Thursday 27th Oct 2016 - Logistics Manager

Will we pay the price? : Mick Jackson

When Skills for Logistics was granted its original licence in early 2004, one of the objectives set for the organisation was to ‘significantly reduce driver shortage’. This is on a par with governments being set an objective of ‘improving the standard of living’.

There is no doubt that, in the time that I have populated this mortal coil, living standards have risen (yes, technically rationing was just still in place when I was born!). However, the degree to which governments of any colour since then can be said to have contributed to that improvement is, to say the least debatable. Credit should probably instead go to messrs Gates, Job, McCartney and Bobby Moore.

Similarly, recent research into the ‘driver shortage’ shows that the situation has eased, partly due to the Working Time Directive having a smaller than anticipated impact and partly due to the influx of drivers form Eastern Europe. We can of course claim some credit for the improved figures as around five per cent of new drivers each year have come through the SfL Young LGV Drivers Scheme. However, can we afford to be complacent? The answer has to be no. A recent article drew attention to the horrendous skewing that exists in the age profile of LGV drivers. Around 24 per cent of drivers are aged over 55 with another 27 per cent over 45.

We have long talked about this ‘time bomb’ lurking in the background but this is clearly getting serious with over half of our drivers over 45.

Our mission in Skills for Logistics is to move companies in the logistics sector towards a culture of Continuous Professional Development. In so doing, the logistics sector will develop an image as a profession that people will wish to enter.

That anyway is the theory and we will be supporting that approach as much as possible through The Professional Development Stairway as a career framework and making available relevant qualifications and programmes. However, there is only so much that can be done to improve the image along those lines and I am concerned as to whether these changes will be sufficient to defuse the potential time bomb awaiting us.

Let me try and illustrate the dilemma through two fictitious job vacancies.

Vacancy number one is for a bodyguard for an Iraqi government minister in Baghdad and vacancy number two is for somebody to sweep up the pit lane for Ferrari following each Grand Prix. Two vacancies of varying attractiveness, both of which can be filled – at a price, and that price is clearly going to be very different. As conditions improve in Iraq, then the personal protection job will become relatively less dangerous, relatively more attractive and will command considerably lower payments. Ferrari, on the other hand probably don’t have to sell their job very hard.

That’s the end of the example but it does highlight the principle that if posts are deemed to be unattractive the laws of supply and demand dictate that, as in any market, prices have to rise if demand outstrips supply.

In a notoriously low margin, high expectation sector, such a message will not be popular (if it is generally subscribed to). However, the hard facts are that in the next 10 years, this sector will need to recruit around 150,000 new drivers as the over 55s stop working. If the jobs are unattractive then the Terms & Conditions of employment will have to improve. Wages are a significant part of that so costs will rise. More enlightened companies are of course upskilling their employees so that these inevitable cost rises can be partly mitigated by improved efficiency.

Nevertheless, it looks as if the era of cheap logistics is coming to an end. However, the sector will presumably need to go through a protracted period of mass corporate denial as margins continue to be squeezed despite the laws of supply and demand. Is it time to engage the immediate customers of logistics (eg the retailers) and the ultimate customers (ie you and me) in discussion about the fact that prices will have to rise?

One problem here is that the environmental lobby has already claimed the moral high ground as costs will inevitably rise as the logistics sector is forced, in the jargon, to internalise external costs.

Or have I got it wrong and in fact upskilling will mitigate against the inevitable wage rises and the less efficient companies will simply cease trading?

Your views are welcome – I’m off to fill in the Ferrari application form!