Running on empty
A persistent talent shortage is placing extraordinary strain on road haulage businesses across the UK. Even though the UK’s road haulage sector is predicted to grow through 2028, an acute shortage of HGV drivers has the potential to put the industry in a spin
The UK logistics industry is big business, with the sector employing more than 2.7 million people, adding £163 billion to the economy and generating over £1 trillion in gross revenues in 2021. More than 8% of the UK’s total workforce help to transport the millions of tonnes of homegrown and international products we consume every day.
However, as positive as these statistics are, they ignore the major issue that is causing problems for both logistics businesses and their customers, and has the potential to devastate the most essential element of the UK’s logistics sector: Road haulage organisations are currently short of 50,000 HGV drivers and 81% of UK road hauliers and logistics businesses are reporting that they cannot secure enough qualified drivers to meet demand.
These daunting figures do not bode well for an industry that is so critical to the nation’s economy, but the potential for chaos is being masked by a temporary softening of demand for freight forwarding services.
As the UK grapples with rising interest rates, persistent inflation, and a cost-of-living crisis, so consumer consumption has declined, and transport needs have lessened. However, because most road hauliers are operating with thin labour margins, industry insiders speculate that even a small rise in haulage demand could quickly plunge the sector back into the kind of supply chain problems last seen in the immediate post-pandemic era. A period when an acute lack of drivers closed petrol forecourts and emptied supermarket shelves.
Source: LinkedIn Talent Insights
The potential for rising customer demand to exacerbate an already difficult driver recruitment problem is especially cogent in light of research that reveals the UK’s road haulage sector is projected to grow at a compound annual growth rate of more than 2% through 2028, and the UK’s wholesale and retail sectors – prime trunking customers – will place the greatest future need on road haulage businesses.
In reply, some road hauliers are taking proactive measures – preparing for increasing customer demand by expanding their current driver pools: 16% of logistics businesses were expecting to recruit more workers in Q3 2023. However, as optimistic as these forecasts are, the hard truths remain – the UK road haulage industry is gripped by a huge talent shortage and even a slight rise in demand has the potential to push the industry into chaos.
These are facts that will worry any road haulage business leader, but they become even more concerning when matched to the composition of the UK’s current HGV driver workforce. The reality is, without a rapid increase in driver recruitment, a demographic timebomb is set to push the sector to its tipping point.
Of UK logistics employers suffering recruitment problems
Source: Manpower
Expected rise in demand for HGV drivers over next 5 years
Source: Logistics UK
Current shortfall of UK HGV drivers
Source: Financial Times
Of UK road hauliers expected to hire in Q3 2023
Source: MEOS Q3 2023
An ageing workforce, too few young drivers, and the impact of Brexit on EU driver talent have created the conditions for a perfect driver shortage for UK road hauliers
A set of uncommon problems are driving the UK’s shortage of HGV drivers, but in simple terms, there are more drivers leaving, retiring, or failing to return to the industry than there are new drivers entering the sector. Why is this?
At the root of it all – four reasons why the UK road haulage industry is short of HGV drivers:
The average UK HGV driver is 55 years old, with less than 1% of the workforce under 25 years of age. Since the start of the pandemic, a large percentage of those over 45 have begun to retire or have moved to a different industry.
Covid-19 lockdowns and the uncertainty of Brexit, which caused worries about future rights to live or work in the UK, encouraged many EU drivers to leave the country. More than 60,000 of those that left have failed to return.
The introduction of IR35 tax rules meant many smaller HGV operators, who typically work on 2-3% profit margins, could no longer afford to pay drivers the mandatory £5-£6 per hour rate increase. These operators have permanently reduced their fleets and driver pools.
The complete shutdown of HGV driver testing facilities during Covid and their slow return to normality after 2021 meant many thousands of testing slots were lost and a long backlog for tests accrued. The inability to gain a licence may have discouraged many potential new drivers from entering the road haulage industry.
Source: RHA
Government estimates suggest the UK’s HGV driver workforce is more than 50,000 below pre-pandemic levels, a figure that reveals the shrinkage in the sector, but does not illustrate its effect on the economy, as dampened consumption during the current cost-of-living crisis is masking the true depth of the logistics problem. However, this situation is set to change. As the UK’s inflation rate continues to fall and the possibility of recession reduces, growth is expected to return, with the UK road haulage sector predicted to grow at +2% per year through 2028.
What does this mean for UK road hauliers? It means that when a lack of drivers meets the return of growth, the road haulage industry may hit a tipping point – a position where it becomes impossible for hauliers to meet delivery demand.
According to the Office for National Statistics, drivers aged 46-55 years made up more than 80,000 (29%) of the total driver workforce in 2021, but they were also the cohort with the largest decline - falling by more than 35,000 (30%) since 2017. Combined with those drivers over 55 years of age, more than 150,000 HGV drivers are set to reach retirement point in the next 10-20 years – a level of decline that will require the industry to replace at least 70,000 drivers in the next 8 to 10 years, and a further 80,000 in the ten years after that just to stay where it is now.
These statistics do not account for younger drivers also leaving the industry, the anticipated growth in demand for haulage services, or the myriad of other agitating factors which may shrink the workforce even faster.
