Rising driver wages look set to exacerbate the current squeeze in labour supply, Meachers Global Logistics MD Stuart Terris has warned.
Commenting on the financial performance of the firm in the year to 31 May - which notched up a 25% increase in turnover with a 67% rise in pre-tax profit - Terris pointed to the ongoing driver shortage and fuel price volatility as the two main operational headwinds facing the company.
On the former, he said: “We’re on top of it as we speak, but we’re anticipating more problems around the corner because driver costs are escalating more rapidly, particularly with own-account operators. The likes of Tesco can afford to pay their drivers £15/hour just by adding a penny to the price of beans, but we can’t do that.”
Meachers, which has still given its drivers a “significant” increase, is trying to concentrate instead on attracting new people into the profession, said Terris.
In the last six months, it has launched its Warehouse to Wheels programme, under which four warehouse employees have so far been trained up to their C+E licence. At the same time, four existing Category C drivers have been trained up to C+E under the firm’s older HGV Licence Upgrade Scheme.
Fuel price volatility remains the other major concern despite recent price drops, added Terris. The firm has a fuel surcharge mechanism to track prices as they rise but although recent drops have positively affected cashflow, he said, “it’s not the huge benefit everyone expects as we pass that on to our customers”. Falling fuel prices also do nothing to offset the firm’s expenditure on AdBlue, he confirmed.
Turnover at the firm rose to £25.5m during the year (2014: £20.3m) while pre-tax profit hit £2.1m (£1.2m), leaving Meachers with an 8% margin. Terris attributed the rises to a couple of new contracts including one from a drinks company and to organic growth from existing customers, as well as to the establishment of a new 70,000ft² warehouse in Southampton that was "bursting at the seams".
However, much of the new work was of a one-off nature and Meachers is unlikely to see further similar increases in turnover and profit this year, he indicated.
“Our aim this year is to replace those one-off contracts with permanent contract business,” he said. “I don’t predict an increase over last year, but the way things are going, we’re not going to be a million miles away from repeating last year’s performance – and we’ll certainly take that.”
