THE ASCENT OF THE WHITE VAN MAN – CAUSES AND CONSEQUENCES Lorenzo Casullo and Serbjeet Kohli Steer Davies Gleave ABSTRACT This paper highlights recent trends in the activity of Light Goods Vehicles in Britain and identifies the main socio-economic drivers that underpin the growth of this type of vehicles. In 2010, Light Goods Vehicles (LGVs) have reached the highest share of total road traffic in the past 50 years, underpinned by constant growth in van sales and in distance travelled throughout the 90s and 00s. Recent data also shows that vans have been more recession-proof than other vehicle types. The paper highlights the need for policy-makers and transport practitioners to explicitly account for LGVs, given the projected growth and their increasing importance in urban freight dynamics. INTRODUCTION – THE GROWTH OF LIGHT GOODS VEHICLES LGVs in the United Kingdom Light Goods Vehicles (LGVs) are vehicles not exceeding 3.5 tonnes gross vehicle weight and are commonly known as vans. LGVs now form the core of city logistics. The U.K. Department for Transport figures from National Travel Surveys show that van traffic accounted for 13.5% of all vehicle kilometres in 2010 in Great Britain. This represents the highest share reached by vans in the past 50 years, underpinned by constant growth in van sales and traffic throughout the 90s and 00s. Although a small share of overall traffic it is also the fastest growing component. LGV traffic has been rising nearly four times faster than rest of vehicle traffic. Between 1993-2010, road traffic for all motorised vehicles in Britain rose on average by 20.3%. While car traffic grew by 16.1% and HGVs only by 9%, light vans witnessed a growth of 61.6% over this period. Between 1997 and 2007 alone, van traffic has accounted for 31% of all new traffic in that period1. Furthermore, data from the DfT shows that vans have been more recession-proof than other vehicle types. For example, vehicle km of HGVs fell by 8% in 2009 compared to 2008 and then flat-lined in 2010, as a result of the recession and the decline in industrial production. LGV traffic only fell by 2.2% in 2009 and picked up again in 2010, potentially showing that different economic dynamics underpin the two types of vehicles. © Association for European Transport and Contributors 2012 1 FIGURE 1 - TRAFFIC VOLUMES 1949-2010 (UNITED KINGDOM) FIGURE 2 - TRAFFIC VOLUMES 1993-2010 (UNITED KINGDOM) FIGURE 3 - TRAFFIC VOLUMES 2005-2010 (UNITED KINGDOM, VKM INDICES) © Association for European Transport and Contributors 2012 2 In London, Transport for London (TfL) statistics report that between 2000 and 2008 vehicle kilometres travelled on London’s roads by LGVs increased by 18%, while vehicle kilometres travelled by HGVs decreased by 4%2. Total motorised road traffic on London’s roads (including cars, taxis, buses and motorcycles) fell by 3% between 2000 and 2008. As a result, LGVs covered 80% of all goods vehicle km travelled on London roads in 2008. Thus the growth of vans is more pervasive in urban areas and in the capital in particular. The relative “weight” of LGVs in London can also be measured by the pollution impact of vans, as detailed in the Impacts Monitoring Baseline Report for the Low Emission Zone produced in 2008. In this report, TfL estimates that the relative contribution of LGVs to London’s PM10 atmospheric emissions accounts for 24% of total traffic emissions. Likewise, LGVs account for 12% of all traffic’s CO2 emissions3. LGVs in the rest of Europe For countries where separate data for LGVs and HGVs is provided, it appears that the growth of vans is a widespread phenomenon across Europe. In the Netherlands, traffic growth for vans outstrips that of lorries by 10% in the period 2005-2010. In addition, the number of vans registered in the country has not been declining in line with that of lorries since the 2008 recession. In France, market data also shows a faster growth in vehicle registration for LGVs than for HGVs in the period 2005-2010. In addition, the economic downturn has brought about a decrease in the average mileage of HGVs (besides a total decrease in tonnes-km), as shown in Figure 4, but not in the average mileage of LGVs. The proposition that LGVs are more recession-proof than HGVs thus seems to hold for several countries. FIGURE 4 - AVERAGE MILEAGE 1990-2009 (FRANCE) © Association for European Transport and Contributors 2012 3 The case of Paris also offers an international comparison with London. The transport department of the Mairie de Paris provides traffic counts statistics over time. These show that the average mileage of HGVs has been declining since 2007 while LGV traffic has risen. In particular, Figure 5 below shows the average number of vehicles on the outer ring of boulevards surrounding Paris. The growth of vans (+47%) is matched by a decline in lorries (-29%) over the period 1993-2008, highlighting a similar trend to that seen in London. FIGURE 5 - HGV AND LGV IN PARIS 1993-2008 (NUMBER OF VEHICLES) Industry trends Evidence on the composition of the current van fleet in the UK is less readily available. However, the following information can be gathered from Department for Transport statistics4 and suggests what the typical van might be used for: almost half of all vans in London are privately owned (49.3% in 2011); 90% of all privately owned vans belong to male individuals; the majority of vans operate in the service sector and the largest single industry sector is construction; 20% of all van journeys for the purpose of delivery and collection of goods; Thus it appears that van producers are required to target different market segments with different requirements. This does not seem to be a constraint on the British market for light goods vehicles, which has recorded growth in sales over the past decade. The number of registered vans has grown from 2.38 million in 2000 to 3.20 million in 2010 (DVLA). In addition, sales figures from the SMMT also show that 189,389 vans were sold in the UK in 2011. This represents a 20% growth over 2010, at a time when HGV sales are going down (partly due to international competition) and car sales are sluggish. One of the interesting trends emerging from a closer inspection of the available data points to the fact that manufacturers have been developing vehicles’ volumetric capacities in recent years, thus increasing the potential load within the 3.5t threshold which classifies LGVs. © Association for European Transport and Contributors 2012 4 FIGURE 5 - VEHICLE REGISTRATION GROWTH A wider inspection of data on vehicle registrations at the European level shows that the period from 2008 to 2010 was not positive for European automotive markets overall, however the LGV market has been more resilient than that of HGVs in the downturn (2008-2009) and has grown faster in the moderate upturn (2009-2010). FIGURE 6 - VEHICLE REGISTRATION GROWTH © Association for European Transport and Contributors 2012 5 CAUSES - THE SOCIO-ECONOMIC DRIVERS This section provides an overview of the socio-economic drivers pushing the growth of LGVs that we have documented in the previous section. In particular, we investigate the relationship between the growth of vans and: Two macro-trends - economic restructuring and regulatory frameworks; Two micro-trends - e-commerce and self-employment. Our analysis is based on a review of the (relatively thin) literature on LGVs, as well as on the analysis of available data to extrapolate key correlations between socioeconomic trends and traffic patterns. Economic restructuring The British economy has undergone considerable changes in recent years, largely triggered by the direct and indirect impacts of the 2009-2009 recession and the subsequent years of low growth. While it is perhaps too early to draw conclusive evidence on the impact of such short-term changes on transport patterns, it is critical to assess the extent to which the current economic restructuring is exacerbating longer-term consumer choices and travel behaviour. In the short-term, the prolonged economic downturn has led to a reduction in the productive capacity and, soon after, in the consumption patterns of the British economy. From the figures presented in the previous section, it can be inferred that the change in the underlying economic context is an incentive to switch to smaller, shorter-distance means of freight transport. This is also recognised in the literature as translating into an overall lower use of private and commercial vehicles across highly motorised countries (Glaister 2011, Schipper 2011). One of the sub-trends developing within the low/no growth scenario is the emergence of a new category of consumers and travellers identified with the younger generation. Chatterjee and Dudley (2009) report that between 1992 and 2007 driving license holding had decreased from 48% to 38% for 17-20 year olds, and from 75% to 66% for 21-29 year olds. Their proportion of trips as car driver had correspondingly reduced. National statistics in Britain show that this age group is characterised by higher than average levels of unemployment, coupled with the highest internet-literacy rates and the highest proportion of self-employed: as we draw a link between these trends in the next sections, it is evident that the “intergenerational shift” in travel behaviour will be an analytical perspective deserving further studies, also in relation to the growth of LGVs. From a longer-term perspective, it is useful to introduce in our analysis the wider debate around the definition and the actual occurrence of what is known as “peak car”. “Peak car” is defined by Goodwin (2011) as a historical turning point, whereby a long-term increase in traffic turns into a long-term decline. The definition emerges from the interpretation of statistical evidence about time-series trends. Sloman et al. report that car driver trips per person went down by 5-7% between 2004 and 2008. Goodwin reports that between 1999 and 2009, the miles travelled by car per person reduced by 500 miles a year. © Association for European Transport and Contributors 2012 6 This concept has not yet been related to the rise of vans. However Goodwin finds that the miles travelled by walking, cycling, local bus and rail only increased by 133 miles a year in the same time frame, suggesting that a little over a quarter of the decline in car use could have been accounted for by a like-for-like mode transfer of journeys, the rest being accounted by a shortening of journey distance and the abandonment of some car trips altogether. In summary, the process of economic restructuring is related to the growth of vans through the following impacts: The downsizing of economic activity is partly reflected in the downsizing of the vehicle fleet and the breaking-up of trips into shorter journeys; Consumer trends in the short-term, including a reduction in purchasing power, are exacerbating longer-term trends such as the reduction in the use of cars. We agree that with Goodwin (2012) about the need to judge what is “leading” this trend, exploring the relevant factors and the sections/places where the “peak car” phenomenon is more evident. We do so in relation to the rise of Light Goods Vehicles and, by examining trends urban regulation, internet shopping and selfemployment in turn, we add a further dimension to the analysis which is triggered by the above considerations on “abandonment” of cars. In particular, we attempt to understand to which extent the growth of vans is part of a “replacement effect” (substituting both lorries and cars), or rather part of a “generation effect” (involving new traffic creation) in the context of profound economic restructuring and potentially behavioural changes described above. Regulatory frameworks At the macro level, the existence of different regulatory frameworks for HGVs and LGVs has progressively encouraged the shift from the former to the latter, especially in urban areas. On the one hand, policy-makers have progressively introduced more “punitive” measures for lorries in response to rising congestion, pollution and safety concerns. On the other hand, vans have been largely ignored by transport policies and hence they are often seen as vehicles that are less burdened with regulation. Thus they have accommodated a partial shift away from HGVs and the impact of regulatory frameworks is mostly responsible for a replacement effect. In Britain, several regulatory burdens can be avoided by choosing to drive LGVs instead of HGVs. For example, the EU Drivers’ Hours Regulations do not apply to commercial vehicles smaller than 3.5t and as such LGVs are practically exempted. Besides, it is enough for an LGV driver to hold a standard car driving licence to operate, as opposed to more stringent requirements for HGV drivers. In addition, van drivers are exempted from requiring an operating licence while lorry drivers must obtain one from the Traffic Commissioner, and as such demonstrate good repute, financial standing etc. (Allen et al. 2003). © Association for European Transport and Contributors 2012 7 In addition, urban policies tend confer a competitive advantage to vans over other vehicle types, particularly in the environmental arena. In London, for example, the Low Emission Zone initially came into force in 2008 and only applied to HGVs. In 2012, LGVs with Euro 3 and Euro 4 engines were eventually included. During this timeframe, the policy may have incentivised the shift to vans as a cost-saving measure. The absence of van-specific regulations (our review has identified the Low Emission Zone in London and the emission targets in Scotland as the only examples of explicit policies in Britain) partly explains why the competitive advantage of vans may have materialised in practice. E-commerce growth The first micro-trend affecting the growth of LGVs identified in the literature is the growth of e-commerce, including both the relative share and the absolute value of online sales (Browne et al. 2010). The e-commerce market is at different development stages in different European countries. This market is more consolidated in Britain given the large proportion of consumers reached by internet connections across the country. Nevertheless, it should be noted that this phenomenon is still relatively recent and can thus only partly explain the market growth of vans in the past decades. In Britain, the growth rate of online transaction outstrips the growth of total retail activities for the years between 2005 and 2010 (ONS 2011). The total value of eshopping has grown by more than 20%, so that web sales are estimated to make up for around 17% of all retail sales in 2010. Researchers predict that this sector will continue to expand and ,according to surveys from the grocery distribution business Ocado, nearly one in 10 consumers say they will not visit a supermarket in five to 10 years’ time, doing all of their grocery shopping online. FIGURE 7 - ONLINE SALES AND TOTAL SALES COMPARED (UK, INDICES) © Association for European Transport and Contributors 2012 8 The key relationship between e-commerce and LGV traffic rests on the assumption that most of the goods bought online need to be delivered to the respective business/home address of the buyer. Browne et al (2010) put forward the idea that “the majority of deliveries that involve groceries and parcels are made by LGVs which are ideally suited to the products and residential driving conditions”. As outlined in our previous sections, we believe this proposition holds for urban areas in particular. The anecdotal evidence linking e-commerce and LGVs is supported by figures showing that around 20% of all vans journeys are made for the purpose of delivery and collection of goods. Arguably, the additional movement of LGVs triggered by the e-commerce growth could be either categorised a generation effect or of a replacement effect, with respect to other motorised vehicles. When consumers divert their purchases from shops to online facilities, they are potentially reducing their walking/public transport/private car trips and adding vans trips. Thus these vans trips will only partly replace other motorised trips. In addition, they are likely to create a “multiplier effect” as shopping trips which might have included multiple “stops to shop” are broken down into different van trips for the delivery of each purchased good. A more definite conclusion is reached by Cullinane (2009): ““Vans delivering goods ordered online are … a total addition to the vehicle stock in the UK. In some cases they are replacing HGVs, but in the majority of cases they are performing a function that was previously not performed by a goods vehicle”. Further research is needed to explore the relative impact of e-commerce on trip replacement and/or generation, but our analysis point to the conclusion that both effects are likely to be triggered at the same time. In summary, the key characteristics of e-commerce stimulating the growth in vans are the following: Increase in home-delivery of small quantities from wholesalers to retailers; Increase in same-day operations and time-critical parcel deliveries; Increase in value density, higher technological requirements; Increase in the overall number of transactions The transport impacts of e-commerce can be in turn summarised as follows: Reducing the number of car-trips (first replacement effect) as consumers shop from home rather than hitting the high-streets and vans deliver goods to them; Reducing the number of lorry trips (second replacement effect) as the nature of fragmented, smaller-size deliveries requires more flexible logistic vehicles like vans; Increasing trip-creation for LGVs as different companies and individuals set up their delivery systems for home-based shopping (generation effect). The effects described above are clearly dependent upon the general macroeconomic context affecting the overall level of sales. It could be argued that any analysis of the relationship between vans and e-commerce should firstly examine whether e-commerce is itself generating, or rather replacing, retail sales activities. © Association for European Transport and Contributors 2012 9 Employment dynamics The second micro-trend affecting the growth of LGVs identified in the literature relates to the underlying changes in the size and composition of the workforce. In particular, the rise of self-employment (as opposed to employee jobs) is the key trend identified as a factor of vans traffic growth. The relative shift towards self-employment is fast-paced in Britain. Self-employment jobs have grown by 400,000 in the period 2005-2011 despite the recession, or perhaps as a result of it. Conversely, employee jobs have gone down in the same period by around 1-2%. More recent figures for the third quarter of 2012 show that the 22% of the quarterly growth in jobs came from self-employed positions. Overall, the self-employed category represents around 15% of the British labour force. Labour surveys show that around one third of these workers were employed in construction, transport or retail trade in 2011. FIGURE 8 - SELF-EMPLOYMENT GROWTH 2000-2011 (UK, INDEX) The link between self-employment and LGVs emerges in part from the observation that the sectors catering for self-employment growth are likely to use vans in order to carry out their service operations. A wide proportion of self-employed jobs include manual, semi-skilled and skilled services such as builders, fitters, electricians, engineers etc. which require availability of light vans to transfer work related material and tools. This could be contributing to rapid growth in LGV traffic which otherwise would have been car or public transport users. Allen (2002) summarises service operations encouraging the use of follows: LGVs as Outsourcing of service functions to specialist companies during the last decade - this has tended to result in a wide range of services provided to buildings and to homes that require vehicle trips; Increase in rapid response servicing (e.g. computer repairs etc.) – this has resulted in increases in LGV trip making in order to rectify such problems; © Association for European Transport and Contributors 2012 10 Development and use of more technological and communications equipment that requires installation, planned servicing and emergency repairs – these sectors primarily use LGVs for their engineers and servicing staff; The installation and maintenance of new telecommunication networks (e.g. cable networks). Although Allen does not draw a direct link between the use of vans and selfemployment, it is evident that the arguments put forward are strongly related to typical construction and IT services which are increasingly performed by the selfemployed. These functions, coupled retail services described above, suggest that rise in self-employment may be having a generation effect for van traffic. However it might also be argued that some of these trips would have been carried out nevertheless by workers employed by existing companies and, as such, it is important to examine the rise of certain sectors within the workforce besides the type of workers. In addition, the growth in the number of workers performing those functions is matched by a growth in the number of households. The number of households has increased by 7% since 2001, slightly faster than the 5.3% growth in the size of the UK population, due to the trend towards smaller household sizes. This has led to greater trip-making in order to meet these servicing needs. In summary, self-employment is an indirect driver of LGV growth, as an indicator of the growth of specific economic activities which rely on vans for carrying equipment, providing rapid response services and reaching a variety of households. This trend should, once again, be observed in the context of wider macro-economic changes. CONSEQUENCES: POLICY-MAKING AND MODELLING FOR FUTURE GROWTH Policy-making for LGVs Our analysis has highlighted the lack of explicit policy measures targeting Light Goods Vehicles. For instance, the absence of specific statistics tracking vans activity in several European countries is the first finding of our paper which raises questions over policy inactivity in this area: having readily available data is the first necessary step to provide a better understanding of vans and promote effective policies. However, improving data availability only will not be enough. In Britain, where statistics on LGVs are available, transport policy has nevertheless overlooked these vehicles at the national and local level. The examples of explicit policy-making for vans we have identified are limited to specific environmental provisions in London and Scotland. Policy-making cannot afford to ignore LGVs any further, given the growth of vans and their prominent role in urban logistics. The imminent risk is that of letting a large sector of the urban economy grow without any specific regulations, leading to potential conflicts between over-burdened and non-burdened road users as well as rising legal litigation in areas of policy vacuums. © Association for European Transport and Contributors 2012 11 A much broader view of the role of LGVs in the field of transport needs to be adopted, beyond that of simply managing delivery timings and parking spaces. For example, LGVs have the potential to reduce the carbon footprint of several nonessential car journeys. They also offer flexibility both to consumers and LGV drivers thereby creating efficiency saving within the transport system Thus besides recognising the importance of LGVs, further research should aim to understand the socio-economic and environmental effects of vans operations in major cities, in order to maximise the benefits arising with their growth. The 2012 Olympics in London have provided an opportunity for the city’s executive transport agency to implement a wide-ranging freight plan in order to reduce traffic during the sporting events and reduce the risks of congestion paralysis. In this context, Transport for London has worked with different categories of HGV and LGV drivers to set up Delivery and Servicing Plans as framework plans. These plans have, for instance, led to changes in the timing of deliveries, reduced maintenance services and promoted cooperation among businesses around distribution centres. Modelling LGV growth The trends outlined above suggest a future outlook in which LGVs continue to grow at a faster rate than HGVs and, potentially, cars. On the one hand, this is likely to result from the continuation of long-term changes in economic structures in Britain and most European countries. These include the growth of the service sector, the decentralisation of economic activity, and the off-shoring of manufacturing. The prolonged decline in economic activity, and industrial production in particular, are likely to exacerbate these trends by incentivising downsizing and the breaking-up of longer trips. In addition, the LGV-specific economic factors identified above are likely to promote the growth of vans even further. The multiplication of policy initiatives for environmental objectives, especially in the urban arena, is expected to provide an additional “regulatory” advantage to LGVs. The continued growth in e-commerce is expected to strengthen the need for real-time, dispersed logistics which vans can satisfy. And faster growth in self-employment is expected to result in increased use of light vans as a mode of choice for traders, builders, electricians etc. Despite the projected growth of LGVs (see Figure 8 for UK forecasts), transport modelling practitioners have, like policy-makers, overlook the specificities of LGVs. Most transport models treat them similarly to cars or to lorries, even though the underlying causes and the resulting behaviour of LGV traffic is different from that of other motor vehicles. Instead, models forecasting traffic growth should explicitly account for LGV growth separate from HGV and car growth, and the socio-economic drivers discussed above should be considered when forecasting LGV growth. For instance, when forecasting growth of work related trips, total employment should be separated categories and sectors, and these should be used in separately when forecasting for car and LGV growth respectively. © Association for European Transport and Contributors 2012 12 FIGURE 9 - TRAFFIC PROJECTIONS5 (PKM 2011-2031, UNITED KINGDOM) CONCLUSIONS The recent rapid increase in LGV traffic has happened mostly unnoticed, possibly due to the low proportion of LGVs in overall traffic. The expected continuation of this trend in the future, however, will result in LGV traffic becoming significant proportion of total traffic. This is especially true in cities – for instance, “peak car” theory may be due to a replacement effect of shopping trips in cars with deliveries by LGVs. While current policy and planning bodies largely ignore LGVs, it is important to consider LGVs as an integral part of the transport system. Our findings suggest that a different set of socio-economic variables should be used to understand, model and regulate vans. LGV-specific factors include, but are not limited to: economic restructuring towards smaller and more flexible production/consumption; unbalanced regulatory burdens for different road users; the growth of e-commerce and home deliveries; the rise of self-employed professions. Through a better understanding of the “generation” and “replacement” effects of LGV traffic with respect to other vehicles, it is possible to steer policy-making and modelling towards a new approach that does ignore vans, but rather attempts to maximise the benefits of this emerging sector of the urban economy. © Association for European Transport and Contributors 2012 13 NOTES 1 Van Activity Baseline Survey (2008), Department for Transport London Freight Data Report 2010, University of Westminster for the Freight Unit, Transport for London 3 Data refers to 2004 and it is likely that the contribution of vans to pollution has grown in line with their modal share in recent years 4 Vehicle Licensing Statistics 2011, Department for Transport 5 Road Traffic Forecasts 2011, Department for Transport 2 © Association for European Transport and Contributors 2012 14 BIBLIOGRAPHY AEA (2010), Light Goods Vehicle – CO2 Emissions Study: Final Report, AEA Group Allen, J., Browne, M., & Wigan, M. 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