Luxembourgish collective convention for the time spent in the country. Trucks in transit are not affected by this measure.
In these countries, the penalties in case of non conformity range from €10’000 to €30,000 per case and could include the cancellation of the transport license, depending on the country. 45 hours of weekend breaks in the vehicle are now forbidden and carriers must provide a hotel room to drivers during these rest periods. The costs for the hotel are payable by the employer.
New measures are expected to be announced soon in Belgium, The Netherlands and Italy.