MT asks a range of the industry's leading players how they plan to tackle increased costs and shrinking volumes in the months ahead...
Charlie Shiels, CEO, ArrowXL
We remain uncertain at the moment about how much of a test the peak season will be for our industry this year. We’re not expecting record breaking pre-Christmas volumes, however there will inevitably be an uplift.
It’s becoming increasingly difficult to find staff in the logistics industry, and our cost base is under extreme pressure. However, we’re working on a number of improved operational efficiencies and are expecting a steady and strong peak operating window.
We continue to concentrate on delivering great service levels, focus on avoiding waste and motivating our team. We are constantly improving our front-line engagement and striving to create the best culture possible.
The retail sector is always a strong barometer for the UK economy and they are currently facing extreme pressures, which will inevitably feed into the logistics market. Those companies requiring discretionary spending will be under the most pressure as consumers continue to focus on essentials.
Mike Parr, MD, PML
The fact that we’re seeing so many established, sizeable businesses struggling and either going into liquidation (Saints Transport, Jupiter Marketing) or simply closing (fresh food supplier Greenyard Fresh) is a clear indicator of the difficult trading environment. Sadly, I believe that this is just the tip of the iceberg and that the industry is likely to face increasingly tougher conditions.
Clearly, the biggest issue for us right now is the unprecedented rise in running costs. The hike in fuel prices has major repercussions for any business involved in transportation, regardless of whether you specialise in road, air or sea – or if, like PML, you work across all three transport streams. This coupled with the hike in electricity bills – as a company that stakes its reputation on maintaining the cold chain, refrigeration costs are a major consideration alongside other running costs associated with our business – is making it extremely difficult to maintain profitability whilst still providing a service at a price the customer can afford.
At PML, we will, like so many businesses, be tightening our belts where we can and consolidating our current business to ensure maximum operational efficiency. However, regardless of these measures, we will never compromise on the quality of the service we offer, nor impact on the highest standard of food hygiene / food safety protocols.
Bob Terris, chairman, Meachers
There seems to be a general reduction in volumes from existing customers, especially those involved in leisure related supplies. I suspect that the high inflation and energy costs have seriously reduced disposable income with people just spending on essentials. This is likely to get worse in the coming months and interest rates will almost certainly continue to rise.
These circumstances will affect all operators but the smaller ones will suffer most as large operators reduce sub-contracting to retain volume for their own fleets. The reduction of volumes and vehicles operated will reduce the demand for drivers and will make availability easier if and when peaks occur.
This situation will probably get worse before it gets better and the early part of next year will be extremely challenging for some operators.
Kevin Buchanan, group CEO, Pall-Ex
Having increased operative wages by over 18% last year, recruitment is less of a challenge, especially now the economy is slowing down. Wage pressure in certain skilled or professional areas such as Finance or IT is still very much an issue due to the shortage of skilled people due to Brexit.
Managing fuel costs has meant passing the costs on to customers with the normal industry fuel surcharges. All of this remains a challenge as inflation has reduced consumer spending, and we see this impact on the volume of freight being moved. In February 2022 we were still growing at 13% year on year but by June we saw a 9% reduction of volumes year on year. We continue to focus on the quality of our services which has seen us secure many new customers as the existing customer base has remained loyal but significantly down-traded.
Lesley O’Brien, director, Freightlink Europe
We are yet again working in challenging times. The driver shortage has not gone away and the consequences will be evident in the peak season. As we possibly enter recession, the first to suffer will be the ‘white van man’ as the indicators are that e-commerce is slowing down.
Pressure is already on hauliers to cut rates to help and retain business. This is a dangerous path to travel, as is avoiding passing on fuel increases. Hauliers can no longer be considered the bottom of the food chain, expected to subsidise the cost of a ‘can of beans’ and absorb increasing costs. Failure to safeguard our transport industry will be catastrophic, seeing many fail to survive.
Moreton Cullimore, MD, Cullimore Group
For us it’s about tightening the belts and trying to not get bitten by cashflow issues in the new year due to the lower volumes. General haulage wise, if you are involved with food etc it’s obviously a bit different. So our approach is the same as it is always, just with more of a concern of the predicted potential downturn.
