Monday, 19 November 2018

UK road haulage facing 'catastrophic cocktail' if key issues go unresolved

StuartTodd

Industry battling driver shortages, high training costs, tougher regulatory compliance and exacting business model says trade body RHA

UK road haulage is facing a number of key issues which if left unresolved represent “a potential “catastrophic cocktail of disaster" for the industry, the Road Haulage Association (RHA) has warned.
They range from growing lorry driver shortages, estimated to number 45,000 and the high cost of recruitment training, to tougher regulatory compliance and an exacting business model which makes it difficult for firms to achieve sustainable margins, the trade body's managing director of Policy & Public Affairs, Rod McKenzie, told Lloyd's Loading List in an interview.
Earlier this autumn, a dearth of maritime container haulage capacity and a lack of available drivers was cited by number of shipping and forwarding sources as contributing to the disruption in container traffic at the UK's major box ports of Felixstowe and Souhampton in recent months leading to delays and backlogs.
One shipping line told Lloyd's Loading List that the capacity squeeze had been aggravated by one-off and external factors but the unsustainability of the road freight market was the underlying cause while a NVOCC and leading LCL consolidator claimed hauliers were “running so lean” that even minor changes in the way they operated triggered  large bottlenecks in the system, adding that it was “pointing out the obvious” to suggest that shippers were not paying enough for their road haulage.
McKenzie said the RHA, "did not have the best level of detail" to offer a view on the box haulage situation specfically "but we can comment on is why we are short of drivers and why the situation is as bad as it is."
He said the main factors were a lack of satisfactory working arrangements for drivers, notably with regard to pay, fears over Brexit and the (high) cost of driver training.
"Lorry drivers are cheap labour and in this day and age, British nationals, in particular, are very reluctant to take a low paid job when they can get one that pays better in a call centre and offers more reasonable hours. This is what we're up against.
"Then there's the European driver aspect. We have been and still are heavily reliant on non-UK European lorry drivers which make up about 60% of the driver pool. But more and more of them are choosing to go back home, typically to Poland and Romania, because of the (pound-euro) exchange rate and fears over Brexit”.
He explained: "Some of them think they won't be welcome after the UK leaves the EU despite government assurances. The RHA is encouraging its members to encourage their EU drivers to trust what Theresa May has said in public about European workers working in the UK. But I'm not sure the message is getting through and some of them are going home and therefore the driver shortage is getting worse and worse".
Emphasing the need to attract younger drivers to the profession, McKenzie revealed that the average age of a lorry driver in the UK is about 55.
"So if we could get some more twentysomethings on board that would be helpful. But there's a barrier to training, a cost barrier - £5,000 to train someone to Class 1 and 2 lorry driver standard".
The RHA is looking to secure some seed funding from the government based on the apprenticeship levy to be put into driver training academies, he added.
"The aim is to put some of these young drivers who want to do the job through a proper training course, get them qualified and into the jobs market. That's the first step".
According to McKenzie, the UK haulage industry's malaise also centres on the exacting business model it operates under, coupled with the demands of regulatory compliance which are set to get tougher, McKenzie noted.
"Many firms are working to a 1%, 2%, maybe 3% profit margin and that's really tight for investment. If you're running Euro 4, Euro 5 trucks, they are increasingly not wanted in UK towns and cities and when they go into them they will very shortly be subject to swingeing clean air charges which they may have to pay multiple times in one day.
"There's no government incentive to trade in older trucks in return for something else. There are no electric trucks in the foreseeable future and there is no retrofit for older lorries to get up to Euro 6 standard”.
McKenzie went on to highlight the "stranglehold" imposed by the large supermarket chains, a major customer of hauliers, and also on other suppliers, where the overriding principle was to drive prices as low as they can possibly go.
"Hauliers can see their margins of 3%, maybe 2%, shrink to ½% and you're in all sorts of trouble at that point”.
If there was consensus among non-haulage suppliers not to undercut each other it would provide scope to obtain a fairer going rate from the supermarkets overall, McKenzie noted.
"A better return would allow our members to invest and pay higher wages to the most experienced and best drivers in their fleet which needs to happen to keep those people in the industry and stop them going elsewhere, for example."
He warned that if all of these key issues were left unresolved they would represent “a potential catastrophic cocktail of disaster for our  industry”.

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