Monday, May 24, 2021

Staff Shortage and Increased Costs Placing Business Recovery At Risk

Logistics UK Report Finding a Resilient Industry But Age Old Issues Still at Play
Shipping News Feature

UK – Logistics businesses have shown impressive resilience throughout the Covid-19 pandemic, adapting their operations swiftly and efficiently in the face of extreme pressures to keep the nation stocked with the goods and services it needs.

According to a report, by Logistics UK as the country now tries to move further to recovery the age-old problem of HGV driver shortage places any possibility of recovery at risk with almost one in ten logistics businesses (9.8%) saying the recruitment of drivers is an ‘extreme barrier’ to the recovery of their business.

With the UK facing higher unemployment, predicted to be at least 5.5% this year, Logistics UK is urging the government to take immediate action to unlock access to these careers for new recruits to the sector, in order to support the recovery of the UK. Alex Veitch, General Manager for Public Policy at Logistics UK said:

“Our report shows that 29% of logistics businesses anticipate that they will be unable to fill vacancies for HGV drivers this year; a further 14.5% expect long delays before filling a role. With the logistics industry in urgent need of these workers, Logistics UK is urging the government to provide interest free loans or grants to train or reskill potential employees and help recruit them into the logistics industry.”

The business group is also urging the Driver and Vehicle Standards Agency (DVSA) to maintain its fast-track programme to catch-up on at least 30,000 driving tests that were postponed due to Covid-19 between March and December 2020, which Logistics UK says has left thousands of potential HGV drivers waiting in the wings when the UK needs them most. Veitch continued:

“With almost one in ten (9.8%) of logistics businesses reporting that the recruitment of drivers is an ‘extreme barrier’ to the recovery of their business, the nationwide shortage of HGV drivers is stalling businesses’ recovery from the pandemic. With a large pool of potential candidates available – owing to the nation’s higher unemployment – we urge the government to make driver training affordable, accessible and attractive for all.”

The report also identified that staff shortages are expected across a range of operational roles in 2021, including fitter, mechanic and technician vacancies: 37% of respondents anticipate being unable to fill vacancies for these jobs this year.

Elsewhere in the report, things are looking just as bad, with the industry association warning that the cost of moving goods and services is likely to increase in the short to medium term, as the economy feels the impact of the COVID-19 pandemic. In launching the annual Logistics Report 2021, Elizabeth de Jong, Logistics UK’s Policy Director advised caution, saying:

“The logistics industry has proved invaluable to the UK economy throughout the COVID-19 pandemic, with businesses across all modes of freight transport taking quick action to adapt their operations to meet the needs of consumers. However, a reduction in supply of international shipping containers, and ships to carry them, led to significant rises to the cost of moving goods and services internationally; by the end of 2020, shipping container rates had increased by 185% year-on-year and air freight costs rose significantly when cargo space was constrained due to the grounding of passenger flights.

“Fuel prices collapsed at the start of the pandemic but have now recovered to pre-Covid-19 levels. This reduction may have helped to offset inflation in the short term, but rates charged for all modes of transport are expected to rise in 2021, which could drive increased prices across the economy.

“For many logistics businesses, already operating on very tight profit margins of only 2% - or just 1% for those in road transport - these rises will make it harder to find the funds they need to develop their operations by investing in green technology, such as in alternatively fuelled vehicles, upskilling the existing workforce or funding new recruits while continuing to pay wages and other business costs.

“These tight margins may mean businesses could be left with little choice but to pass these additional charges onto their customers, rather than focus on building upon the resilience the sector demonstrated in 2020. Logistics businesses face a myriad of challenges on the road ahead, with the cost of vehicle repair and maintenance also increasing in 2020, and cash flow restrictions remaining a barrier to recovery for 40% of logistics businesses.”

The Logistics Report 2021 also shares insights into the UK’s competitiveness, international trade, connectivity, labour and skills, sustainability, and safety and innovation.