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Do consolidation centres work?

24 September 2008

The Department for Transport (DfT) needs to conduct a study to prove whether freight consolidation centres (FCCs) are truly benefiting operators, and determine who should finance them, the South London Freight Quality Partnership (SLFQP) has claimed.

According to the SLFQP, there is a confusion as to whether they should be funded by local or national government, or the transport industry. Chris Douglas, communications  coordinator for SLFQP, says: "The environmental benefits are clear, but the key stumbling point is who should pay for them."

According to Douglas, if FCCs are purely an environmental project, the government should fund them, but if FCCs are feasible business ventures, then he believes "operators and retailers will be happy to invest".

SLFQP's own feasibility study, commissioned by Transport for London (TfL) and Croydon Borough Council, at the end of last year, found that of the three existing consolidation centre schemes, the Heathrow site is the most successful. Operated by DHL Exel Supply Chain, the centre has cut the number of deliveries made to the airport terminals by up to 65% between 2000 and 2006.

Douglas puts this down to the fact that BAA, Heathrow's operator, has been able to specify use of the consolidation centre into the leases of the retailers as they have come up for renewal. Currently only a few retailers at the airport do not use the centre.

In comparison, Norwich FCC, opened in 2007 and part-funded by the Norfolk County Council from the CIVITAS SMILE project, only has four businesses using the site.

Graham Mayes, development manager for Foulger Transport, which runs the centre, admits there have been some difficulties. "It is still very early days to get this high on people's agenda," he says. "There is no industry awareness, so it needs longer than a year to prove it is a success. [One problem is] that it is entirely voluntary; there is nothing to force businesses to join."

Meanwhile, European Commission funding for the Bristol Broadmead FCC, set up in 2004, has come to an end, meaning retailers using the scheme are now being charged for its services. Although there is still some funding from Bristol City Council, a spokesman says this is likely to decrease each year, but adds that no companies have pulled out of the scheme yet.

With further centres being trialled in Glasgow and Bath, Douglas says it is imperative that the DfT conducts a "national, open-book access study, which would show bottom-line operating figures".

He adds: "Investing in further schemes is not worthwhile until it is proven that FCCs are economically viable. Operators and retailers need to see transparent figures to prove there are profits to be had."


Joanna Bourke
Email at joanna.bourke@rbi.co.uk
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