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DRIVING YOU CRAZY?

When McDonalds runs out of milkshake, you know you have a serious problem. It makes global headlines but the cause of this devastating news for diners at the company’s 1,250 British restaurants is anything but ‘news’. It’s a consequence of a situation which has been building for over a decade or more; shortages of truck and van drivers.

In fact, ‘shortage’ is now too trivial a term. Consumers are waking up to a reality which has been challenging supply chains so much that a recent article in The Times newspaper in the United Kingdom stated that lorry drivers working for one on the country’s leading supermarket chains can now earn £53,780 (€62,500) a year, considerably more than the average salaries of schoolteachers (£40,880), solicitors (£43,190) and architects (£42,930).

So, it’s not all bad news if you love driving trucks. Sadly, though, if you do, you’ll soon find you’re running low on colleagues in your chosen profession. A new whitepaper by Ti, Insight, a leading logistics and supply chain market research and analysiscompany, looks at one of the biggest risks to supply chain resilience in Europe…

Driver shortages have been affecting the global road freight market for around 15 years. The issue comes as the pool of truckdrivers is contracting but demand for transport is rising. As global economies have grown, the demand for transport hasincreased, which has caused a strain on personnel resources especially for van and last-mile drivers. As this happens, labourcosts are also rising, which is increasingly putting pressure on road freight operators and freight rates. The reasons behind thegrowing shortage are plentiful as are the solutions, but the implementation is difficult and lengthy.

While the COVID-19 pandemic has challenged supply chains and logistics in unprecedented ways, it has further exacerbatedthe already alarming issue of driver shortages. Even before the pandemic was a serious cause for concern in the industry,the lack of drivers in the road transport industry was at an all-time high with many of its underlying issues being long-termchallenges. Factors such as an aging workforce and insufficient numbers of new recruits, due to working conditions andimage issues of the profession, have plagued the industry.

According to Ti’s estimates, in 2020, the European road freight industry had a driver shortage of

around 400,000 drivers. The most heavily impacted European countries are Poland, the UK and Germany. The UK is in aparticularly difficult position as it is not only grappling with Brexit, but it also saw European workers leaving the country overthe course of the pandemic, as fears over lockdowns grew.

Strategies to mitigate driver shortages

The driver shortage is a multi-layered problem. There has been much debate about the strategies needed to mitigate this ongoing problem across Europe. There are short-term solutions such as making truck driving a more attractive job by increasingpay, introducing bonuses, giving opportunities to buy shares in the company and flexible hours, which can all start from the roadtransport companies. Then there are longer term solutions which sometimes require government or institution intervention,such as recruitment programmes for females and ex-military personnel, raising awareness of driving careers in schools, training programmes, redefining regulations, and improving parking facilities for rest breaks.

The use of apprenticeships and training schemes to attract young people

The offer of apprenticeships to encourage young people into the profession has been adopted by many companies. Theseschemes often include training as well as a healthy salary. Some employers have also set up ‘academies’ and training schools which include covering or contributing to the costs of training, often regarded as an expensive entry requirement.

The legal age to drive an HGV varies throughout Europe, which can be another barrier to entry. Nagel Group in Germany is one of the companies which has recognised this problem and created an apprenticeship scheme which employs young people and gives them industry experience before turning 21. Another initiative aimed at attracting young drivers is the partnershipbetween Logistics UK – formerly the Freight Transport Association – and Think Logistics, an arm of the educational charityCareer Ready. It aims to build links between schools, colleges and employers to communicate the opportunities a career inlogistics presents to young people.

Other strategies to tackle the problem include:

  • Pall-Ex’s UK-wide Driver Drive to encourage drivers to join its network - a separate website for job applications with opportunities for Class 1 & 2 HGV drivers, van drivers and forklift truck operators.
  • JMHC Logistics’ HH Drive Right online driving academy initiative to attract young people into the industry.
  • Eddie Stobart’s driver school, which offers financing, courses and driving experience with a guaranteed job, subject tocompletion, at the end of the programme.
  • Aldi’s offer of a 13-month driver apprenticeship scheme for over 18s, offering an attractive salary, mentoring and holidayallowance, and the opportunity to work towards a Cat C+ E licence.
  • Hermes’ ‘Road to Logistics’ apprenticeship programme and 12-month ‘Warehouse to Wheels’ training scheme which allows existing staff to undertake their LGV training to become drivers for the company. The scheme is open to applicants of any age and all successful apprentices are offered roles as hub drivers.

Seasonal hiring

Driver shortages are particularly noticeable during peak seasons in Europe. Schemes to attract drivers who can be used duringpeak times and then utilised in other ways can be seen as an inviting alternative to being a full-time driver. One company thathas explored this approach is DHL Freight, which trialled a new scheme to get more people behind the wheel to keep goodsflowing across Europe, especially at peak times like Christmas. DHL Freight’s recruitment drive has initially focused on Europeanoperations, and there is already a pilot scheme in branches in Erfurt, Koblenz, Maintal, Malsfeld and Sehlem in Germany.

The pilot programme employs new recruits in a “rotating deployment” capacity, where they serve as drivers in peak periodsand work in warehouses during quieter moments. The company said 30 new jobs had been created at each of the branchesin the pilot programme and, if successful, a further 500 employees would be taken on across Europe.

Recruiting ex-military personnel as drivers

Some companies in Europe have embarked on campaigns to encourage former military personnel to become drivers in the logistics industry. In the UK, for example, there are approximately 50,000 unemployed veterans (according to 2019 data) - alarge untapped potential pool of truck drivers. To take advantage of this, logistics business ELB Partners turned to a specialistrecruitment agency for ex-military drivers to find skilled, reliable drivers. Using agency drivers is often the ‘go to’ solution for many hauliers but this short-term solution inflates supply chain costs which can be difficult to pass onto customers in such a margin-sensitive sector.

In Germany, an increasing number of companies are also looking to recruit truck drivers from the army. The carriers andshipper’s organisation, Logistik Netzwerk Thüringen, has signed a letter of intent with the Logistics Command of the GermanArmy to support the professional development of employees through their employment and training by both parties. Forexample, army members from the logistics unit will be able to work in a logistics company during a break in service and thenreturn to serve in the army. Logistics provider, DSV, entered into an agreement with the Dutch army in 2018 to hire army driversto support its busiest periods.

The use of technology

The application of various technologies can help with the driver shortage problem by enabling or facilitating visibility in supplyand demand schedules to eradicate the issues of empty runs and wasted capacity. Equipping trucks with localisationtechnology and sensors is one step towards achieving visibility and more efficient utilisation of assets and driver resources.

The introduction of digitalised platforms, AI and forecasting could also greatly redress driver shortages as they remedystructural inefficiencies. These types of platforms can help to reduce the number of trucks required to move freight and cut emissions and costs. However, the reality is much more complex. Although notional spare capacity in the market is, onaverage, around 40%, that so-called ‘waste’ is not entirely addressable by the use of road freight platforms.

According to research conducted by IRU, the international road union, 71% of European transport are pinning their hopes on autonomous vehicles in the next decade. Autonomous trucks can reduce labour costs and keep running 24/7 without beingconstrained by driver rest time and driving distance limitations. However, in reality, the technology is not yet commerciallyviable on a large scale and trials usually operate in closed environments. Longer term, however, it seems certain the use ofautonomous vehicles will play an important role as one of the solutions alleviating the driver shortage problem.

Institutions and governmental input

The support of governments and other institutions is also essential.

The lack of convenient, safe and secure rest areas has become one of the key problems for truck drivers, and a major factorputting off women and younger people from joining the industry. The European Commission has decided to make some €178 million of funding available to increase the number of secure parking areas across Europe but getting EU Member Statesonboard is essential to achieve tangible results. Matthias Maedge, the IRU’s General Delegate to the EU, says the ConnectingEurope Facility, the EU funding mechanism for infrastructure projects, will finance 30% of the projects, so Member States willbe expected to provide additional support, with investors needing to cover the remaining 70%. It is therefore necessary to actat the local, national and European levels to achieve a breakthrough.

Other initiatives in the UK include the ‘Road to Logistics’ programme, a national training programme designed to encouragepeople from different parts of society, who need help and integration into work, into the transport and logistics industry. The UK Government has also pledged £1 million to the programme to help prepare former criminals to become truck drivers. It comes after successful pilot schemes in several UK prisons. The scheme will mentor and guide potential drivers, linking them withemployers and help put them through training and the HGV driving test. It has already trained 300 drivers in the first year.

Reducing the minimum age of professional truck drivers

A particular concern is the lack of younger people training to become HGV drivers. In Q2 2020, the proportion of people under the age of 24 driving HGVs fell by 57% compared to Q2 2019 in the UK. This is an issue the European market is familiar with as well. According to the IRU, only 11% of the workforce in Poland are younger than 25 years-old, while in Romania, the averageage of drivers is 41 years old. The European average for drivers below 25 years-old sits at 7%.

To tackle the issue, the industry is calling on governments to reduce the minimum age of professional truck drivers toinclude younger people. IRU has called on nations to agree on a global minimum age of 18 for professional truck drivers.

There is variety when it comes to age requirements around the world. In the Middle East and some European countries, the minimum age is already 18. In many other countries, the minimum age is 21 but can go up to 26 in countries such as China and Turkey. Even within the EU there are different age requirements and rules. Such restrictive minimum age rules are aserious obstacle to young people joining the profession at a time when youth unemployment exceeds 30% in somecountries.

Attracting female truck drivers

Women account for 2-3% of drivers across Europe, according to the IRU. The IRU is acutely aware of the need to improve the attractiveness of the job, working with the European Commission as well as supporting its members to promote women in theindustry. For example, a German member of the IRU recently employed a female ambassador to help attract women into thetransportation sector.

Attracting foreign drivers

Another way to alleviate the shortage is to employ non-resident drivers. Opening borders to employees from Eastern Europeancountries has helped, but only temporarily and, as a result, operators have started looking for drivers from further and furtherEast. In Poland, for example, there are agencies that offer employment of drivers from Asian countries such as Bangladesh,India, the Philippines and Vietnam. It can take around four-to-six months from the start of the recruitment process to arrival.Employing foreign drivers from Central Asian and Caucasus countries such as Kazakhstan, Uzbekistan, Georgia and Armenia, however, only takes around one-to-three months.

The use of financial incentives

The use of financial rewards is, of course, a strategy to both invite new drivers and retain current drivers. It is probably themost realistic short-term solution. Some company bosses are even reportedly encouraging their own drivers to poachcompetitors’ employees at motorway service areas. As an incentive, there is an offer of a bonus and an exchange premium of €500. Some companies have also been known to offer shares to driver employees as an incentive to join, whilst others have offered flexible hours and extra holiday days to compensate for the long periods away from home.

According to a Ti survey of hauliers across Europe, around a third of hauliers (33.9%) offers regular increases in salaries to retaindrivers, acknowledging the assumption that low pay is a major factor putting people off coming into the trucking industry.29.5% stated that they offer bonuses.

A worsening situation

The driver shortage in Europe is set to get worse, despite the many strategies that are being implemented, which will all help to alleviate the issue to some degree.

Sadly, it will most likely take the threat of transport companies losing business to become the turning point in theimprovement of working conditions of drivers and consequently in the increased attractiveness of the job.

About the Author

Violeta Keckarovska is one of Ti’s Senior Research Analysts and leads its Freight Research Team. She works with clients on both the shipper and carrier side of the market on key strategic issues and has authored a number of other reports, including digitalization in road freight and the effects of regulation on the market. Prior to joining Ti, Violeta worked across a number of sectors, including retail, luxury goods and FMCG.

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