Client Update HGV driver and fuel shortages in UK October 2021 Market update The factors affecting all parcel carriers in the UK right now 2021 has been another year of uncertainty as despite government restrictions easing on 19th July, the effects of the pandemic are not over. Furthermore, as we enter the Golden Quarter, retailers are facing continuing Brexit and COVID-related challenges that are impacting supply chains. National shortage of lorry drivers: Many European drivers have ‘gone back home’ due to Brexit, plus it is estimated that 30,000 HGV driving tests were lost last year due to the pandemic. The impact of this is already being felt with stock shortages and higher prices for some products Labour shortages (warehouse and temporary staff): Many staff who were furloughed are now turning back to their previous sector Fuel shortages and rising oil prices have driven fuel price levels close to the all-time record set in April 2012, the RAC said. Diesel rose by 2.5p a litre in September 2021, a rise of 21p on 2020 prices All of which is having a material impact on the cost of end-to-end logistics that ultimately impacts us all. According to a leading employers group, nearly two-thirds of UK manufacturers expect to raise their prices in the run-up to Christmas after being hit by mounting cost pressures. Source: Internet Retailing The British Chamber of Commerce has also said inflation expectations had risen to their highest since Internet Retailing & eBay Ads UK Survey of 2,000 UK consumers its records began at the end of the 1980s, with 62% of industrial firms planning price hikes over the Road Haulage Association (RHA) next three months. RAC via the Guardian, October 2021 The Guardian, October 2021 2 Yodel’s position How we are reacting to changes in our environment Yodel offers delivery drivers £16 an hour to avert strike by GMB union As an organisation, we have been doing everything we can to retain service for our clients throughout this challenging period however, we are facing the same The GMB union has praised Yodel for “doing the right thing” after the parcel delivery challenges as many of our industry peers and retailer partners. firm offered LGV drivers a pay rise to £16 an hour. The offer followed difficult negotiations two weeks ago resulting in 95 per cent of the HGV driver resource is an ongoing issue affecting not only Yodel, but all parcel union’s LGV-driver members — about 250 couriers — voting to take industrial action. carriers and many retailers across the UK. This has arisen from the COVID backlog According to the union, industrial action could have exacerbated Britain’s supply chain in issuing HGV licenses and Brexit-related factors. nightmare by hitting some of the country’s biggest retailers, including Marks & Spencer, Very and Aldi, in the lead-up to Christmas. You will no doubt have seen the recent press coverage speculating industrial action and Yodel has been in discussions with unions, GMB and USDAW, to ensure A lack of lorry drivers, due in part to the COVID-19 crisis and Brexit, has put pressure on our people are satisfied with working conditions and are prepared ahead of our supply chains and left some retailers struggling to maintain stock. busiest period. The union said it was still in discussions over outstanding issues, including the settlement of an employment tribunal affecting 137 members, which it said Yodel had These discussions have resulted in Yodel agreeing to increased driver pay and a agreed in principle to resolve. It said its members would vote on the improved offer in commitment to address any outstanding working condition issues. Please see a the coming days, adding: “Strike action may yet be avoided.” snippet from a recent Times Online article outlining these changes to the right. Nadine Houghton, GMB national officer, said it was a “great outcome” for a group of drivers who previously “earned some of the worst wages and endured less than We have a longstanding relationship with our fuel supplier to ensure we’re satisfactory working conditions”. She added: “It took some time, but Yodel did the right receiving regular updates on the current fuel shortage situation. Each of our thing and agreed to the pay rise.” sortation centres currently have sufficient fuel levels, however, we will not be The shortage of lorry drivers has put pressure on delivery companies to improve pay complacent in monitoring this. and conditions, leading to a series of industrial disputes. In August, planned strike action by 1,000 draymen, responsible for 40 per cent of the UK’s beer deliveries, was called off We have also put additional protocols in place to preserve fuel, i.e., ensuring after GXO Logistics made an improved pay offer to the Unite union. trailers are full wherever possible and using fuel cards, however this puts further pressure on costs. Source: Times Online Article, October 2021 3 The outcome What this means for you Unions are proposing a strong recommendation to its members to accept the new conditions put forward by Yodel and avoid industrial action. As a result, labour costs for Yodel have increased significantly to meet the demands of the ongoing situation. Further to conversations with your Client Director, regrettably, from 15th November 2021, an additional surcharge per parcel will be applied to cover some of the unprecedented increase in operating costs. The remainder of the financial impact will continue to be absorbed by Yodel to share this burden. As an appendix to this document, we have provided formal written notification of this new “Linehaul Surcharge”. The situation will be monitored and reviewed regularly, and the surcharge may be removed dependent on the situation improving. However, contractual fixed rate pay increases will, as expected, see no change. Please reach out to your Client Director if you have any queries. Thank you for your continued support. 4
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