FTA MD of membership and policy James Hookham has said he is not surprised third party logistics companies (3PLs) have proved unwilling to discuss their role in the application of penalty charges for non-compliant deliveries at retailers’ distribution centres, and advised hauliers unhappy about having to pay the fines to stop taking on contracts that involve them.
“3PL silence on this issue doesn’t surprise me as they, like most other businesses, rarely comment on their contact terms with customers,” Hookham told Motortransport.co.uk in response to the growing controversy over penalty charges at such DCs, many of which are run for them by 3PLs.
While fines for late or otherwise non-compliant deliveries may seem unfair, given that the causes are often outside the control of vehicle operators, they are usually spelled out in the original contract “so there should be no surprise when they are applied”, stressed Hookham. “Airlines get fined for missing landing or take-off slots; train companies and Network Rail get fined for late trains. Penalty clauses are a fact of life in service industries,” he said.
The best way for vehicle operators to end the practice is to stop accepting work with such terms included, added Hookham. “The fact that so few have chosen to take this option perhaps highlights that this is work most hauliers on balance value, or perhaps know others will accept if they don’t,” he said.
Suggesting hauliers should price the risk of such fines into their contracts wherever possible, Hookham admitted, however, that Motortransport.co.uk’s recent investigation into the problem showed “that the scale and frequency of fines may have reached a level where they are becoming counterproductive”.
“Retailers and 3PLs should understand the perception and impact of these conditions on smaller operators and be aware of the resentment and tensions that could be creating a problem for the longer term,” he advised.