At risk of sounding like a broken record (see previous article) we plough headlong into this continuing story with a view to leave it alone for a while afterwards. Let’s hope we can resist the urge.
Last year we had the gargantuan capacity crisis with the Rastatt disaster leaving warehouses across Europe full and factories idle, now as things get back to normal so returns a hidden issue that finally everyone is talking about.
There simply aren’t enough drivers!
The problem has been creeping towards us for a long time and we have all played a part in it without knowing, but what has caused this?
“Cheap trucks everywhere!”. That was the cry as the emergence of the eastern European haulier over 10 years ago appeared beginning the demise of the UK haulier in Europe. The EU economy wasn’t particularly buoyant as we all remember why.
Now as Europe has awakened from its slumber and ramps up productivity, carriers are full to the brim. They could certainly do more as there’s no shortage of trucks, but where are the drivers?
International long-distance transport is currently dominated by companies in eastern Europe, and the wage level for drivers is correspondingly low. The life of a driver would often be weeks on the road away from family for a wage that seems unsustainable to most. I myself have had discussions and emails over the past with drivers begging to understand why they are paid so low. As there were no other jobs it became unspoken practice to treat Eastern European drivers this way.
Now the drivers can see and feel the demand for their services increasing and are now enforcing wage rises from the haulage companies, who have always been used to dictating the terms. Resentment of company owners living what is perceived a very good life in comparison to the drivers with poor pay and working conditions has finally ignited the touch paper.
Haulage companies are now having to pay higher wages or the driver will simply up sticks and move to another company. And said driver may simply drop their vehicle too and take up position in another. It’s really happening, over and over again, there are abandoned truck in Europe where hauliers are having to collect them because the driver has jumped to a better paying job.
The problem is even more serious for the UK importer as drivers are now even starting to dictate where they want to go. And the UK is not on their visiting list. To be fair the UK has had its fair share of reasons for hauliers not wanting to come. We have a sea between us for a start. Then the danger of migrant activity in Calais. Then when you’re finally here, you have severe traffic congestion and finally can’t get off our island as export volumes are slim (but improving) and pay very little. Hauliers already factor in an empty crossing back to mainland when calculating coming here. What then of our attractiveness post-Brexit with border controls and the possibility of customs documentation? One to watch no doubt.
For international hauliers now they have a bittersweet time ahead. On the one hand there’s so much business in Europe they can be choosy. On the other there is a driver mutiny occurring compounded with ever increasing but totally valid EU regulations deterring cheap labour, such as legal weekend breaks, mandatory minimum wage, etc.
You would think, with rising prices (the fourth quarter of 2017 recording record prices) because of the capacity issue, that the answer is simple. If you’re charging more, pay more to your drivers. But the job itself of a trucker appears to be losing its attraction. The falling unemployment rates in Europe, even Eastern Europe, means young job seekers have many more options than before.
Here in the UK we have the highest driver shortages in Europe. The shortage here rose by almost 50% in the second quarter of 2017, according to the FTA. This is set to continue as drivers reach retirement age with few younger applications coming in to the industry.
Over the next five years driver shortages throughout Europe will pose a major threat to the industry with government anti-diesel regulations and city bans also contributing to problems. The road freight market is a competitive arena and with margins historically low and for the big players any reliance on overall market share to keep businesses strong is suddenly a dangerous game to play.
So even though we can say the demand side of the market is fairly predictable going forwards, the same can’t be said about supply. Businesses need to start developing strategies to combat the key issues confronting the industry and understanding what is contributing to them.
To make matters worse, grumbling in the EU from the big Western players is causing frostiness with their Eastern neighbours. “There is no place for social dumping in the EU. There is no room for nomadic drivers in the EU either” said EU Transport Commissioner Violeta Bulc.
With Europe’s road transport sector employing around 5 million directly, with some 560,000 companies registered throughout the bloc, many small family owned businesses, that’s enough blue-collar electorate for some serious political consequences.
We can examine the clashing of the EU’s Franco-German core against the interests of the poorer, newer member countries in eastern Europe next time.
On the back of all this woe there are some winners, in particular sharply increasing in demand are alternative means of transport including un-accompanied trailer shipments and rail, up more than 30 percent since 2015. Also having spoken to many UK based haulage companies that retreated from Europe many years ago, they are now reconsidering Europe as prices rise. We firmly believe we could be coming full circle over the next five years.
In conclusion we all know change is constant. If it wasn’t this challenging us it would be something else as our industry is super complex. Being an optimist we feel companies that can understand what’s going on and adapt will bear fruit and succeed whereas those who are stubborn with little flex could well come up short.
For customers concerned about their supply chain we always recommend using specialist companies with long standing partnerships with their suppliers as you really need a key understanding of what’s occurring together with strong operational tentacles to navigate these choppy waters. Here at Jordon we are constantly reviewing the issues facing our industry and working with partners to secure capacity based on a win/win outcome. In our view win/win should always be the aim. There, the secrets out!
Phew, so there we have it. I hoped you enjoyed this article which is based on real feedback from the real people we speak with daily. If you wish to discuss anything featured in this article please feel free to contact me, and until next time I’ll keep asking questions and bring here what I’ve found.