Alan Braithwaite gives the lowdown on logistics trends, Brexit, e-cargo bikes, and the Trans-India challenge
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Despite having several decades in the logistics industry under his belt, Alan Braithwaite is showing no signs of slowing down. The consultant, philanthropist and adventurer is currently working with e-cargo bikes and the Chartered Institute of Logistics and Transport among others, as well as being involved in multiple charity projects. One of those projects, the Trans-India challenge, was completed just before the pandemic and has been documented in the amazing Amazon Prime film ‘The Indian Queen’.
Given Alan’s wide range of knowledge, which spans Business Operations and Strategy, Global Supply Chain Management, Analytics and modelling, Retail, Manufacturing, Services, and Sustainability, we took the opportunity to quiz him on a variety of topics, including the supply chain transformations of 2020 and 2021, Brexit, e-cargo bikes and last mile deliveries, as well as his experiences in India.
Hi Alan, happy new year and thanks for talking to us. 2020 has one hell of a year for the logistics industry, albeit due to challenging and unwelcome circumstances. Looking back, how was it for you, and what changes did you see come to the industry?
Well, I actually started 2020 in India with the trans-India challenge. We drove a Morgan three-wheeler across India and back for charity and just returned to the UK almost as the country was going into lockdown, so we snuck in a few days beforehand and put ourselves into lockdown.
The early part of the year was notionally normal, but then of course the implications of the lockdown became clear. Obviously, I’m not directly involved in managing logistics businesses – I work as an observer now, but what I and others saw was a number of things:
Firstly, perhaps for the first time ever, logistics wasn’t taken for granted by the politicians. They realized that in the current environment, people had to be fed, watered, medicated and all the rest of it. Particularly with regards to the PPE supplies, logistics perhaps came into focus for the politicians in a way that was more tangible than it ever had been before.
So we at the Institute, and I personally, were very pleased about that. Having said that, the statistics I saw were that within a couple of months, big operators like DHL were at 80% of their sites were open. They were perhaps not working to the same model they had been, but they were still moving and shipping items and so on.
So the sector bounced back quickly and did OK, but there were still some disasters within it. The business of doing logistics for food services, for example, was immensely problematic. Whether it be restaurants, cafes, or cafeterias at work, the logistics behind those went absolutely down the pan, which presented huge problems for those operators.
In contrast, the home delivery side of things saw a huge surge; shops were shut and people didn’t want to go out. Grocery volumes were up nearly 100%, so I was told, while online-shopping was up 50-60%.
That figure is interesting because a couple of years ago I worked on the panel for the National Infrastructure Commission on their freight policy study. So I was a member of that panel, and I provided some consultancy input as well. At the time, I was asked what the online percentage would stretch to. I said that I thought online retail could stretch to more than 50% of volume within the next seven to 10 years. And it seems like we got there in a year! So yeah, the potential for structural change is enormous.
Then [after the 1st lockdown], of course traffic as a whole bounced back. This was largely because people wouldn’t travel on public transport. Naturally, I am referring to the UK example, it may have been different in other European countries. The traffic came back surprisingly quickly, but people were doing different things besides replacing public transport journeys with their car.
Therefore, the emissions bounced back very quickly too. And that’s the other thing that we’ve got to be hugely concerned about, as in parallel to coping with the virus, we’ve got to decarbonize. People aren’t going to offices, but they are traveling, and they’re traveling more by car, which is obviously hugely less environmentally friendly than public transport.
So there’s been a structural shift there, it’s going to be very interesting to see how that comes back and whether it can come back and whether policies can be introduced that will help it to come back. Policies which are seen as being sensitive to the needs of population rather than draconian.
In that regard, the UK government has actually introduced a huge programme of activities, mobility, walking, cycling. For example, a lot of road space has been cordoned off into traffic lanes for bikes. This is good for cargo bikes, but causes huge tension on parking and access. For freight vehicles, it also adds a very significant amount to the cost.
Therefore, the implication for logistics is a lot of freight is actually working at below utilization. This is particularly true if you’re delivering at high frequency in short lead times. And at the same time, work in towns and cities has been made more difficult by other policy priorities. Then, when you put that in the context of decarbonisation and look beyond the next year, that’s the crucial area to focus on.
The concern of the Institute and myself is that we’re going to lose the attention of the policymakers once the virus is fixed. That could mean some of the things that have not been particularly well planned end up being hardwired.
Looking into 2021, Brexit is obviously going to have an impact on logistics in Europe. What kind of developments do you anticipate?
When the UK voted for Brexit, I personally was pretty upset because it was the wrong decision. But it is what it was, and it is what it is. We at the Chartered Institute of Logistics and Transport formed a working group to try and at least internalize and articulate what Brexit might mean. We like to claim that it was us that invented the term frictionless, but others will probably contest that!
Anyway, we spent a lot of time trying to emphasize the importance of frictionless borders. In parallel to that, I did a lot of research work with Cranfield and others, on the impact of duties and tariffs in a WTO Brexit outcome. In addition, since then, the Institute, not me personally, has had representatives on what’s now called the Border Delivery Group (BDG). This is a cross agency organisation to coordinate measures to handle Brexit,
The role of the BDG was to make things as frictionless as possible. The reality now is that we have a situation where there is built-in friction. There’s also a very strange situation in Northern Ireland, which I don’t fully understand. Cargo is not moving seamlessly at the moment, and apparently, volumes are way down, nobody’s traveling.
However, that’ll have to start again by the end of the week or, early next week. That friction, combined with the migrant issues in Calais, is by all accounts causing a major shift in the sea routes, which is something I covered in my last blog piece. So I think we’re going to see some fundamental restructuring.
There are also some unexpected consequences. For example, The Times had a story about EU retailers just refusing to supply because the VAT and processing charges relative to the value of the transaction make it uneconomic to do so.
So, although we have a notionally zero tariffs, zero quota, arrangement, there are nuances of personal shopping, personal movement, bureaucratic barriers to trade and so on. I expect those issues will result in some unexpected and undesirable consequences that we’ve yet to see.
Nonetheless, the one thing the logistics industry does incredibly well is it responds. It’ll be responding with new routes and so on. Apparently, there are new routes opening up between Ireland and Cherbourg and Dunkirk, which means Irish hauliers can simply bypass the UK.
Liverpool port is also starting to see a big rise in unaccompanied freight from Iberia. One of my forecasts is that European truck drivers will simply refuse to come to the UK, and we don’t make it very nice for them anyway. So there’ll be a massive issue with capacity. On top of that, there have already been gaps on some supermarket shelves in my area. This is the consequences that will play out in logistical terms, and the industry will respond.
Zero tariffs and zero quotas sounds good, but a whole series of other frictions have also been put in place.
The decision to stop shipping goods due to the customs difficulties is being seen in both directions, isn’t it? How could this change things?
That’s correct; it actually reminds of a discussion I had at a dinner at the London Business School, where I got an MBA way back in 1975. Linda Yueh, one of their top economists, said that there will be a whole series of behaviors which shall pop out on both sides of the channel, whereby people interpret and apply regulations, and to be frank, in some cases just be bloody minded. I have to say I agree. That’s going to have a very significant consequence for the logistics industry because you can’t tell when it’s going to pop up.
There’s a story I always enjoy telling that relates to this issue. The route into the UK for Argentinian beef is through Rotterdam, and then on a truck back to the UK. There’s actually a heritage reason for that. They used to try and ship the beef into Tilbury, which sounds sensible. However, the sanitary inspections in Tilbury were so onerous and took so long, that after they’d gone through a container or two, some meat had already rotted, so they moved to the Netherlands, where apparently it was much easier.
The point here is that we’re going to get those sorts of situations where companies will just be pragmatic and reroute accordingly. Eventually, we’ll then get used to the costs.
It is also interesting to look at Dover crossing, which is often used as a force of habit. It’s embedded in how companies do things, rather than necessarily being a more cost effective method. The opportunity to use unaccompanied trailers and completely redesign the system, particularly for non perishable cargoes, will actually make things cheaper.
At the same time, however, it involves hand offs in the supply chain. So if you’re serving a Jaguar, Land Rover or Nissan plant, you will want to try and keep control of the situation. The industry is going to have to go and work out new models and find ways to compensate for the cost. It’s going to be a huge period of change.
One of the changes seems to be increased traffic at other ports, such as Liverpool. Do you see this trend continuing?
It’s already happening. Even before COVID, and the current Brexit arrangements, the fastest growing shipping service in the UK was the unaccompanied container service to Purfleet in the UK, just just by the Dartford Bridge, run by Cobelfret. They were already exploiting that trend.
That said, although I’ve got people that I can always talk to, I don’t track those volumes myself. And things probably haven’t settled enough yet for us to really get a good feel for it. At the end of the day, it is essentially about whether British consumers can easily get their fruit and veg. At the moment, we’re hugely dependent on European food – it’s massive.
You are currently working as Non-Executive director at e-cargo bikes, who provide electric bikes for transporting cargo in urban environments. What kind of advantages does an e-cargo bike offer to a logistics company compared to a modern-day van?
— e-cargobikes (@ecargobikes) November 18, 2020
Well, firstly, they are almost totally zero emissions provided a clean energy source is used. According to our figures, it’s 1% of an electric van and a half a percent of a normal van. Even electric vans create emissions because of the heavy batteries. They also create brake dust and tyre wear and so forth, which are part of the particulates.
So the bike avoids all of that, but clearly doesn’t have the payload of a van. Even so, the discovery we’ve made at e-cargo bikes is that if a bike works within a tight radius, then it can go out and come back repeatedly to a micro hub. Then the bike actually can do more work more efficiently than a van, largely because of the issues related to access and parking. The changing streetscape I mentioned earlier also helps the bikes.
Therefore, if the bike can carry the appropriate cargo, and be suitably scheduled, then it provides the opportunity to actually work more efficiently within a district. Then that district has to be served in bulk through a micro-hub. Alternatively the goods can be picked and packed locally for delivery in the district, with the bikes operating from the microhub.
What we’re certainly seeing in grocery is the opportunity to provide same day delivery service. This is something most of the big operators are really struggling with. We also see huge environmental benefits, as well as the opportunity to provide syndicated services for local shops and retailers.
We are getting massive support for e-cargo bikes from local authorities, who are really keen on it. We’re learning a huge amount about how to operate a business of this sort; it has a whole range of different conditions and different scheduling and planning constraints.
We’ve been constrained by the virus in the last nine months as to the speed at which we can develop. But we are nonetheless seeing some very encouraging signs. The challenge will then be to ramp quickly in order to be able to serve the larger industrial, retail clients at the scale they require.
We’ve got 50-60 bikes at the moment, and we can expand that very quickly. We now know how to configure a bike. We’ve had a whole range of technical problems with the bikes, which we’ve now solved. We’ve had a whole range of scheduling challenges that we are solving pretty well too. The next step is to offer large scale clients large scale solutions, and that’s a huge jump. So that’s what we’re now working on.
So it’s an exciting time. I started our business in consulting in my dining room, and I remember how challenging it was and it took some years to turn the corner and there were a few ups and downs on the way. This is a physical operational business that’s having the same issues, but we’ve also made it unlike some of the other flash delivery services, if I can call them that.
For example, we don’t use the gig economy as we see it as being exploitative and inhumane. We’re trying to create an employment environment for the people to work with us rather than work on a gig basis. The experience of that is that the people love us, and they want to come work with us. This means we can expand our ridership and deliveries very quickly, because we’ve got a great reputation.
One of the high spots last year was winning The Ashden Award, which is the top environmental award in the UK. It’s a really important recognition for us and it has opened a number of doors.
So, ultimately e-cargo bikes will be part of the future. The research I’ve done for an EU project into future models in urban delivery very much has e-cargo bikes as part of the system.
There’s also some good research that’s come out of Amsterdam, which suggests that cargo bikes will be able to relieve about 15% of the current urban delivery problems. If these bikes were deployed across the whole of the UK, it would translate into about 600,000 vans off the road – that would make a big difference to the environment and congestion.
It’s interesting that you touched on the gig economy, as it has been in the news for a while now. Indeed, there have even been reports of fatal accidents caused as a result of severe fatigue.
Yes, well I’m not going to publicly badmouth anyone in particular, but some of the practices I’ve seen are just dreadful.
Unfortunately, with the huge hike in unemployment we’re now seeing in the UK as a result of COVID, people will try anything. So there’s a pool of people that are ready and waiting to be exploited. They’ll then fall through the cracks then in the social system, and it’s a disgraceful situation really. There’s not much more that can be said about it.
How sustainable are the bikes compared to electric vans?
Well, I’m incredibly lucky because we’ve got this amazing group of experts that seem to be happy to come together, five, six times a year and chat about this stuff, share experiences and then go off and write papers. One of our big concerns is the huge embedded carbon and mineral exploitation that goes into some batteries, and the fact that that the life cycle analysis that has been done mostly ignores that implication.
And of course, for a bike it’s much much less. And there are arguments about exactly what the consequential tyre and brake emissions are, because these vans are pretty heavy. There’s been a derogation in the UK to allow greater vehicle weight on a nominal three and a half tonne van to enable an eco economic payload. It has gone to four and a quarter tonnes, to allow for the extra weight of the batteries and so on and so forth. And, if you’re going to operate a van of that sort then you have to look at your network anyway, because you may be range constrained.
So there’s a lot of understanding to go under the bridge as companies then look to change. I think the good news is that almost everything about logistics needs to be looked at going forward – from the routings and the seaports into the country, through to the delivery into more society-friendly city centres and so forth. The economic incentives will be there.
In addition, we’ve also got congestion charges and road user charging coming down the pipeline, together with the phasing out of internal combustion engines in cars by 2035 and in trucks by 2040. There is now a real imperative to change and there are a whole bunch of things coming together.
People have got to think about new solutions for their business, But towns and districts and city centers and so on also need to think about how they want to run their centres in future. They’re currently facing a simultaneous collapse in property taxes from retail together with the completely reconfigured use of city centers. Although I’m too old to be able to participate in much of it, I can advise a bit, and a huge period of change is about to appear.
Do you see drones or autonomous vehicles complimenting e-cargo bikes or competing against them?
Probably a bit of both. At the moment, the autonomous robots are for smaller payloads, which is a constraint. They’re being used at the moment primarily for restaurant deliveries rather than the market we’re targeting, so that would then be a compliment to the bikes.
The robots also have to cope with the operational requirements of pavements and crossings, which means that in some city centers, they will be more difficult to operate. One place where they’re working brilliantly at the moment is Milton Keynes, which has appropriate pathways and other infrastructure. It would probably be more difficult in a Kentish Town. So, in short, the answer is it’s horses for courses.
Moving onto another last mile issue, parcel lockers don’t seem to be as common in the UK as they are elsewhere in Europe. Why do you think that is the case?
Yes, they haven’t caught on to the same extent here as they have in some European cities. Part of the reason for that is that we don’t have the same preponderance of apartment living; the dwelling structures in our cities are different. There’s a very high cost to the parcel driver having to climb to the top floor of an apartment, which makes parcel lockers more attractive.
Click and collect here is very much based on retail outlets rather than lockers. I just did click and collect with John Lewis at our local Waitrose, and of course, they’re desperate for customers to do that because then you go to the actual shop and buy something else. And that’s a really smart strategy if they price accordingly.
Customers are incredibly sensitive to the price. They may pay 50 pounds for something, but if the delivery goes from one to two pounds, they’ll change their behavior. Therefore, the way consumers internalize things, and the way in which they respond, it may not always be what you expect.
Finally, it would be interesting to learn a little about the charity work you are involved in, can you tell us a little bit about that?
Well, we’ve got a long family heritage in India. So we set up this Trans-India challenge to try and work on social and economic development in rural areas. We had a bit of fun, too, don’t get me wrong. It’s been huge fun, and a very rewarding experience to look at the relief of poverty in poorer communities in India.
Having done that challenge, we produced a movie. So if you want to see it, you can order the DVD through the website (www.transindiachallenge.com) or stream it on Amazon Prime – it’s called The Indian Queen.
We’re now producing another, more thoughtful movie, which will look at the implications of social and economic development. I’m actively engaged in academic work to try and think that through and to try and bring forward the issues in world developments that need to be addressed from an economic and social policy point of view. That’s been a huge process of discovery in 2020. I’ve learned stuff I never thought I would ever touch.
And also locally, I’m chairman of our local Citizens Advice Service, which is basically helping people with their issues with benefits, debt, family relationships, employment and so forth. We have a great local team, and I’m really privileged to do that as well.