The long predicted driver shortage has finally arrived accompanied by warnings of food shortages on the shelves and demands for the Government to act. The recently announced regulatory changes will help, but they are unlikely to prove substantive in alleviating the scale of the issue ahead of the Christmas peak. As a result, contractors who employ more than 70% of HGV drivers, are seeking ‘Force Majeure’ rate rises to cover increasing driver costs.
So how do you react?
Neither the customer nor the contractor is a winner in this situation – The best solutions will strike the balance between being commercial and reasonable; this requires an understanding of the challenges each face and how the changing cost landscape specifically impacts your operation or contractor.
- The immediate requirement is to have a sensible conversation with your contractor. Not all areas of the Country are affected equally and not all types of operations will experience shortages in the same way. This should not be an opportunity for contractors to try and increase margins.
- Those contractors with a stable, well paid workforce that have a range of benefits will not be suffering driver turnover to the same extent as those relying on temporary or self-employed drivers.
- The drivers’ wage proportion of transport operation charges will vary depending on the size of vehicles and the nature of the operation.
- Various operational and commercial factors will determine whether a permanent or temporary increase in charges is more appropriate
- Finally, where possible, you should work with your contractor to try and reduce the demand for drivers. Typically this will mean seeking ways to use larger vehicles and that are better utilised. Possible options include reducing frequency of delivery to particular areas, raising the minimum order quantity or increasing the speed of loading and unloading. Increased driver costs will inevitably demand better productivity.
Whilst the problem of a driver shortage is real, by adopting an analytical and constructive approach with your contractor, it should be possible to minimise the worst effects of a situation that will correct itself over time.
As specialists in the procurement of logistics services and the modelling of transport networks, Davies & Robson are well placed to identify the appropriate compromises required for these unusual commercial conditions. If you need assistance with planning your way through the current challenges Davies & Robson would be pleased to help. Call us on 01327 349090