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Great Britain’s supermarkets and other large retailers are fighting hard to recruit truck drivers, with salary increases and “golden hello” payments, making it harder for transport companies and food suppliers to hold on to staff.
Grocers were desperate to avoid the recurrence of empty shelves seen in stores last year, and moved aggressively to deter drivers from going to agencies, where hourly rates rose sharply in response to labor shortages .
The CEO of a British transport company has warned that the movements by supermarkets to lure trucks to alleviate the current crisis would do little to help in the long run. “All you are doing is spreading the existing workforce,” he said.
Steve Bowles, managing director of Roy Bowles Transport, a specialist in freight transport and storage at Heathrow, said that although wages ‘had to rise’, the companies offering big premiums ‘distorted the problem’.
He said his business usually employs 40 executives, but that it has dropped by ‘about 20 percent’.
The transport industry in large parts of Europe is struggling to find enough drivers, but the problem is particularly acute in the UK because a large number of EU workers have left after Brexit, and many indigenous drivers have retired.
According to the British Retail Consortium, British supermarkets alone will need another 15,000 drivers in the coming months, and few expect the government’s temporary visa scheme – which aims to grant 5,000 three-month permits to non-British truck drivers – to dives into the deficit.
The threat to retailers was underlined on Friday when electronic retailer AO World warned that there was a shortage of drivers harms his business. Shares in the group fell more than 20 percent.
Joseph Oakley, manager of the HGV, said supermarkets pay the most. “Pay rates have risen as they fight over a very small group of managers,” he said.
Giles Hurley, chief executive of Aldi in the UK and Ireland, said he had raised the salary for drivers in August. John Lewis increased the summer driver’s wage increases by around £ 2 per hour, raising the average truck wage to £ 45,000 a year, while Tesco and Asda offered bonuses of more than £ 1,000.
According to Andy Prendergast, national secretary of the GMB trade union, the extent of the recent salary increases among HGV managers was unprecedented.
‘I’ve never seen it in my life; ‘you usually get increases slightly above or slightly below inflation,’ he said. “But we are seeing increases that are not just inflationary, but actually double digits, while employers are struggling with retention.”
At delivery firm Yodel, which is owned by billionaire Barclay’s family, the GMB negotiated a 20% increase in the basic salary, with overtime rates rising from 150 per cent from basic to 200 per cent. This means that overtime has risen from around £ 20 to around £ 35 per hour.
Most supermarkets use a mix of their own vehicle fleet and drivers and those of third-party logistics providers, such as Eddie Stobart, Wincanton and XPO. In food retail, the ratios of Aldi, which employs more than three-quarters of its managers directly, to Iceland, which outsourced the majority of logistics operations to XPO.
The transport manager added that the widespread moves to increase salaries will inevitably be passed on to consumers.
‘The reality is that transport companies are companies that achieve margins in the range of 1-5 percent. So the salaries will be passed on at some point. ”
Suppliers are already finding it difficult to retain managers.
Arla, a major dairy processor, said in July it needed to suspend some deliveries and last week EVCL Chill, a distributor of chilled food in Derbyshire, went into administration citing the impact of ‘acute management shortages’.
Richard Wilding, a professor of supply chain strategy at the Cranfield School of Management, said many third-party logistics providers work under tenders negotiated before rising wages.
They are now faced with the choice between watching managers stop taking on more lucrative roles – or raising wages and weakening their already thin margins. “Some will go back to their customers and say ‘we need to negotiate on this, otherwise service levels will fall off a cliff’, ‘he said.
Yeast, a supplier to Marks and Spencer and others, said contracts with customers have not been renegotiated. “We were glad we were able to retain the full service,” said Rob Hunt, its director of business services.
Yeast launches fully funded places at a training school and offers a £ 5,000 sign-up and retention bonus.
“We hope to attract or make people who have left the industry attractive to new employees, and we have achieved success with this,” Hunt added.
Kieran Smith, CEO of the agency DriverRequire, said hourly rates are not the only consideration. “Things like shift lengths, start times and paid breaks are also important for drivers,” he said, adding that there was evidence that the premium for working unsocial hours was rising.