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Logistics businesses reasonably confident despite challenges ahead, report shows
Logistics UK’s Logistics Performance Tracker Q3 2022 shows that while respondents were not confident about the UK’s economic outlook in the coming six months (3.3 out of 10), they were reasonably confident about their company’s own outlook (6.0) and even more buoyant about the current financial health of their businesses (7.2).
MECHANICS AND DRIVERS STILL IN DEMAND
On skills, over half (54.4%) of respondents reported severe or very severe challenges filling mechanic and technician vacancies, while more than a third (37.3%) reported severe or very severe difficulties filling HGV driver roles. By contrast, only one in seven (14.3%) survey respondents reported difficulties recruiting transport managers, while 15.4% reported challenges recruiting van drivers.
BUSINESS AND THE UK ECONOMY
As households and businesses were affected by soaring inflation, gross domestic product (GDP) fell by 0.2% in the third quarter, according to the most recent ONS figures. This dip in activity was exacerbated by businesses closing for the funeral of Queen Elizabeth II.
In September, 85% of businesses were fully trading and 10% partially trading, according to the latest Business Insights and Conditions Survey (BICS). Almost nine out of ten businesses in the transport and storage industry were fully trading in September, which is the highest number since the BICS survey began in June 2020.
More than half (55.5%) of transport and storage firms are reporting demand for their products domestically is unchanged. Economic uncertainty in the industry is high, with 47% of transport and storage firms ‘not sure’ how they expect their business to perform over the next 12 months.
The Consumer Prices Index (CPI) rose by 11.1% in the 12 months to October 2022, up from 10.2% in September 2022, the highest since 1982.
SUPPLY CHAIN CHALLENGES
Respondents to the LPT survey are still reporting delays in suppliers receiving parts for vehicle maintenance and repair, likely to be linked to the global shortage of semiconductors and manufacturing disruption in China. More than half of respondents experienced delays in receiving goods in the third quarter, an improvement on Q2 when seven out of ten reported this issue. More than four out of ten respondents (42%) reported extended delivery times to the EU, while over a third (37%) indicated delays at UK borders – falling from 61% in the second quarter.
HGV DRIVER RECRUITMENT, RETENTION AND PAY
Difficulties in filling HGV driver roles are moderating slightly – 11% of respondents are reporting a very severe problem in the third quarter of 2022 compared with 12% in the second quarter. However, more respondents are reporting problems filling van driver vacancies with only 16% reporting no problem in Q3, compared to 30% in Q2 2022.
Plus, 95% of respondents continue to experience problems filling vacancies for mechanics, unchanged from Q2, though the severity has eased. More than half of respondents intend to raise driver pay in the next six months, with the average pay rise expected to be 6.2%. The two key reasons for raising pay are to remain competitive and retain drivers.
Sarah Watkins, Deputy Director – Policy Information, Logistics UK, said: “The latest Logistics Performance Tracker captures a snapshot of how logistics businesses have fared in the third quarter of 2022. It is telling that while logistics businesses appear confident about their own financial health, they are less confident about the UK’s economic outlook as a whole.
“Skills shortages continue to be an issue, and filling vacancies for mechanics, where more than half of respondents have reported severe or very severe difficulties, is proving particularly challenging.”
*www.logistics.org.uk/lpt
Published On: 01/12/2022 16:00:05
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