UK Logistics Sector Driver Shortages linked to Global Liquidity?!
As we move into the seasonal peaks for the logistics sector, I thought I would look into the reasons why this happens. It affects all industries and is something that also follows the liquidity cycles from my short analysis of the previous two cycles that tend to last on average, 65 months (5-6 years).
I find this fascinating as the last driver shortage/seasonal peaks were during covid and persisted through the peak of the liquidity cycle, then diminished at the end of this cycle which was also a bear market (if you follow financial markets).
I can already see signs that this is happening again, and this year will likely have similar requirements to those during the COVID-19 pandemic. Are companies noticing the same trends? Are they forecasting how severe the situation will become?
I think they are missing some information because they are not taking macroeconomic factors into account.
What is driving the requirements is what we need to ask and not just say "last year was quiet, I wonder how it will be this year...". What is causing the requirements to increase in certain years and not in others?
Athough I am biased and think my analysis above is the best reason as to why we see these huge fluctuations, Global Liquidity is the driving factor of everything in our economies.
We are a little further along in the cycle than the image above shows and liquidity is currently in a lull for the moment (going sideways/slightly lower). Soon Global Liquidity will be rising again and you will see asset prices rising globally as the printers start up to stimulate economies, this (in my opinion) flows down through to the end user (consumer), and thus increases demand for everything in almost every sector.
- Summer Holidays: The summer months typically see a higher demand for goods, especially within the retail and tourism sectors. Additionally, more drivers take holidays during this period, further straining the available workforce.
- Back-to-School Season: Late summer to early autumn sees increased logistics activity related to back-to-school shopping, impacting demand for drivers.
- Christmas Season: The period leading up to Christmas, often referred to as the "Golden Quarter," sees a significant increase in demand for logistics services due to heightened retail activity. This seasonal spike exacerbates the driver shortage as companies struggle to meet increased delivery requirements.
2. Lower demand seasons / Off-Peak Periods:
- Post-Christmas Slump: After the Christmas rush, demand for logistics services typically drops, offering a temporary respite from driver shortages. However, the underlying issue persists as the industry recovers from the peak season's strains.
- Early Spring: This period often sees relatively stable demand, with fewer spikes compared to other times of the year.
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On top of this, companies are facing:
If you work in logistics, you may be wondering, "how do we mitigate this issue?".
Unfortunately, time is too close to the seasonal highs of this cycle that will run through to late 2025 according to research I have seen, so training new drivers and allowing them to gain the experience needed in the numbers required won't be acheivable.
My opinion is that it will be PvP (player vs player) this cycle and the highest bidder / best benefits offered will gain the workforce required to get through this year and through into late 2025. The rest will have unfulfilled loads and will struggle to complete all runs without external support.
The best preparation will be:
Review your current driver terms
Compare them to current market offerings, forward plan in a 'what if' scenario, so if our main competitors do this or something similar, we will do this.
Build good relationships
Reach out to your current external hauliers and agencies and form an action plan so they will give you the extra resource over your competitors - We are definitely seeing a number of new customers doing this but if you already have a good relationship with people, build on that, support them and create loyalty so when the time comes, they will choose you over them.
Conclusion
Until the game changes; by understanding global liquidity cycles, you can forecast these periods and plan ahead so you aren't in the tailwind of your competition.
The driver shortage in the UK logistics sector is a multifaceted issue influenced by seasonal demand fluctuations and broader economic, regulatory, and social factors. Addressing this shortage requires a comprehensive approach involving better incentives, training, and industry improvements. By understanding these dynamics, stakeholders can develop more effective strategies to ensure a stable and efficient logistics operation throughout the year.
As I said, it will be player vs player over the next 12-18 months - Get prepared!