Just like everyone else in the world, FMCG companies are facing a growing problem with a shortage of HGV drivers affecting the supply chain.
But what does this really look like and how does the FMCG industry plan to bounce back?
How It All Started
The whole situation began a few months ago when the media announced there was a problem of not enough HGV drivers in order to maintain the supply chain process. With the BBC highlighting that:
- Big brands cannot restock their shelves in supermarkets
- Nandos was closing some of its sites
- Beer brewers couldn’t deliver to its Pubs
And
- Supermarkets were being forced to increase prices and cancel deliveries on daily basis
This is just a small fraction of the problems that began for the country! Many people started asking the question “how did we end up in this situation?”
Partially the fault comes with Brexit, Covid and the financial inability of people to afford coming to the country due to the preceding events. However, the government realised that if the situation continues by Christmas we will be left with only the jolly spirit and short on consumption needs, therefore introducing a short scheme of giving temporary visas until Christmas. But the problem will not disappear after that, because the average age of a lorry driver is 55 years old, the government and companies need to consider how to attract young people for the job - through better pay and incentives, not only for current drivers but new ones as well.
Picture credit to BBC NEWS
How Does The Problem Affect the FMCG Industry
This is by far the biggest sector worldwide and is currently largely disrupted by the shortage of HGV drivers. This is causing supermarkets to push prices up due to the pressure suppliers are having on them.
A director told The Grocer it was unlikely these price hikes would have filtered down the supply chain yet but warned suppliers, wholesalers and retailers would all “feel this driver wage increase”.
Although the supply chain problems may sound like a problem only for the FMCG companies struggling to fill their shelves, they may actually spell more misery for the consumer:
- Higher costs - For the moment there aren’t any costs proposed to shoppers, but with the transportation problems, providers are likely to set higher prices for goods, in order to recover the extra costs for supply..
- Limited hours - If a raise in working conditions is to be expected, we could see deliveries not being made outside of the 9-5, meaning many hospitality companies that rely on weekend and evening top-ups run dry.
- Wastage - with deliveries being less frequent, short-life goods are more likely to perish.
- Consolidation - although only sending out full lorries sounds great on paper, in reality it usually means consumers having to wait longer than expected to get certain goods.
Where Are Supermarkets Standing Now?
- From Grocery Gazette we know that currently Sainsbury’s and Asda chilled food distributor could collapse, risking around 1,000 employees and worrying about keeping shelves stocked.
- Morrisons is working on a scheme to train staff to become lorry drivers.
- The milk producer Arla struggles to complete shelves of more than 600 stores.
Hopefully, now that “ping” guidelines are getting relaxed, and isolations are minimised, more drivers will be available to work and the temporary visas could attract workers, helping to fix the problem, in order to maintain stability.
