LTB 297/16 - JOINT STATEMENT BETWEEN ROYAL MAIL LOGISTICS AND THE COMMUNICATION WORKERS UNION ON THE TERMS OF REFERENCE FOR THE PROGRESSION OF THE TRIAL ACTIVITY ON THE COMMERCIALISATION OF EMPTY LEGS

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LTB 297/16 - JOINT STATEMENT BETWEEN ROYAL MAIL LOGISTICS AND THE COMMUNICATION WORKERS UNION ON THE TERMS OF REFERENCE FOR THE PROGRESSION OF THE TRIAL ACTIVITY ON THE COMMERCIALISATION OF EMPTY LEGS WITHIN ROYAL MAIL LOGISTICS

No. 297/2016

13th May 2016

For the Immediate Attention of All:

Postal Branches

Divisional Representatives

Area Distribution Representatives

LGV Representatives

JOINT STATEMENT BETWEEN ROYAL MAIL LOGISTICS AND THE COMMUNICATION WORKERS UNION ON THE TERMS OF REFERENCE FOR THE PROGRESSION OF THE TRIAL ACTIVITY ON THE COMMERCIALISATION OF EMPTY LEGS WITHIN ROYAL MAIL LOGISTICS

Dear Colleagues,

Branches and representatives will be aware that the department has for some time been involved in extensive discussions with the business in relation to advancing our commitments to Logistics Future Ambitions.

Branches will recall that a Joint Statement on this subject was agreed as part of a suite of agreements which resolved the potential Logistics dispute in July 2012. These discussions were designed to explore new products and services that could be developed in the Up Stream areas, to arrest the significant bulk mail volume losses attributable to Down Stream access and help secure the future of the RDC Network and the LGV Fleet.

As a result an initiative the business called Project North Atlantic and an associated Joint Working Group were created and external consultants were appointed to provide assistance in assessing opportunities that may be available for development.

The JWG activity commenced on 5th May 2015 and ran through the summer focusing on exploring a range of potential opportunities utilising the warehousing capacity within the RDC Network, such as external cross docking, storage and stock management and pick and pack supply chain activities for external companies.

In relation to the LGV/Logistics services the JWG analysed the existing Royal Mail Fleet profile, VOC Network placement and operational capabilities to assess opportunities to provide logistics/distribution services to the wider market.

The most relevant immediate output was the commercialisation or selling of existing empty legs within the current Royal Mail service profile. Around 30% of Royal Mail services currently run empty which is around the industry standard. However given the size of the Royal Mail LGV Fleet, which is the largest in the UK by some distance, this equates to a significant opportunity.

Further analysis shows that Royal Mail Group runs around 775,000 empty legs per year. Obviously any commercialisation of these legs would have to compliment the core operation and mitigate the prospect of service disruption and therefore focus has predominately featured on return legs only. As such when filters are applied the outcome suggests that around 56,000 empty legs per year could be considered for sale.

Intense discussions have therefore been ongoing on the Terms of Reference for a trial at a limited number of VOC’s to test the concept of selling empty legs and providing distribution services to the wider Logistics market.

Attached at Annex A for the information of Branches and representatives is the agreed Joint Statement in relation to this issue. In addition to the Joint Statement also attached at Annex B are the full Terms of Reference.

Representatives at the trial sites have been briefed in detail on the contents of the Terms of Reference. However, Branches will note that participation in the trial activity by our members is on a voluntary basis and that robust safeguards have been secured in regard to protection of earnings and attendance patterns for both participating and non participating drivers.

The package of reward and protections surrounding the trial is we believe excellent on the basis that participation in the activity is voluntary. However, we have informed the business that should the trial be viewed a success we would require a far wider discussion and agreement on the terms of deployment prior to any further roll out.

The CWU will be fully involved in all aspects of the trial and its review through the Joint Working Group and activity at the trial sites.

We believe that this trial is significant as it represents the first real initiative to test the viability of utilising our Fleet to service the wider logistics market place, which we believe can provide a platform to reverse recent trends and grow workload in the upstream areas of the business. As such we are sure that the progress that has been made in relation to this issue will be welcomed by Branches and representatives.

Any enquiries in relation to this LTB should be addressed to Davie Robertson, Assistant Secretary, email: dwyatt@cwu.org or shayman@cwu.org quoting reference number: 211.06

Yours sincerely,



Davie Robertson

Assistant Secretary

ANNEX A

JOINT STATEMENT BETWEEN ROYAL MAIL LOGISITICS AND CWU ON TRIAL ACTIVITY FOR THE COMMERCIALISATION OF EMPTY LEGS



Introduction

Royal Mail and the Communication Workers Union are working together in developing key business policies, mutual interest solutions and a new culture, which is at the core of all the commitments contained in the BT2010 Agreement and the Agenda for Growth, Stability and Long Term Success Agreement.

In line with these commitments this Joint Statement launches the commencement of joint trial activity on the Commercialisation of Empty Legs in our Logistics road Network.

Background

The Logistics function within Royal Mail provides the business with an integrated end to end transport solution that services the operational requirements of the business. Royal Mail Logistics and the CWU recognise the pressures of the increasingly competitive and rapidly evolving business environment that we operate in and are committed to ensuring that our National Logistics operation remains in the best possible position to provide robust levels of service to our internal customers which:

Fulfils the requirements of both internal and external markets
Maintains excellent Quality of Service
Optimises the ability to accommodate new products and services, consistent with our joint commitment to a growth agenda.
Equally, both parties acknowledge that for Royal Mail to successfully compete with its competitors it will have to offer truly comprehensive solutions to current and future customers, i.e. embracing and moving to the forefront of the information and convenience agenda and re-designing industry and customer expectations.

The Business Transformation 2010, Agenda for Growth and Joint Statement on Logistics Future Ambitions agreements committed both parties to a programme of work to explore those opportunities.

In May 2015 Royal Mail Logistics and the CWU commenced a joint project to evaluate all such opportunities. To support this activity a Joint Working Group with the engagement of a mutually selected external strategy consultancy firm was established. The project addressed a range of potential initiatives within the Warehousing (RDC), LGV Fleet as well as possible combined capabilities and identified a number of possibilities suitable for further joint development and trial activity. The first of these joint activities is the Commercialisation of Empty Legs.

Commercialisation of Empty Legs

It is jointly recognised that the nature of traffic flows within our core network operations across Royal Mail and Parcelforce results in a number of empty legs. Currently the percentage of empty legs within the Royal Mail Network is around the industry standard. This represents a significant available capacity within our operation which could possibly be utilised by external customers.

In conjunction with the Joint Working Group, the strategy consultants tested the market on the viability of commercially offering some of our current empty leg capacity. They identified that Royal Mail was seen as an industry leading Fleet operator providing quality vehicles and highly trained Professional Drivers and as such demand for such a service was present from both direct customers and capacity brokers. This has indicated that a large number of service legs nationally could provide an additional source of revenue, enhancing services offered by National Logistics while reducing the proportion of empty leg running.

Joint analysis has defined the number of usable legs into two main operational opportunities. The first being the marketing of current direct empty leg road services on existing routes and the second expanding this opportunity to potentially longer empty legs by utilising the additional positioning of road services.

Given the above both parties have agreed to test the above assumptions by moving to a limited trial phase, during which the proposition is to offer empty leg capacity to the external market via direct contract opportunities and third party logistics brokers. Trial activity will be strictly controlled and expanded on a phased basis.

It is anticipated that the trial will run for six months commencing on the 16th May 2016. To ensure that the trial progresses in a controlled manner the initial launch will be limited to the following four VOC’s:

Bridgend VOC
Northern Home Counties (NHC)
National Distribution Centre (NDC)
Yorkshire Distribution Centre (YDC)
A small number of jointly agreed services at the sites will be involved in the trial with driver participation on a voluntary basis. The activity will be reviewed by the JWG on a monthly basis where expansion of the trial activity to additional VOC’s and services will be considered and where deemed appropriate agreed.

A full briefing of the Distribution Management teams and the CWU Representatives from those sites will take place to ensure that the aims, objectives and agreed operational parameters are fully understood. Joint communications will be launched at participating sites to ensure that all drivers are aware of the activity and of any opportunities to participate and fully understand the nature of any such commitment.

Both parties recognise that the trial activity will introduce new parameters to scheduling which rely on the cooperation of third parties. To that end a detailed terms of reference has been developed and agreed to support the deployment of the trial activity.

Any changes to working practices during this trial activity are agreed by both parties on a without prejudice basis and do not set any standard for a deployment model should the trial be considered a success.

At the conclusion of the trial the activity will be assessed against the success criteria and further National discussions will commence on the viability of a wider commercial offering and a suitable deployment model. No further roll out of the trial activity will take place until these discussions have concluded in agreement.

The trial activity will be monitored by the JWG who will review progress, address any issues and where necessary agree any amendments based on experience gained from live operational scenarios.

Any issues of interpretation of this Joint Statement and associated Terms of Reference should be referred to the respective Headquarters for resolution.



Euan McMurdo Davie Robertson

Logistics Director Assistant Secretary

Royal Mail CWU



Date 11May 2016

ANNEX B

TERMS OF REFERENCE BETWEEN ROYAL MAIL LOGISTICS AND THE COMMUNICATION WORKERS UNION FOR THE PROGRESSION OF THE TRIAL ACTIVITY ON THE COMMERCIALISATION OF EMPTY LEGS WITHIN ROYAL MAIL LOGISTICS

Introduction

Royal Mail and the Communication Workers Union are working together in developing key business policies, mutual interest solutions and a new culture, which is at the core of all the commitments contained in the BT2010 Agreement and the Agenda for Growth, Stability and Long Term Success Agreement.

As such, Royal Mail have committed to provide the CWU with genuine engagement at the development stage of key business policies supported by transparency and good information share, in order that the CWU can influence and shape key National policies before decisions are made.

Background

The Logistics function within Royal Mail provides the business with an integrated end to end transport solution that services the operational requirements of the business. Royal Mail Logistics and the CWU recognise the pressures of the increasingly competitive and rapidly evolving business environment that we operate in and are committed to ensuring that our National Logistics operation remains in the best possible position to provide robust levels of service to our internal customer’s which:

Meet the needs of both internal and external markets
Maintain excellent Quality of Service
Optimise the ability to accommodate new products and services, consistent with our joint commitment to a growth agenda
Equally, both parties acknowledge that for Royal Mail to successfully compete with its competitors it will have to offer truly comprehensive solutions to current and future customers, embracing and moving to the forefront of the information and convenience agenda, re-designing industry and customer expectations.

The Business Transformation 2010, Agenda for Growth and the Joint Statement on Logistics Future Ambitions agreements committed both parties to a programme of work designed to:

Consider the logistics marketplace to identify growth opportunities utilising Royal Mail fleet and warehousing capabilities
Identify how cost efficiency and revenue can be improved and achieved via new market diversification
Establish ways to reduce empty legs and improve utilisation of the Royal Mail fleet through additional logistics business
Identify other products & services to provide logistics solutions to other organisations (mail, parcels, retail or other) to enable joint optimisation with Royal Mail either in one integrated network or potentially new networks.
Assess options to sell and buy ad-hoc workload and peak/single day workload on a day-to-day basis on logistics spot markets.
To avail the above in May 2015 Royal Mail Logistics and the CWU committed to undertake a joint project, creating a Joint Working Group with the engagement of a jointly selected external strategy consultancy firm to evaluate all such opportunities. This project addressed a range of potential initiatives within the Warehousing (RDC), LGV Fleet as well as possible combined capabilities and identified a number of initiatives suitable for further joint development and trial activity. The first of these joint activities is the Commercialisation of Empty Legs.

Commercialisation of Empty Legs

It is jointly recognised that the nature of traffic flows within our core network operations across Royal Mail and Parcelforce results in a number of empty legs. Currently the percentage of empty legs within the Royal Mail Network is around the industry standard. This represents a significant available capacity within our operation which could be utilised by external customers.

In conjunction with the Joint Working Group, the strategy consultants tested the market on the viability of commercially offering some of our current empty leg capacity. They identified that Royal Mail was seen as an industry leading Fleet operator providing quality vehicles and highly trained Professional Drivers and as such demand for such a service was present from both direct customers and capacity brokers. This has indicated that a large number of service legs nationally could provide an additional source of revenue, enhancing services offered by National Logistics while reducing the proportion of empty leg running.

Joint analysis has defined the number of usable legs into two main operational opportunities. The first being the marketing of current direct empty leg road services on existing routes and the second expanding this opportunity to potentially longer empty legs by utilising additional positioning road services. While it is agreed that both options will be tested during the trial the CWU believe that the use of positioning would expand the range of opportunities with minimum risk to service.

Royal Mail has developed a database of empty service legs using the national logistics Road Service List (RSL) that are within strict criteria set by the JWG, which minimise potential effects on the integrity of our internal networks and ensure that our drivers remain safe and legal at all times.

Preliminary discussions have taken place with both direct customers and third party logistics capacity brokers which have proved positive and modelling activity has identified potential commercially viable opportunities.

Given the above both parties have agreed to test the above assumptions by moving to a limited trial phase during which the proposition is to offer empty leg capacity to the external market via direct contract opportunities and third party logistics brokers. Trial activity will be strictly controlled and expanded on a phased basis.

Both parties recognise that the trial activity will introduce new parameters to scheduling which rely on the cooperation of third parties. It is also recognised that the wider haulage industry does not necessarily adhere to the fixed vehicle scheduling criteria which are the standard in Royal Mail. As such the viability of any commercial opportunity may depend on the ability to control or minimise waiting and load/unload time at third party customer sites. To that end commercial agreements will seek to maximise reliable scheduling and minimise uncertainty. Therefore the following criteria will be the optimum position sought in any commercial arrangement, though it is accepted that these criteria may be subject to negotiation with any third party:

Initially only final return empty legs on any current service will be commercially offered to the market
Empty legs will only be commercially offered where with the addition of stem mileage/time drivers hours and working time are not compromised or without reducing daily or weekly rest with overall daily driving hours not exceeding 9 per day
Longer empty legs will only be commercially offered where the use of positioning allows the fixed scheduling of the return load
All third party sites will be fully risk assessed in line with our current agreed standards
All third party loads will be suitable for safe carriage on the relevant Royal Mail trailer associated to the empty leg and will not include hazardous goods
Commercial agreements should stipulate loading/unloading at collection and delivery points within 30 minutes of arrival
Commercial agreements should assign primary responsibility for loading and unloading to the third party. Where Royal Mail drivers are required to assist they will be fully trained in all relevant processes and in the use of all mechanical handling equipment. It is anticipated that this will be restricted to the use of hand pallet trucks. Drivers must have access to check loads prior to dispatch and total combined load weights must not exceed agreed loading patterns or combined vehicle weight
Commercial agreements should seek continuous arrangements for the utilisation of specific empty legs as this maximises the ability to schedule
Where an empty leg is being sold on a continuous basis a notification will be added to the national RSL confirming the detail
Where empty legs are to be sold on an ad-hoc basis commercial agreements should include sufficient notice to ideally provide drivers with a proposed schedule a week in advance. Where this is not possible drivers will be given a minimum of 24 hours notice of a change to their normal schedule
It is also recognised that the trial activity will require variations to our agreed ways of working participation for the duration of the trial by our Professional Drivers will be on an entirely voluntary basis. During the trial elements of the National Agreement for the Implementation of the Road Transport Directive and the Introduction of the Professional Driver will be varied as defined below for participating drivers only. The full terms of that agreement and all other national agreements will be unaffected for all other staff and will resume for participating drivers at the conclusion of the trial activity.

The full terms of the Agenda for Growth Agreement as detailed in Section 3, Legal Protections, with regard to the outsourcing of workload will fully apply to this trial activity. For clarity no agreements will be made with any third party operator or capacity broker in relation to the commercialisation of empty legs that would entail the movement of Royal Mail workload on an external carrier’s services. Equally the use of agency resource within the trial will be restricted to instances where no internal drivers have volunteered for a particular service. The changes to working practices during this trial activity are agreed by both parties on a without prejudice basis and do not set any standard for a deployment model should the trial be considered a success.

At the conclusion of the trial the activity will be assessed against the success criteria and further national discussions will commence on the viability of a wider commercial offering and a suitable deployment model. No further roll out of the trial activity will take place until these discussions have concluded in agreement.

The trial activity will be monitored by the JWG who will review progress, address any issues and where necessary agree any amendments based on experience gained from live operational scenarios.

Resourcing Principles

Royal Mail reaffirms its commitment that ‘People Issues’ will be at the forefront of planning and that such issues arising from local activities will be dealt with in line with our existing agreements.

Using feedback from potential customers and analysis of the market the most commercially viable empty legs within the agreed criteria will be identified and Commercial agreement will be reached with third parties. Based on this information the JWG will then agree the VOC’s to participate in the trial activity.

It is anticipated that the trial will run for six months commencing on 16th May 2016. To ensure that the trial progresses in a controlled manner the initial launch will cover four VOC’s with a small number of services. The activity will be reviewed by the JWG on a monthly basis where expansion of the trial activity to additional VOC’s and services will be agreed.

Where it is agreed which VOC’s have been selected, a full briefing of the Distribution Management teams and the CWU Representatives from those sites will take place to ensure that the aims, objectives and agreed operational parameters are fully understood. Joint communications will be launched at participating sites to ensure that all drivers are aware of the activity and of any opportunities to participate and fully understand the nature of any such commitment.

For each VOC the specific empty legs to be commercially offered will be identified and agreed locally. Where this has been done volunteers will be sought to participate in the trial activity. A number of reserves will be identified that could cover at short notice as a result of any unexpected service disruption due to unforeseen issues.

Direct Empty Leg Services (without positioning)

Where specific empty legs on existing work duties have been identified as direct services without positioning the duty holder or duty holders (if the duty is part of a rotation) will be invited to participate in the trial. Where they agree to do so, they will become part of the trial. Where any individual declines to participate they will relinquish the duty on days where the empty leg has been commercially sold. In such circumstances drivers will be reallocated to other driving workload. The aspiration will be to maintain or provide a best match to their current attendance patterns while maintaining the associated earnings of the driver.

Where all drivers on a rotation including a duty with a designated empty leg decline to participate, the duty will be removed from the rotation for the duration of the trial. Alternate workload matching the current agreed attendance patterns and earnings packages will be assigned in line with the terms of the temporary change section of the PDA.

Drivers who participate in the trial will agree to perform additional hours associated to the commercial commitment to the third party customer subject to the strict adherence to all Drivers Hours and working time limits across the day, week and reference period
Drivers hours and working time will be managed in line with the principles stated above. All additional hours above core will be paid at overtime rates. Additional Meal Relief will only be aligned where legally required and any additional meal relief required by the extension of hours must be scheduled where drivers can freely make use of their time (required relevant to the law) and have access to rest and welfare facilities where possible
Exceptionally for the purposes of this trial this meal relief will attract payment as additional hours. In the interests of clarity an example of this may be where a driver is taken beyond their scheduled hours due to additional travel time or unavoidable waiting time for a load at a customer’s premises
Where a participating driver can not extend duty on a particular day they will notify management providing as much notice as possible to ensure that timely alternative arrangements can be sourced. Where this requires them to change duty on that day the above principles to reassignment will apply. In line with all local resourcing principles Annual Leave and Overtime will be resourced in the normal way and Annual Leave already authorised in line with all local and national agreements will remain unaffected by the trial
As the trial develops any increase in identified empty legs sold by the commercial team will continue to be resourced using the principles above
All drivers will be provided with the relevant site rules and safety documentation for all third party sites they will be required to visit
Route assessments to/from customer sites will be carried out by Advanced Driver Coaches prior to the commencement of any service
Isotrack will be upgraded to allow drivers the opportunity to plan safe routes to customer sites using the in-cab Sat Nav capabilities
Full training on Customer security or trailer sealing requirements will be completed prior to the commencement of any service
Drivers will be required to complete either an end of shift debrief or a duty tick sheet debrief
Indirect Empty Leg Services (with positioning)

Where positioning services are used to convey the customer loads to and from the RDC/VOC, the positioning services will be arranged in line with the above principles for Direct Services.

Where such loads are then assigned to an existing empty leg service and can be loaded and conveyed within the current duty times and service specification on the long empty leg this will not require the driver on that leg to volunteer. In such cases drivers will be given full familiarisation training on the load characteristics and load plan.

Training/Communication

All drivers who volunteer and are selected to participate in the trial along with local managers, Advanced Driver Coaches and CWU reps will be involved in a joint workshop to ensure they are aware and understand fully the details of the trail activity. This may include identification of 3rd party service requirements, routes and possible issues. The workshop will also include training on the enabling and use of the Route Guidance elements of Isotrak for travelling to third party locations. It is also recognised that 3rd party loads may be heavier than existing Royal Mail loads and as such it is important that the drivers are made aware of this so they can maintain a safe driving style at all times. For the purposes of the trial, drivers will be made aware and briefed in advance of any excessive increase in loads where driving styles will need to be adapted to accommodate. In addition we will jointly review and develop an appropriate training model during the trial which is to be available for any further deployment. All driver coaching will be delivered by the Advanced Driver Coaches. In parallel to this activity there will be a robust communications and engagement plan.

Health and Safety

The Health and Safety of our drivers is of paramount importance. CWU Health and Safety Reps will be consulted on all Customer Site, Risk Assessments and route assessments. All Load Plans will conform to current agreed Royal Mail Standards and the use of all Mechanical Handling equipment will be covered by the relevant Risk Assessment and Safety documentation. Any proposed variation to the above will be the subject of consultation and agreement with the CWU Health and Safety Department prior to deployment.

Support Functions

As part of the process a detailed what happens next list will be agreed and supplied to participating VOC’s, Drivers, Advanced Driver Coaches and CPC. Drivers will be able to seek support from the local VOC or directly from CPC on issues covered on the list. The main goal should be to prioritise the driver’s safety and the security of the load while maintaining the driver’s hours inside daily and weekly rest requirements.

There will be regular joint review meetings of the JWG who will oversee activity to discuss the development and ongoing status of the trial in order to review local progress and expected timescales.

Equally, the JWG will be available to assist local managers or CWU representatives should issues occur at any site.

Where there is a concern or issue regarding the interpretation and/or the application of the trial activity then the issue should be referred to the NLSG for assistance.

CWU Involvement

The role of the CWU Representatives within the trial activity is fully recognised, as is the requirement for appropriate release in order for them to meaningfully prepare, participate and obtain the views of their members. It is agreed that in line with the IR Framework, CWU Representatives undertaking this work will not suffer financial loss. To this end it is agreed that local managers will facilitate this release and that all reasonable requests for release will be agreed.

Management and CWU Representatives will agree locally, on a weekly basis the period of the release required.

Success Criteria

As part of the continuous review and at the conclusion of the trial activity the JWG will assess the success of the trial against the following criteria.

Customer Satisfaction – Feedback will be sought from Customers on the service provision on all aspects of the trial.

Driver Feedback – Driver’s views will be sought on operational issues, failures and changes to working practices.

Postal Operations - A full review will take place on any adverse affect on Postal Operations.

Financials – A full review on the financials and an assessment of the ongoing commercial viability will take place.

The success of the trial will be jointly assessed across all four areas.

Any issues of interpretation of this Joint Statement and associated Terms of Reference should be referred to the respective Headquarters for resolution.

Euan McMurdo Davie Robertson

Logistics Director Assistant Secretary

Royal Mail CWU

Date 16th May 2016