Turbulent times for UK haulage sector but it will adapt to post-Covid-19 world

Driver Require has released the final instalment of its three-part report, analysing the impact of the Covid-19 pandemic on the UK haulage industry and LGV driver employment levels as the country moves through the crisis and subsequent recession and eventually to an economic recovery.

After exploring the first part of the report which mapped out the likely nature of the social and economic crisis brought about by Covid-19, The Parliamentary Review lays out the report’s conclusions on the fundamental changes that will occur within the haulage industry and how, nationally, supply changes will need to adapt in order to avoid future crises.

Analysing the shape of the haulage sector at present, Driver Require’s report includes insights from the Freight Transport Assocation [FTA] and the Road Haulage Association [RHA] trade bodies, which revealed that little under half of the UK truck fleet is currently incapacitated with no work.

Furthermore, a survey of UK businesses carried out by the Office for National Statistics [ONS] in March showed that 55 per cent of transportation and storage firms were furloughing their staff in the short term, and 37 per cent were decreasing work hours. These numbers were very much early doors in the UK lockdown, considering that prime minister Boris Johnson only imposed the measures on March 23.

Within the report, Driver Require CEO Keiran Smith says: “Our direct experience has been that haulage companies only started to wind down at the end of March, and it was in early April that many took drastic action. This means that we can expect the April numbers to be worse.”

Switching focus to what may come to pass when the government eases lockdown restrictions, Smith predicted that an increase in demand for fleet and workers will come about, with a corresponding spike in activity to distribute large stockpiles that have been accumulated during the lockdown period.

However, Smith believes that the full structural impact of the crisis cannot be determined until this spike in demand tails off and what he calls “business as usual” starts to resume.

According to the report, employment growth rates in the transport and haulage industries are expected to be lower than average.

Smith wrote: “Where we’ve assumed a -25 per cent drop in total employment [all sectors] during the lockdown, we’ve seen a -35 per cent drop in the transport and storage sector, and a -50 per cent drop in LGV driver employment during the same period. We have projected that, by the end of 2020, total employment levels will only be down five per cent and that they will recover to pre-pandemic levels by the end of 2023. In contrast, we see transport and storage employment being down around 15 per cent by the end of the year, and not fully recovering until mid-2026.”

For employment in the LGV driver industry, recovery could trail the overall transport and storage sector by three to six months.

Smith explained: “As happened during the 2008 Great Recession, we expect recovery of LGV employment numbers to lag three to six months behind the overall transport and storage sector. LGV employment will continue to rise to around 10 per cent below pre-crisis levels by mid-2021 [equating to around 30,000 driver positions] as manufacturing and construction activity ramps up, then it levels off to rise gradually to achieve pre-crisis levels by the end of 2026.”

However, it does beg the question as to what impact the pandemic will ultimately have on Driver Require itself and other temporary staffing agencies.

In Smith’s view, agencies will play a huge part in responding to demand, considering its ability to provide a flexible workforce, and so a spike in demand can be expected initially.

Outlining that agency workers will be at a premium since different sectors accelerate at different rates, Smith said: “Agencies will perform a critical role in providing a flexible workforce to respond dynamically to varying demand for temporary staff as it evolves across the sectors.”

In addition, many volume agency contracts could be brought back in-house, and agencies may revert to their more traditional role of assisting clients in coping with variability, a role which will be crucial as the UK passes through the crisis.

In the long-term, Smith concludes that there will be a “new world” post-Covid-19, and some potentially fundamental changes will be needed to the UK’s strategic priorities alongside alterations to how we live and work. Adapting to this new world will mean that the UK must become more resilient to international crises and the political and economic instability that can be expected to follow.

As part of these measures, companies will need to restructure supply chains to manage risk and add local second source suppliers. Strategic reserves will need to be accumulated and storage outsourced to third parties to prevent any supply chain disruption being triggered by an international crisis such as this in future.

All three sections of Driver Require’s full in-depth report may be accessed and read in full here.

Read the article in The Parliamentary Review