In the months since the most severe covid-19 restrictions were lifted, the logistics sector has been unable to fully supply essential goods meaning that, at times, motorists have been unable to fill up with fuel while some shelves have been bereft of certain goods.
In the light of the post-pandemic supply chain failures an enquiry was set up by the Transport Committee to examine the road freight supply chain. With a call for evidence, the Committee’s objectives were ‘to explore the immediate and systemic challenges to the effective operation of the road freight supply chain and to assess the effectiveness of the Government’s policies to meet them.’
Narrow margins risk supply chain
Published in early June, the report acknowledges an issue with margins across the sector noting that: “Some links in the supply chain industry enjoy high profit margins. Other links, including transporters of goods, operate to narrow margins and cannot withstand shocks to the labour market or spikes in cost. If any one part of the supply chain is impacted, the entire chain can be adversely affected.”
Against this backdrop with its inherent high risk of market failure, the Committee suggests the supply chain is ‘fragmented and not operating holistically’. Highlighting the co-contributing factors of a labour shortage in the logistics sector, exacerbated by an ageing workforce and record job vacancies across many other sectors in the UK economy, making it challenging to retrain and recruit personnel the Committee sets out the intentions of the report, and its recommendations, to be to overhaul the logistics sector and ensure that the supply chain, and its workforce, is more robust and resilient.
Policy failures overlooked
In response, Logistics UK suggests that this focus on this multitude of complex industry factors has led the committee to the wrong conclusions and resulted in a failure to address urgent policy concerns. As David Wells OBE, chief executive at Logistics UK (the industry’s biggest business group) explains, the sector has worked tirelessly throughout the pandemic to protect the supply chain. However, he feels that blame for the issues faced by the sector has been unfairly placed at the industry’s door:
“Logistics workers are the unsung heroes of the Covid-19 pandemic, keeping shops, schools, hospitals and locked-down families supplied with all the goods and medicines the country needed,” he says. “To place all the blame for the supply chain issues facing our industry at our door does our workers a great disservice, and totally ignores the role which the government and other agencies have played in creating staff recruitment and retention problems across the sector.
“Despite operating on incredibly narrow margins – often of less than 1% – our sector has already made significant investment in the next generation of workers through the Apprenticeship Levy with £700m paid in by our industry to date. However, due to a lack of appropriate qualifications for the sector, which did not even exist until 2021, only £150 million has been able to be drawn down thus far, representing a tax on our sector and a huge, missed opportunity for recruitment.
“It is also a national disgrace that thousands of HGV drivers, which have worked so tirelessly to protect the supply chain during the pandemic, are still unable to access suitable safe and secure truck stops across the country, with many forced to take their legally mandated rest breaks on the side of roads, something which Logistics UK has campaigned on for many years.
“It is not the industry’s responsibility to build and run these facilities, not least because they are commercial enterprises, many of which cater for all road users and not just the haulage sector. The real problem that has not been resolved is local authority planning rules and red tape that prevent these facilities being built in the first place. To suggest that these new builds, which are used by all road users, could be constructed as a result of a levy on hauliers would place an unfair, disproportionate burden on the industry.”
Confused and misleading
“The report’s overview of the sector’s recruitment issues is confused and misleading. Like nearly every other industry in the UK, logistics is facing issues caused by a combination of factors, none of which are within its control. These include an ageing workforce, the loss of European workers after Brexit and the impact of the Covid-19 pandemic on testing of new HGV drivers. The industry has already come together to create and fund a massive skills and recruitment campaign, aimed at young people, women and other under-represented groups, to attract new talent into the sector. The government is aware of this and has committed to supporting the industry’s efforts.”
Wells concludes: “It’s disappointing that the Committee has taken so long to reach the wrong conclusions and not address the real public policy issues needing urgent attention.”