UK fuel crisis shows road freight labour markets are changing

The reason for the pantomime taking place in the UK fuel distribution system at present is largely to do with the sense of panic generated in the public by eighteen months of perceived crisis. The availability of road tankers seems sufficient to support normal demand and the oil majors keep stating that they have enough product at their terminals, so there does not seem to be an objective problem.

However, the general sense of the fragility of road freight in the UK is clearly an aspect of the stress on the logistics sector seen across much of the rest of the world. Part of the problem is a disruption to the labour force. In the case of Britain, the road freight market has been heavily dependent on foreign labour which in recent years has originated largely in Romania and Bulgaria. The impact of the COVID-19 crisis has disrupted the availability of such drivers, making operational management more complex. Ironically, the part of the road freight sector with less reliance on such drivers are areas such as fuel and liquid chemical tankers.

A strong feature of the problem is that lower labour rates have had a very significant impact on how major shippers approach buying and managing road freight services. Central European drivers not only worked for lower salaries, but also were more prepared to work for very demanding hours in poor conditions. The impact on freight rates was obvious, however, it also engendered an aggressive approach to managing drivers as a ‘cost-driver’. Today it is usual to see trucks waiting in supermarket car parks waiting for their unloading slot. This betrays the willingness of shippers to use driver-hours as a resource that can be ‘flexed’ in order to optimise other, more expensive, assets.

With the change in labour-force structure, this is no longer viable. Labour productivity needs to be increased but the good news is that the option exists to precisely manage loading schedules for vehicles using the information systems architecture that every major shipper ought to have. This should eliminate the habit of making drivers lurk around in car parks for hours. In addition, automation offers huge potential for improvements in the efficiency of loading and unloading. Largescale fulfilment operations are increasingly automated and extending such technology to smaller-scale loading bays will be straightforward. The improvements in labour utilisation are obvious.

A further option is the already well-established use of ‘freight exchanges’ or ‘trucking brokerages’. These offer much greater ability to exploit road freight markets, improving the utilisation of freight within and between trade lanes.

The issue is that doing all this will demand some effort from those buying and managing road freight. They may also have to invest in capital equipment. Perhaps that is why some are lobbying so hard for the continued flow of lower-cost labour to continue.

Source: Transport Intelligence, 28 September 2021

Author: Thomas Cullen