Yahoo Finance Why is the UK facing a HGV driver shortage and what could it mean for consumers?
The UK is facing a lorry driver shortage due to the “double whammy” of Brexit and the pandemic. This is impacting several industries and could lead to major supply issues.
What is going on?
The Road Haulage Association (RHA) reported on Thursday that there is a shortage of 100,000 drivers and warned the situation has reached a “crisis point” with critical supply chains failing.
It said that many drivers have gone back to their home countries either due to uncertainty over new Brexit rules, or because of UK’s COVID-related lockdown restrictions. Many have not returned.
On top of this, HGV (heavy goods vehicle) drivers are made up of an ageing population that is retiring; and there is a major backlog of tests needed to be taken before drivers can qualify to operate lorries, because the tests were put on hold during the pandemic.
The RHA said the 40 largest hauliers who responded to its recent survey currently have 3,654 vacancies, averaging 91 vacancies per haulier.
"The driver shortage is down to the double whammy of the Brexit effect and pandemic disruption,” Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown (HL), told Yahoo Finance UK.
She said many drivers were furloughed at the start of the crisis due to the pandemic. Plus, HGV drivers are not on the approved list of skilled workers eligible for a special visa post Brexit so recruiting from Europe is difficult and HGV training takes many months.
The 'pingdemic' – a phenomenon in which thousands of Brits are being told to isolate by the NHS COVID app because they have come into contact with someone who tested positive – could be exacerbating the problem.
How does this impact consumers?
For one, grocery prices could go up.
"The shortage is pushing up wages and some of these costs already appear to be being passed into supermarket suppliers, who may only be able to absorb higher costs in the short term so there is a risk prices in the shops may rise as a consequence," said Streeter.
"This war for workers could be yet another inflation driver."
The 'pingdemic' means supermarkets are already struggling due to a shortage of staff that coincided with ‘freedom day’ for the rest of the country, and the shortage of lorry drivers is hitting them hard as well.
So much so that Tesco (TSCO.L) is offering a £1,000 ($1,394) bonus to lorry drivers who join the company before the end of September.
This is a clear indication Tesco shelves could be impacted if it doesn’t attract enough drivers.
"We are reaching the point in which widescale shelf shortages could be a genuine threat up and down the country," said Will Broome, founder of Ubamarket, a retail tech app provider.
And equity analyst at HL, Laura Hoy warned "it could be a challenge to find the right candidates in this environment, particularly on such a short timeline."
She added that the shortage will also hit the consumer goods industry’s smaller players that "don’t have the financial firepower to get new drivers in right away."
Meanwhile Morrisons (MRW.L) has said it is working on schemes to train staff to become lorry drivers.
And dairy giant Arla, which supplies milk to all major UK supermarkets, has said it is being forced to cut back on its deliveries.
The company normally supplied 2,400 stores a day.
"Last Saturday, there were 600 stores that we couldn't deliver milk to," managing director Ash Amirahmadi told the BBC.
Trade union Unite has warned the shortage of drivers is behind a forthcoming ballot for strike action that could impact on deliveries to more than 1,500 convenience stores in London and the south east.
Ben Dyer, CEO of Powered Now, a field service management software for the trades, told Yahoo Finance the trade industry is seeing timber, steel, insulation and plaster board imports becoming very challenging, "and this is really down to haulier issues, with 15,000 fewer deliveries to the UK which is largely due to Brexit."
What next?
Hoy said that with the “ping” guidelines becoming more relaxed, fewer self-isolations are expected going forward, which means more drivers will be available to work.
“This looks like a short-term problem that shouldn’t have a lasting impact on the consumer goods industry.”
However, the RHA has asked for the introduction of a temporary worker visa for HGV drivers and for this role to be added to the Home Office Shortage Occupation List as it believes the problem needs government intervention.
"Adding HGV lorry drivers to the Shortage Occupation List would help ease the current bottlenecks by enabling firms to bring in the skills they need from outside of the UK when they cannot recruit from the local labour market," said Suren Thiru, head of economics at the British Chambers of Commerce.
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