7 minute read
NACFB: The long haul
The long haul
Efforts to avoid industry grinding to a halt
Norman Chambers Managing Director NACFB
Almost everything NACFB Members help to fund, relies in some part on road haulage services. Our clients would have no stock or building materials without lorries, and the companies and drivers that operate them. We see the vehicles that transport them daily – but they are far less often understood.
The last few months have proven beyond measure just how essential road haulage is for the people and businesses of the UK. The productivity and competitiveness of our economy remains dependent upon having an efficient road haulage sector and a supporting transport infrastructure that works for all users.
The road to ruin?
Data from the Road Haulage Association (RHA) demonstrates just how vital the sector is to keeping the UK moving. 89% of all goods transported by land are moved directly by road. Indeed, 98% of all food and agricultural products are transported by road freight, alongside 98% of all consumer products and machinery.
More than 2.54 million people work in the haulage and logistics industry and the sector is currently the UK’s fifth largest employer – including some 600,000 goods vehicle driving licence holders. These drivers sit behind the wheel of over 493,600 commercial vehicles. Such eye-opening data points not only to an underappreciated industry, but alludes to an over-dependency on road freight, one that became all too apparent earlier this summer.
Figures from the ONS show the number of people working as HGV drivers in the UK has fallen by 53,000 (16.5%) in four years, from 321,000 in 2017 to 268,000 in 2021. The number of UK nationals working in the sector fell by 42,000 people over the same period – a 15% drop.
It was a real cocktail of chaos that slammed the brakes on the wheels of UK industry. No single factor shoulders all the blame, but a combination of COVID aftershocks, Brexit fallout, retiring drivers, poor working conditions, fuel panic buying, and the cost of training cruelly conspired to bring the entire sector to the brink of collapse.
Such is our dependency on road freight, the economic impacts were felt almost immediately after society returned from COVID-induced hibernation. A reduction in trade with the EU drove down UK exports as driver shortages scuppered the normal functioning of trade flows. According to the ONS, exports were £1.3 billion lower in August compared to July, driven by a £600 million fall in trade with EU countries. One of Britain’s biggest ports, Felixstowe, even started turning away new shipments due to container numbers swelling on site because of poor HGV driver availability. All in all, the RHA now estimates the UK needs an additional 100,000 HGV drivers if it is to meet current demand.
An industry in reverse
It’s all too easy to be wise after the fact. To its credit, the RHA points to the repeatedly ignored warnings it shared with the government in the build-up to the HGV crisis, but in the short-term at least, there have been some measures introduced designed to help ease the backlog.
The government quickly cleared the way for a visa change allowing foreign lorry drivers to work in the UK. In a bid to keep supermarket shelves stocked, temporary measures created opportunities for a potential 5,000 HGV drivers and 5,500 poultry workers to take up employment in the UK until Christmas Eve. The government has subsequently admitted that take-up had been ‘relatively limited’ before a minister finally revealed on Radio 4’s Today Programme that only 20 foreign trucker visas had been approved, with each one taking up to three weeks to process.
The transport secretary also unveiled plans for HGV driving tests to be relaxed, allowing room for up to 50,000 more tests to be taken before the end of the year. Tests have been made shorter, with the reversing and the uncoupling and recoupling exercise elements entirely removed. Articulated vehicle drivers will also no longer have to get a licence for a smaller vehicle first. The government says this will allow about 20,000 more HGV tests each year, some way short of the RHA’s suggested target of 100,000.
Critics say temporary visas and test changes won’t solve the problems facing the haulage industry. Many would prefer to see commitments to longer-term investment measures including training, apprenticeships, improved testing resources, and better welfare facilities for truckers.
The domino effect
Speaking last month at a meeting of the Business, Energy and Industrial Strategy committee, haulage industry leaders agreed that the driver shortage is likely to last for at least another year. Duncan Buchanan, policy director at the RHA told the committee of MPs that in relation to shortages and delays its members had reported that “…things are not visibly getting better.” He shared
how the aforementioned short-term measures were not yet having the desired impact. “Visually, on the ground, that is not really having much of an effect,” said Buchanan, adding the government’s temporary visa scheme for foreign workers would not help alleviate supply chain issues in the run-up to Christmas.
Food & Drink Federation chief executive Ian Wright acknowledged there had been some shortages but said that consumers did not need to worry. “We’re not going to run out of food,” he said, “Big red letters. Double underlined.” However, he did warn the committee to take note of the ‘terrifying’ inflation rises in some parts of the sector. “In hospitality, which is a precursor of retail, inflation is currently running somewhere between 14% and 18% – that is terrifying,” he added.
Neil Carberry, chief executive of the Recruitment and Employment Confederation, said its surveys showed that there was strong demand ‘across the board’ in most sectors of the job market, which was spiking wages, and firms were taking longer to fill driving vacancies. “This is a global issue caused by a misallocation of resources caused by the pandemic which is being amplified by the new trading arrangements that we’re working under and will take a little longer to work out in the UK than other countries,” he added.
It’s not just the haulage sector that is struggling to keep moving. A report from the Licensed Private Hire Car Association (LPHCA) published recently revealed that more than half of licensed mini-cab taxi drivers had not returned to the trade since the pandemic. The trade body estimated that the industry is short of 160,000 of the previously 300,000-strong workforce.
Unfortunately, labour supply problems are affecting UK industries from construction and manufacturing to retail and hospitality. The CBI has warned that shortages could last for up to two years and government officials have told businesses they should use British workers, including those coming off furlough, rather than expect further rules to change to temporarily allow in EU workers who had filled these positions in the past.
For those SMEs lucky enough to still maintain drivers in their employ, concern over the very vehicles they’re steering is now on the horizon. NatWest’s Dave Furnival explained: “We’re seeing issues around lead times on assets. If you’re a haulier right now, for example, it’s taking between 12 months to two years to get a truck. Something similar is happening in construction with plant. JCB’s order book is already full for next year, so it’s looking at 2023.”
Changing lanes
In truth, standing firm and waiting for shortages to solve themselves is not the way to run an economy. The UK needs to simultaneously address short-term economic needs whilst implementing longer-term economic reform – no easy task.
UK driver shortages are just the visible and immediately impactful manifestation of the current shortages we face, but what we have in plentiful supply, is expertise. This includes the collective insight, knowledge, and experience of the NACFB’s growing network of intermediaries who have the tenacity to secure the finance that is needed to help the UK and particularly its SMEs ride the storm. Battle-hardened yet agile, diversified and resilient, the Association’s commercial finance professionals remain both willing and able to carry post-pandemic momentum and face the next crisis alongside their clients.
Through the intermediary route to market, millions of SMEs survived the static and stationary depths of lockdown immobility. Now, the challenge we face is one of keeping the wheels of industry turning. On both counts, our membership is proving just how seriously it takes the responsibility of Moving Britain Forward.
