On August 22, Logistics UK and the British Retail Consortium (BRC) wrote a joint open letter to Kwasi Kwarteng MP, secretary of state for business, energy and industrial strategy (BEIS), to ramp up pressure on the government to take action over the chronic HGV driver shortage.
After weeks of negotiations with the transport department, Logistics UK chief executive David Wells, pictured, decided to go public and address his concerns to the business secretary, explaining that the driver shortage – which Logistics UK calculates is now around 90,000 - was a business rather than just a transport issue and if left unaddressed would start to affect the whole economy.
According to Logistics UK and the BRC, which together represent more than 23,000 retailers and freight transport firms, the crisis is going to worsen in the coming months as demand for goods increases as schools and offices reopen and the twin peaks of Black Friday and Christmas loom.
Logistics UK and the BRC called on government to boost the DVSA’s HGV testing capacity to process the backlog of driver tests that has built up the pandemic, grant 10,000 temporary work visas to HGV drivers from the EU and reform the National Skills Fund to fund HGV driver training and make the Apprenticeship Levy more flexible.
While there is a shortage of HGV drivers across Europe, Office for National Statistics figures indicate that of 14,000 EU drivers who went home during the Covid pandemic only 600 have returned to work in the UK, and Logistics UK believes many of these would be willing to return if given visas – especially with the signing-on bonuses and rates of pay that are said to have increased around 20%.
“On top of the top of the number that went back in 2020, originally 29,000 drivers returned to the EU after Brexit,” Wells told MT. “Members tell us there are drivers who would come back, especially now the rates have gone up. They follow the money.
“Eight other professions including the arts and religious workers have been granted temporary visas. Agriculture has 30,000 temporary visas but there is no point picking the food if there is no one to transport it.”
Logistics UK argues that granting a limited number of temporary work visas would just be a stop gap measure while the industry trains up more domestic drivers, and that without them there will be serious issues with the autumn peaks.
“That’s the reason we did it now,” says Wells. “People think the peak is in December but it is way before then. We need to fix this now.”
Pipeline
When it comes to restarting the pipeline of new drivers, the DVSA has said it will prioritise vocational driving tests over private car drivers and Logistics UK is calling for more transparency on how the agency is progressing towards its targets. The DVSA says it has recruited 40 extra examiners, and “following the easing of restrictions, we have typically made a total of 3,000 vocational tests available per week compared to 2,000 pre-pandemic”.
“We haven’t seen that data yet,” says Wells. “On paper it looks they are doing what they can but the proof of the pudding will be to show us the figures. If you talk to members they will tell you it takes months to get an HGV driving test.”
Delays have also been introduced by industrial action at the DVLA, which is taking up to six weeks to issue provisional HGV licences, without which candidates cannot book their theory tests.
“The DVLA is in more of a mess than the DVSA,” says Wells. “It has a strike problem and there is also an issue around medicals as a result. There is a huge queue of people waiting for medical professionals to check their licence applications. They have given vocational drivers extensions but we need a surge of activity to clear the backlog.”
Even when the testing logjam is cleared, there remains a big question over how many UK nationals actually want to drive a truck for a living, despite the higher pay and signing on bonuses now on offer. Wells believes that improving driver facilities is key to unlocking this issue.
“If at the end of this driver shortage crisis we have made some headway on driver facilities, it will be some good to come out of a horrible situation,” he says. “The problem of recruiting young people is down to years of negative stories that put people off joining this industry.
“When the French closed the borders and there were thousands of trucks backed up on the M20 there was a lot made of the Sikh community feeding the drivers, which was fantastic. But my point to [transport secretary] Grant Shapps - and the reason he got upset – was that it was a national disgrace.
“Every time we get a story about drivers having to use the side of the road as a loo and having food parcels lowered down on a rope it doesn’t do our industry any good in recruiting young people.”
Another often-cited off-putting factor, especially for women with childcare responsibilities, is the long hours involved in driving for a living, something that Wells rejects.
“Tachograph data will tell you is that a lot of drivers don’t do long hours,” he argues. “OK people tramping and doing overnights do long hours but the majority of drivers do not do those sorts of hours.”
News headlines
The effects of the driver shortage are now making daily national news headlines, with gaps in supermarket shelves, no chicken at Nandos and no milkshakes at McDonalds – all sure signs of a nation in crisis.
“Lots of operators tell me they have vehicles parked up,” says Wells. “Retailers are dropping the number of SKUs to hide the fact they have a driver shortage. Instead of 20 types of cornflakes there will be four and the frequency of deliveries is dropping. Instead of just-in-time replenishment it is ‘just when I’ve got a driver’ replenishment.
“This suggests a fragility in the supply chain which is why a lot of our members are now starting to think about resilience and where they are sourcing product. I think we will see shifts from single to double or triple sourcing to build resilience.”
Another criticism government sometimes levels at logistics is its lack of efficiency, evidenced it claims by the consistently high levels of HGV empty running, which rose to 30% in 2020 according to DfT statistics.
“The industry runs on such tight margins, if they could reduce empty running, they would,” says Wells. “If you’re only making 1% as a bottom line and you could backload, you would.
“Those criticisms are woefully inaccurate. There has to be some element of empty running but no operator wants to run trucks empty.”
This low profitability in the transport sector is another issue that needs addressing if it is to find the money to permanently increase driver wages and so make the profession more attractive to UK workers.
“The average margin is 1.5% which is not sustainable,” says Wells. “Because the industry is so competitive everything has been cut and that plays into the hands of the government who can just say ‘it’s a market adjustment and you will have to pay more’.
“We are telling them that will lead to higher inflation – are you ready for that?”
Financial pressure
This unrelenting competitive pressure has seen the demise of several well-known family haulage firms who have been forced to close their doors or sell up.
“In the time I’ve been doing this job I can name several good family operators who have been swallowed up,” says Wells. “The next challenge will be decarbonisation – how are smaller operators going to do this?
“Putting aside the technical issues, how are they going to afford it? The only way is through some certainty over the economics of it. It is a long term investment and some big numbers.”
With fuel duty contributing £37bn to the UK Exchequer every year, the government will want to protect that revenue as sales of diesel and petrol car, vans and trucks stop in the next 20 years, leading to a tailing off of demand for road fuels. Road pricing seems to obvious replacement but in the meantime Logistics UK fears a return to the much-reviled fuel duty escalator.
“They will stop selling diesel cars from 2030 so what’s the government going to do after that?” asks Wells. “They want you in an electric car so they will use the tax system to drive behaviour. They will attempt to raise fuel duty which is why we want a freeze in the long term. That is what will protect smaller businesses and give them certainty to invest.”
