TRANSPORT: LOGISTICS: An introduction to UK-Wide

This year has seen the persistence of challenges to the transport sector with the continued driver shortage, increasing fuel costs and key legislative changes. Other factors also playing heavily on the sector include recession, rising inflation, the war in Ukraine and the lingering effects of Brexit and COVID- 19. Challenges remain for transport operators, with the number of business failures continuing to rise. We provide an update on these challenges and what we predict is to come.

Truck Cartel and Competition Litigation

In 2024, we saw substantial progress in the truck cartel litigation being pursued by the Road Haulage Association (RHA) following the PACCAR judgment of the Supreme Court and its impact on litigation funding.

In 2023, the court of appeal ruled that there was a conflict of interest between claimants in the RHA’s truck cartel claim, as claimants that purchased or leased new trucks would have an interest in showing that the overcharge they suffered as a result of the cartel was not passed on when they resold their trucks, whereas those that purchased or leased used trucks would have an interest in showing that there was high resale pass-on. The court of appeal therefore remitted certain matters back to the Competition Appeal Tribunal (CAT) so that it could consider the arrangements put in place by the RHA to deal with the conflict of interest.

The hearing of the remitted matters by CAT took place on 4 and 5 June 2024 and 18 July 2024. On 2 August 2024, CAT handed down its judgment, which approved the measures put in place by the RHA and granted the RHA opt-in to the Collective Proceedings Order (CPO). The CPO and the associated Rule 81 Notice, which was approved by CAT, allow potential class members until 31 December 2024 to opt in to the RHA’s claim. Once the opt-in window has closed, it is expected that CAT will list a further hearing to progress the RHA’s claim for compensation on behalf of the truck industry.

Convention on the Contract for the International Carriage of Goods by Road (CMR)

The Supreme Court provided certainty regarding the recoverability of excise duty under the CMR in 2023, and this remains the most recent development in the CMR.

JTI POLSKA Sp. Z.o.o. and others (Respondents) v Jakubowski and others (Appellants) [14.6.23] has put the question of the recoverability of excise duty under the CMR beyond any doubt and reintroduced certainty as to the English courts’ position on this point. It has also provided useful guidance as to how to determine what “additional” charges can be recovered from a carrier under Article 23.4 of the CMR, in addition to the limits of liability.

Article 23 of the CMR sets out the damages recoverable in the event of a claim for loss or damage to goods and limits the liability. Article 23.4 allows the cargo owner to recover certain further losses in addition to the limit of liability, which includes ”other charges incurred in respect of the carriage of the goods…”

In James Buchanan & Co Ltd v Babco Forwarding & Shipping (UK Ltd (1978), the House of Lords held that excise duty was a charge incurred in respect of the carriage. The Supreme Court has endorsed the Buchanan decision and provided clarification on what it considers not to be a charge (liability for liquidated damages and a liability under a guarantee to tax authorities).

Whilst this decision may attract academic criticism, it has reintroduced certainty on the English courts’ interpretation of Article 23.4 and provides clarity for the transport industry, specifically the shipping sector.

Clandestine Fines

On 13 February 2023, the Carriers’ Liability (Amendment) Regulations 2023 (”the Regulations”) came into force, which changed the rules and penalties relating to vehicles carrying clandestine entrants into the UK.

The key changes made by the Regulations are that the fine for carrying clandestine entrants has increased from GBP2,000.00 per responsible person, per clandestine entrant, to GBP 10,000.00 per responsible person, per clandestine entrant.

Recently, many operators have challenged large fines imposed on them by appealing to the courts on the basis that they complied with the Regulations, and/or the fine imposed is disproportionate. This has resulted in the recent court of appeal decision in the case of KLG Trucking v Secretary of State for the Home Department (2024) EQCA Civ 737. Whilst the fine was reduced on appeal, it was, unfortunately, indicated by the court that Border Force are correct to impose penalties in cases where operators have fully complied with the Regulations, and there should be a strict application of the Penalty Code in determining the level of penalty.

However on 22 August 2024, it was announced that the Independent Chief Inspector of Borders and Immigration (ICIBI) had begun an inspection – and call for evidence – of the Border Force operation to deter and detect clandestine entrants to the UK. We await the outcome and anticipate the next 12 months will see the system shaped further by recommendations from the ICIBI and court decisions.

Guide to Maintaining Roadworthiness

April 2023 saw the launch of the latest version of the Guide to Maintaining Roadworthiness (“the Guide”). There have been a significant number of changes. Operators are expected to have read it, be familiar with it and to have introduced systems that are in line with the guidance given insofar as it relates to their business actives. The latest version of the Guide has also seen a significant change in the language used, moving from a softer, more encouraging style of language to a firmer, more directive approach. Words such as “must” and “should” are explained in the introduction, with “must” indicate a requirement due to the legislation and “should” indicating guidance; however, if an operator chooses not to follow the guidance, they will be expected to have demonstrated a risk assessment for their alternative approach. Failure to comply with the Guide is commonly cited at public inquiries by traffic commissioners, which justifies regulatory action against operators.

Alternative Fuels

One of the most significant challenges the industry faces at the moment is upgrading to alternative fuel vehicles. With the green agenda well underway, and the deadline of 2030 being ominously close, the industry is scrambling around trying to find appropriate vehicles for their operation to meet this zero-carbon agenda. In some sectors, such as the bus sector, this has been hugely assisted by government grants and other schemes to enable the purchase of fleets of electric buses, which we are seeing in many towns and cities today. This is not without problems, however, as the recharging of buses requires a huge amount of electricity.

Hydrogen is a serious contender but lacks investment at present. A real challenge is the distribution of hydrogen, which is currently treated as a chemical and not as a fuel. This creates all sorts of storage and transportation issues. Operators want to move to modern technology, but technology has not yet adapted this type of fuel/chemical sufficiently to enable vehicles to be purchased by the vast bulk of the transport sector who do long-distance work.

Upcoming Employment Law Changes

The transport industry has been hit by increased costs and driver shortages. The introduction of a Labour government and the promise to implement significant employment law changes in the first 100 days could add additional pressures to the industry. Key changes, such as the implementation of day-one rights for unfair dismissal and/or stricter regulation in relation to casual workers status, could significantly impact industries who use occasional staff to deal with significant seasonal fluctuations.