How to cope with another year of instability

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Published: 14 March 2023
Categories: News Article

How should the supply chain industry cope with another year of instability?

2022 was a particularly challenging year for supply chains. The impact of Brexit and the pandemic were still adding to the instability, alongside new challenges in the form of the conflict in Ukraine and rising inflation. Last year, no supply chain had a smooth ride.

For fleet providers, ongoing staff shortages, skyrocketing fuel prices, and demand for faster and more efficient ecommerce deliveries has led to significant strain. This is against the backdrop of heightened consumer, government, and stakeholder pressure for businesses to reduce their environmental impact. With the government’s target of net zero by 2050 creeping closer, organisations can ill afford to neglect sustainability progress in favour of financial priorities.

This year, fleet providers are likely to see more of the same instability. Here, the executive directors at SCALA, a leading supply chain and logistics consultancy, detail the issues fleet providers are likely to experience within supply chains this year, and how businesses should adapt accordingly.

The road to net zero continues – Rob Wright, executive director at SCALA

The UK government is increasingly looking to the transport sector to improve its sustainability, as it accounts for 27% of the UK’s total carbon emissions. However, what the road to net zero for the transport industry will look like is still being disputed.

Some businesses are making the transition to electric vehicles (EVs), with research predicting that by 2025, 30% of all vehicle sales will be hybrid or electric. However, there certainly needs to be greater investment into the development of EVs if they are to become a viable option for all companies.

An electric road system (ERS) is widely considered the ideal solution to making EVs a practical option for fleet providers. An ERS is an electric motorway whereby the trucks would be charged via overhead cables as they travel. This would reduce both the battery size necessary, and the scale of charging infrastructure required to make a fully electric fleet a possibility.

Whilst the industry continues to invest in better infrastructure for long-distance deliveries, EVs can be used for short-distance, last mile deliveries. With electric LCVs having an average range of over 200km, they’re already a feasible option to perform daily deliveries from retailers. Making the transition to electric for these journeys is a great step in the right direction for retailers and hopefully we will see much more of it this year.

Another year of instability for supply chain
Photo by Fleet Point

Navigating inflationary pressures – Phil Reuben, executive director at SCALA

With the price of fuel rising, and the overall cost of business operations increasing with inflation, fleet providers need to maximise cost savings where possible. This is where a tech-enabled fleet management systems can be beneficial.

Having full visibility of operational costs on one platform allows fleet managers to make well informed decisions on how to operate the fleet in the most cost effective way. One benefit of a fleet management system is that it allows for smart fuel consumption. With prices of fuel predicted to start rising again as wholesale cost starts to creep up, businesses need to ensure they are strategic with their consumption. Bad route planning and inefficient driving can be detected by a management system and offer the driver ways to improve their consumption through changes to their driving.

Another important feature in this current climate is predictive maintenance. Automated systems can predict when issues are set to arise ahead of time, meaning managers can identify maintenance issues early before they develop into costly repairs. It also reduces downtime, which is unproductive and costly for businesses.

Staff shortages will continue – Dave Howorth, executive director at SCALA

HGV driver shortages have largely dropped off the national media agenda. However, the reality within the industry is much different. In a survey by CILT, 60% of member businesses were still experiencing the instability of driver shortages towards the end of last year.

Evidently there is still more to be done within the industry to improve the role of drivers to encourage greater employment and retention levels. Despite the government announcing plans to issue 10,500 temporary visas to foreign lorry drivers and food industry workers last year, this is a short-term fix rather than a long-term solution.

In the past, drivers were often employed by the major brands on good terms and conditions. However, with increased competition and a drive to reduce costs, wage levels have been eroded as transport operations have been outsourced with very little profit margin for the logistics operators.

The perfect storm of Brexit and Covid has brought these problems into sharp focus. If we want to combat the issue in the long term, we need to see a move towards drivers being respected for performing important, professional roles with attractive salaries, benefits and better working conditions.

Many HGV drivers work very unsociable hours, and they are often required to change those hours every day. Conditions for rests and overnight stays are particularly poor in the UK, which deters even more workers from pursuing a career in HGV driving. This is especially the case among women, who only account for 1% of HGV drivers in Britain.

The age profile of HGV drivers also presents an issue. With an average age of 51, more needs to be done to encourage younger people into the profession. Driving needs to be presented as a long-term career option. This can come through greater investment in training young people.

Training HGV drivers requires a lot of time and is very costly. Many companies do this, but many are also reluctant to incur the heavy costs as trained drivers might leave once, they are qualified. The government can make a difference by significantly increasing support in this vital training area.

It is time for real action from both companies and the government to reduce the instability. Companies need to be reviewing the T&Cs they are in control of including workplace benefits. Additionally, the government needs to be looking at how facilities out on the road can be improved, and most importantly, how they can support HGV driver training.

Final thoughts

This year is going to be far from straight forward for the fleet industry. Resilience and flexibility are going to once again be some of the most important traits of fleet providers and the wider supply chain. But, by investing greater in sustainability, automation, and taking some meaningful steps towards improving the role of a HGV driver, the industry can survive and even grow through the turbulence and instability.

Written by Mark Salisbury for Fleet World © Wednesday, February 22, 2023.

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