HGV truck driver shortage symptomatic of wider supply chain market

Fallout from the supply chain talent shortage in the form of HGV drivers continues to be felt acutely in the UK, across European borders and in other parts of the world like the United States where driver shortages, for all sorts of reasons, are affecting grocery stores, manufacturing and even schools.

Frequently billed “the summer of attrition” by the press, whether that be “The Great Resignation” or “The Turnover Tsunami,” staff resignations this season particularly from professions like teaching, healthcare and leisure are indicative of an opportunistic market causing challenges on the recruitment front in many industries. The attrition is apparent in the procurement tech world too and we’ve seen many cases of senior talent jumping ship of late with some of their direct reports following suit.

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The issue of talent gap impacting procurement and supply is an ongoing challenge, especially when it comes to not just recruiting but essentially retaining that talent — but on this occasion it’s HGV driving talent that is remarkably absent. And of course that talent shortage is not just impacting our supermarket shelves, it’s affecting other industries like automotive in terms of parts delivery, and healthcare in terms of medical supplies.

Voice from the industry: Supply outstrips demand — prices rise

Logistics and freight forwarding professional, Alexandra Ozolina, who works within the World Transport Agency (WTA) which provides freight globally for major food manufacturing businesses, highlights the issues she’s seen recently in her role. “There’s been a drastic reduction in supply of HGV drivers at a time when there’s been a big increase in demand, so we’ve seen the price of HGV drivers double since the beginning of July in the UK,” she told Spend Matters.

“This whole issue of skills shortage within the HGV market is symptomatic of the wider issues we are seeing across blue collar and professional markets at the moment. Companies need immediate results and the answer to that is to buy in the skills because training and development takes time and costs money and resource.”

Buying talent not creating it is a short-term measure

As a short-term measure, according to Supply Management, British Army personnel with HGV qualifications are being put on standby to help with deliveries: “… They are being put on five-day standby notice for driving jobs at major distribution centres around the country … Soldiers will be put up in hotels where necessary and will be working extended hours to assist with the crisis. They will be involved with food distribution as well as the transportation of other essential goods and medical supplies.”

The Guardian reports: “Gaps on supermarket shelves are likely to continue for several months, suppliers have warned, unless the government does more to tackle the shortage of qualified HGV drivers worsened by Brexit and Covid. Logistics and hauliers’ organisations said August would be a pinch point in the shortage as workers take summer breaks. Tesco is among firms offering incentives of £1,000 or more to lure HGV drivers. Rod McKenzie of the Road Haulage Association said: ‘This is a real problem because all they are doing is buying talent from somewhere else. They are not creating talent.’”

So what’s behind this shortage?

Logistics UK states that “At the start of the pandemic, there was a shortfall of at least 76,000 HGV drivers and with the additional loss of EU workers who have returned home, the industry estimates that this number is now higher than that.”

Part of the problem is the lack of EU citizens who were doing the jobs, part is jurisdiction since Brexit, and part is the non-addressed issues that prevent new drivers from wanting to become qualified.

Elizabeth de Jong, Policy Director at Logistics UK said in a press release: “After all the incredibly hard work to keep the country stocked with all that it needed throughout the pandemic, it is dispiriting to see that the safety and security of our workforce in the course of doing their jobs is still not being prioritised … The lack of available overnight parking spaces continues to be a huge impediment to attracting more people to join the industry and we need the government to make a far clearer commitment to deliver the 1,500 parking spaces it promised in 2018.  Without the safe and secure locations in which to take legally mandated rest stops, it will be impossible to diversify the workforce and attract new employees to the sector.”

She continues: “It is good to see the urgent focus placed by government on increased HGV driver testing with DVSA, as this is currently the biggest blocker to new entrants entering the workforce, but without targets and a workable timeline, this is simply a statement of intent. We need to know how soon the backlog of 25,000 test passes can be cleared more swiftly by the DVSA, as we estimate at current rates this will take 27 weeks (i.e. until the end of January 2022) …”

So the outlook doesn’t look good.

How could procurement respond?

We spoke with Andrew Daley of international procurement and supply recruitment firm Edbury Daley to understand a bit more about why the recruitment situation is so dire.

“The UK government has done a great job with apprenticeship schemes generally, and so have the big corporates with their graduate programmes, the large retailers like Sainsbury and Tesco are heavily involved in that too, but we aren’t aware of the same kind of investment being made into HGV drivers. So, basically we are the seeing the age-old problem of ‘demand is up and supply is down.’

“When you look at the haulage companies, many of the drivers are EU citizens, and many of them are taking jobs in other parts of Europe – that is partly down to Brexit, and partly down to Covid.

“In the Eurozone, if you are moving goods into or out of the UK, there is a lot of confusion over the new customs regime post Brexit, which means drivers are sitting at customs for hours and sometimes days before being cleared. Realistically, for a driver that means loss of time and therefore income. So the complexity of the customs regime means drivers feel there are easier ways of earning than being involved in UK trade movement. That’s one factor.

“Another is the incentives being offered to drivers in the face of demand. Some are leaving one haulage company to go to another. As we know, while people have a wide range of reasons to move jobs, universally money is the dominating factor. People go to the highest bidder!

“If we look at some numbers: in 2019, the year before Covid, inward migration to the UK was down 28% on 2015, and long-term migration, by which we mean people who plan to stay for at least 12 months, was down 34%. When you factor in the people who left the UK, you’ve got quite an extreme change in immigration. That affects the HGV market, but it also affects the leisure industry, as we are seeing, and the retail sector, and of course agriculture. Then you’ve got the fact that people have been unable to train owing to Covid restrictions, and some firms have been unable to invest in training and development owing to downturn in revenues.

“So when you take into consideration this combination of catalysts, at a time when demand is up, you get the perfect elements to create the huge problem we are experiencing. And this applies to any market sector.”

For the HGV market in particular, short-term solutions are in play because it can take 9 months to train a new driver, who then have to get the licence, and we are already behind on 25,000 tests.

“We can make comparisons with what’s going on in the wider market,” he says. “There’s a parallel in the procurement tech world too. Organizations need people who can make a quick impact. They can’t wait two years to train someone up to make a difference. The big corporates have invested in graduate schemes so that graduates can spend a few months with each business before choosing which department they’d like to join, and historically procurement has done a really good job at attracting talent by marketing itself well. But not all firms have the resource to do this.

“So buying in talent rather than creating it is the short-term answer. This is also an attractive proposition to offset the issue of spending time and investment at cost on training people only to see them leave, or be poached, once they are valuable.

“This means procurement has two challenges in the current shortage scenario:

• In the short term the need is to get products on shelves, and that ultimately comes down to how you position yourself as a buyer or employer of choice and looking at how you can be innovative and creative in how you assure you get your fair share of the market for these people.
• In the long term, the challenge is deciding what your plan is to alleviate the skills shortage. This is where it’s imperative that the category buyer sit down with logistics and works out what they need to do to attract trainees, develop them and most importantly, retain them – you need clear and innovative plans for both these solutions.

“At the end of the day, it always comes back to collaboration with your internal and external suppliers. It also comes down to procurement being more than the cost saver and being the driver of the right conversations in the right direction at the right time. If you focus just on cost, this problem will spiral out of control, because it isn’t going away, and burning budgets as the highest bidder, paying more for transportation and raising prices, simply isn’t sustainable.”

Edbury Daley produces The Procurement & Spend Management Insider report which gives industry insights on M&A activity, senior hires, changing customer demands, how practitioners are adapting and the challenges faced by procurement solutions providers. It is available free of charge here. Look out for the next issue this October.