Many logistics companies are rightly proud of the sustainability initiatives which they have introduced within their warehousing and transport operations. Despite this, the fundamental business models and employment structures which many companies in the sector operate are coming under intense scrutiny due to the impact which they have on logistics workers. Many of the issues relate to the highly subcontracted nature of labour in the transport market and the use of agency workers in the warehouse sector.

The failure of express parcels company CityLink in Christmas 2014 shone a light on the established working practices which exist throughout the industry – the widespread use of owner-drivers within a transport network. Parcels companies use flexible resources who are often paid by the delivery in order to balance peaks and troughs of demand with their capacity. It doesn’t make economic sense to employ their own staff and invest in their own fleet of vehicles. However this business model has come in for criticism due to the very low rates of pay and the long hours which are entailed.

The business models of many companies operating in the ‘on-demand’ economy (also called ‘gig’ economy) in the transport sector are also coming under intense scrutiny. There have been legal challenges as to whether self-employed workers should be given access to the same rights as other employees. In a case related to the sacking of two drivers, the legal company of a Union commented, “Employers cannot be allowed to have all the financial benefits of employees and none of the responsibilities to these people’s livelihoods. The attempt to reframe normal employment as part of the gig economy is a serious threat to the financial security of thousands of hard working people and will end up costing the tax payer huge sums whilst companies take all the profit.”

Unsurprisingly others take a different view. Although some of the sub-contractors may see the on-demand model as unfair, many are suited by the arrangement. After all, both on-demand delivery companies, such as Deliveroo and UberEats, have attracted many thousands of couriers to sign up to their business models.
Distribution centres too have faced criticism for the working practices imposed. The use of temporary staff and the restrictions placed upon them, such as the imposition of ‘zero-hours’ and ‘short hours’ policies, has been regarded as unfair and unbalanced in some quarters. These, and the use of employment agencies, has developed largely due to the e-retail revolution which has generated the need for large amounts of flexible staff to meet volatility, seasonality and high volume growth rates.

The ‘shared economy’ and e-retail is now a part of life for most people and consequently it is unrealistic for governments to either want or attempt to hinder innovative business models. However companies operating in these markets also have the responsibility to ensure that all participants, including their workers, benefit fairly from the changing environment. This makes good economic sense as well as ensuring an engaged and dynamic labour force which can take advantage of flexible working practices, rather than become subservient to them.

To purchase your copy of my latest book Supply Chain Ethics please click here.