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2022 promises to be a year of challenge and opportunity, says Logistics UK chief


For logistics, 2021 was a year dominated by labour shortages, the need to decarbonise and COVID-19 restrictions, according to David Wells OBE, Chief Executive of Logistics UK, one of Britain’s biggest business groups.

Finding itself at the sharp end of each of these major disruptive trends, the logistics sector has been forced to continue to adapt and develop, Wells maintains.

“Like every sector, logistics has got a significant skills challenge,” he said. “I think we as a trade association have done a fantastic job of raising the profile of those skills challenges. Not just drivers, which became a national story of real importance, but we’ve also raised the issue of skills right across the industry.”

Wells believes there is a strong chance that the HGV driver shortage will continue to ease in 2022, but he cautions that there may continue to be challenges recruiting for warehouse roles, fitters, mechanics, forklift truck drivers and higher-skilled roles.

“I think as the industry seeks to continue to evolve and invest in IT and new technologies, there will be challenges finding the right skills to take those projects forward,” he said.

ADDRESSING THE SKILLS CRISIS

While skills shortages in logistics have been particularly acute over the last six months, Wells maintains that the problem is a longstanding one.

“When I started at Logistics UK back in 2009, the first big topic on my desk was the shortage of drivers,” he said, “Industry largely filled that with Eastern Europeans. Initially, the average age of HGV drivers fell because the industry did recruit new people locally, but then those people did not stay in the industry, it fell back, and we then turned to Eastern European labour.”

One of the key outcomes Wells would like to see arising from the crisis is a solid commitment from government to improve driver facilities and help create an environment which makes it attractive for developers to invest in truck stops and new HGV parking spaces.

“It has to be a partnership,” he stressed, “I’m not asking government to build these facilities, what I’m asking them for is to create a framework in which they are commercially viable. That local planning authorities are mandated to consider the needs of logistics firms to supply retail parks and town and city centres.”

Rather than pinning the blame on Brexit, Wells believes that the labour shortage issue has been massively exacerbated by disruption brought about by the COVID-19 pandemic.

“The world had a shock in March 2020,” he said, “Many drivers were furloughed. If you were a furloughed Eastern European driver, what would you do? Well, you’d go home, wouldn’t you? You’d go back to your family. You’d go back to an environment where you understand how the health service works, where you feel confident and secure. So, I’m not surprised that Eastern European HGV drivers went home, because I would have done the same.”

CAMPAIGNING ON THE ISSUES THAT MATTER

Logistics UK has campaigned hard to help tackle the shortage of skilled drivers over the past 12 months and Wells reports that he is broadly satisfied with the government’s response.

“All of the policy asks that we made of government have largely been met,” he said, “You can argue about the effectiveness of the short-term visas and three months is clearly not long enough to make them viable. But generally, I am fairly satisfied with the government’s response.”

However, he remains concerned that the government is not looking longer term to think about the importance of building high-quality driver facilities and making logistics an attractive industry to work in.

YEAR OF LOGISTICS

One unintended consequence of the pandemic is that the public’s level of understanding about the importance of the supply chain has increased significantly, with people generally supportive of truck and van drivers. Wells believes that the forthcoming government-backed Year of Logistics campaign will help build on this newly raised public awareness.

“We mustn’t lose that goodwill, we must build on it and attract people into the industry,” he said, “The industry is fast paced, it’s changing, it’s problem-solving, it’s customer focused. There are great jobs out there, exciting, fast-moving jobs. We must do our best to promote those and that’s what the Year of Logistics is about – it’s a collaborative effort, right across the sector to showcase what’s good about the industry.”

On the sector’s current lack of diversity, Wells argues that showcasing best practice initiatives and offering more flexible packages are the best way to attract more women, younger people and applicants from a more diverse range of backgrounds.

“There are some really good initiatives and activities going on – we need to showcase them, we need to sing about them, and shout about them a bit more,” he said. “We have to tackle the facilities issue, and as an industry we have to be flexible about the roles and the hours and the jobs that are available. That’s how the bus sector has attracted women – it’s about flexibility and conditions.”

DECARBONISING LOGISTICS

Decarbonisation rapidly climbed the logistics sector’s agenda in 2021, with the publication of the government’s Transport Decarbonisation Plan in July, followed with confirmation at COP-26 in November that the sale of new diesel and petrol HGVs will be phased out by 2035-40.

How prepared does Wells think logistics businesses are to transition to zero tailpipe emission forms of transport in less than two decades?

“It’s definitely rising on the to-do list of boards across the industry,” he said, “By and large I would say that the industry buys into its responsibilities to decarbonise and do the right thing. That’s its starting point. They’re not frightened of looking at it and saying well what do I need to do, what is going to be the technology that I need to start to get my head around to learn, to invest in?”

His view is that battery electric and hydrogen are the two frontrunner fuels for zero tailpipe emission vehicles, with the technology for electric vehicles arriving quite quickly, and hydrogen trailing a little behind.

Although he is satisfied with the speed of the development of the vehicle technology, however, the speed of the development of the refuelling infrastructure remains a cause for concern.

“The government wants to let the market decide,” he said, “Its traditional free-market economics model says that the market will decide the right technology, but actually the market won’t really decide on its own, because if you’ve got no infrastructure you can’t use either fuel.”

If there is no way of creating hydrogen in sufficiently sustainable quantities, and no way of distributing electricity to trucks, whether that is via an overhead catenary or a chargepoint to recharge a battery, these alternative fuels will not provide the answer, he argued.

Asked whether it was the government’s role to pick winners in the transition to zero tailpipe emissions, he said: “At some point, somebody has to take the plunge and start investing in the infrastructure to make this work. Given the scale of what will be required, that will be where this falls down. I don’t think the industry will prove unwilling to do it, I think it will be a collective failure to get the infrastructure ready.”

INCREASING MARGINS

Despite signs of recovery in the UK economy, many logistics businesses, particularly smaller companies, were still reporting poor financial health at the end of 2021. How optimistic is Wells that logistics businesses can bounce back from their current difficulties and launch a strong post-pandemic recovery in 2022?

“I think the industry has traditionally worked on very low margins,” he said, “If operators don’t take the current crisis as an opportunity to improve their margin, then they’re missing a business trick. There’s a scarcity of resource, therefore the opportunity is to address some of your margin challenge.”

THE OUTLOOK AHEAD

Logistics is currently facing multiple challenges simultaneously – shortages of labour, the dampening effects of COVID-19 restrictions, and the need to decarbonise. How does Wells assess the industry’s economic outlook for 2022?

The UK economy, he observes, is not back to where it was before the pandemic and while some sectors have grown, others, such as bricks and mortar retail, have declined.

“I think we’ll continue to see a decline in the high street,” Wells said, “I walk through many high streets and they are depressed places, and our members service the high street. I think there has to be a bit of a sifting in the high street and that will continue. The move online won’t go back.”

As head of the industry’s representative trade body, how does Wells think Logistics UK can help its members overcome some of these challenges?

“We’re currently facing a very uncertain future with Omicron and what it’s going to do in the first quarter of this year,” he said, “I think we as the trade body need to stay close to our members, understand what’s happening in their businesses and continue to react quickly and appropriately to what’s going on in the economy. We need to stay close to our members.”

*www.logistics.org.uk/campaigns

Published On: 06/01/2022 16:00:37

 



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