Operators have painted a mixed picture of the sector as they look to gradually restart their businesses. So should they be preparing for an upturn in the months ahead? Or are they bracing themselves for a second wave?
More schools have opened since 1 June, with Welsh schools set to re-open at the end of the month, but many companies admit it is difficult to plan ahead without knowing when further restrictions might be eased.
Early indications are that in places such as the North East, where Covid-19 infection rates have been among the highest in the country, few schools have seen pupil numbers rise, as people fear further infection. This will make it difficult for some parents to return to work if childcare is an issue.
Surveys undertaken by the RHA in April showed that 50% of drivers and 46% of trucks had become inactive, with 25% of drivers on furlough schemes. Another survey last week suggested around 16% of businesses could collapse within weeks without sector-specific support from the government.
Among the worst affected sectors are removals, car transporting, medical, construction, quarries, public authorities and manufacturing.
Hauliers agree that reviving business activity will not be an easy task, particularly as 73% of the firms surveyed indicated that their cashflow had been significantly reduced.
Return to work
Caledonian Logistics, based in Aberdeen operates 75 vehicles and has had 20% of its staff on furlough. The company had reduced its trunking operations in line with the reduced volume of work, but is now finding that volumes are starting to increase again. “Depending on the rate of business returning to normal, we will stagger the return of the furloughed staff," MD Derek Mitchell told motortransport.co.uk. The company’s cashflow has been affected but agreeing payment breaks has helped to ease the situation.
Others have found a return to work more straightforward. Cambridgeshire-based Knowles Transport operates a fleet of over 200 vehicles and 350 trailers, but MD Alex Knowles believes that bringing staff back again is a relatively straightforward process.
Because of the sectors that the company operates in, business has in the main carried on operating normally with only staff in the pallet network part of the business being placed on furlough. There has not been a need to streamline the business to respond to the Covid-19 crisis. Business is now picking up again and Knowles reports that most of the staff on furlough are being brought back.
Massey Wilcox operates internationally from Somerset with a fleet of over 60 vehicles. The business responded to the downturn with a range of cost-reducing measures, including using the furlough scheme, taking vehicles off the road, taking repair and maintenance contract breaks and finance holidays, as well as taking trailers off the road to reduce maintenance costs. MD Robert Wilcox reports that things are now picking up: “We reduced the fleet to match demand, but the demand is now returning and so are the drivers and their trucks.”
The RHA April surveys showed that some 57% of respondents believed that a weekly furlough scheme would be vital to help firms emerge from the crisis. Caledonian Transport’s Mitchell agrees: "Yes it is vital, it gives us more flexibility in getting the staff back into work as business improves."
"Utter confusion"
Wilcox also sees the flexibility in bringing staff back as an advantage. The RHA survey results raised concerns about how a lack of roadworthiness testing might restrict their ability to recover from the crisis. Wilcox expressed his astonishment that DVSA testers were withdrawn so quickly: “The workshops still function and the trucks are maintained to MOT standards. If these men and women were prepared to come to work every day of the pandemic, then why couldn’t the testers?” he asked.
“It would be fairly easy to keep the DVSA people away from others in the course of their duties. What we have now is a massive backlog which DVSA has little hope of catching up with. Fleets have had their carefully planned maintenance work loads thrown into utter confusion and it will cost a great deal of money to put these vehicles’ MOT dates back to where they are needed. To do this will entail testing trucks and trailers twice within one year. The ATF staff should have been allowed to test trucks under emergency conditions for up to one year, or in the case of Green OCRS score operators given 12 months relief so at least their planned maintenance could be maintained.”
Returning drivers and warehouse staff admit they are coming back to a very different world from the one they were familiar with back in March. This has meant a great deal of work behind the scenes to ensure that all staff follow the regulations to combat the spread of the virus.
In many ways it is fairly straightforward for most drivers, alone in their cabs for most of the time. But it’s a different story when it comes to collections and deliveries: “We have installed Perspex glass where drivers speak to traffic operators”, reports Knowles, “utilising our EPOD platform on our drivers’ smart-phone devices, we can minimise risk of transmission from paper PODs.”
Inevitably it is up to individual drivers to maintain the social distancing guidelines when they are on the road and ensure that hygiene regulations are observed. Drivers cannot be refused access to toilet facilities despite the Covid-19 crisis.
Warehouses and depots pose a different set of challenges. To overcome these, Knowles Transport has introduced a number of initiatives including “One in, one out” policies in some communal areas, as well as floor markings to designate two metre walkways in areas where a number of employees are working.
Agency drivers
Hauliers have access to a number of methods to manage fluctuating demand, including using agency drivers, diversifying and expanding into warehousing - although most of these are not really designed to cope with a return from an international pandemic, while also facing the possibility of a recession.
Agency drivers were not a preferred option for any of the operators we spoke to. They were either actively avoided or viewed as a resource to be used only when needed. Knowles Transport does use agency drivers to manage seasonal fluctuations, but recent successful recruitment of more drivers means that the company will not have much need for agency support in the coming months.
Diversification can sound like an attractive option to drive up business, but it brings its own issues. “We are always open to forms of diversification but only for the right opportunity," said Knowles, “We are specialists in the food and food associated industry sectors so any further diversification would need to have an association to what we currently do.”
Stay with what you know is very much the thinking for both Mitchell and Wilcox. “I have always believed in sticking with the knitting”, comments Wilcox. “We operate curtainsiders in the dry freight business, and therefore are not experts in tippers, tankers and fridges.” As he points out, competing in those sectors would mean taking on established competition and their expertise, which could turn into a costly exercise.
For larger operators, warehousing is very likely to be part of the business already, so should it be viewed as an opportunity for diversification or as part of planned business growth? Massey Wilcox is operating at capacity for its warehousing, which is an important asset in seeing the business through the pandemic. Building more capacity could be risky given current economic forecasting and Wilcox would rent more space only out of necessity.
Balancing warehousing and transport operations is part of the model at Knowles Transport, which seeks to combine the efficiency benefits its customers can attain from its warehouse and transport service model. “For us the two go hand-in-hand, so as the business grows naturally the warehousing and transport capacities will need to increase," said Knowles.
New technology
Just as new technologies are playing a part in trying to contain the Covid-19 pandemic, so they can help to plot a way forward for hauliers. “We are always looking at ways in which we can utilise the best technology to enhance efficiency both in transport and warehouse divisions”, Knowles added.
But the Covid-19 crisis has not triggered a fresh search for technology, it’s just one of the things that the company constantly reviews. The pandemic hasn’t triggered new interest in technological solutions for Caledonian Logistics or Massey Wilcox either. A return to human contact would suit Wilcox well: “I can’t say I enjoy communicating with things like Zoom”, he says, “I long for face-to-face meetings again, preferably over a pie and a pint.” No doubt that’s a sentiment shared by others.
Something as far-reaching as a pandemic has the potential to bring about change, perhaps more quickly than it might have happened otherwise. For Robert Wilcox, better appreciation from the public would be a good thing, “Hopefully the nation may start to appreciate what part our industry plays in their daily lives and give the drivers the respect they deserve”, but he’s not holding his breath.
“The sector will change”, says Alex Knowles, but it’s going to be a waiting game to see what that means for transport, “In the short term, the biggest impact on the economy will be how volumes match up against when the furlough scheme stops.”
If volume does not return, reduced demand will take its toll on hauliers. As Wilcox points out, that could mean more work for remaining operators with the potential for improved rates.
And longer term, will it bring about a change in customer attitudes to their transport partners? Commented Knowles: “I think customers will consider more the financial standing of their logistics partners and how they can potentially weather any further instances such as we have experienced with Covid-19."
