distribution

Tesco sounds alarm over driver shortages

The boss of Tesco has sounded the alarm over driver shortages as the labour crisis shows no signs of abating. 

Britain’s biggest supermarket chain said it was grappling with a chronic shortage of lorry drivers and was working hard to remedy the situation. 

The Road Haulage Association and company bosses met with ministers this week to stress a “growing peril” to supply chains from the worsening lorry driver shortage.

There is an estimated shortfall of some 65,000 drivers, mainly because EU workers had left the UK and the suspension of driver training and testing during the pandemic. The shortage has sent wages rise by a fifth. 

Ken Murphy, chief executive of Tesco, said that if the crisis worsens the retailer might have to pay more to attract drivers.

He insisted that there were no gaps on shelves because of the shortages and that the supply chain was “in good shape”. 

“What I’m hearing is we can manage it and we have to play it as we see it,” he added. “Once there is an understanding that there is availability of work [at Tesco among drivers] and rates are potentially more attractive, they will fill very quickly.”

About 48 tonnes of food – enough to fill two trucks – destined for Tesco is being thrown away every week as a result of the shortages. 

FareShare, the food redistribution charity, estimated that up to a third of the food that would otherwise be sent to its warehouses was not getting through due to problems in the haulage sector. 

Earlier this month FTSE 100 discount chain B&M also revealed it was struggling to hire both drivers and workers for night shifts at its distribution centres.

Tesco’s total retail like-for-like sales rose by 1pc to £13.4bn for the 13 weeks to May 29, and by 8.1pc compared to the same period two years ago.

Shares fell 2.4pc to 225p.

References

  1. ^ Markets Hub – Tesco (cf-particle-html.eip.telegraph.co.uk)

Tesco suppliers forced to bin nearly 50 tonnes of food each week due to lorry driver ‘crisis’

Tesco suppliers are being forced to bin nearly 50 tonnes of fresh food every week because there are too few lorry drivers to transport produce to stores.

Around 48 tonnes of food – enough to fill two trucks – destined for Tesco is being thrown away every week as a result of a severe shortage of heavy goods vehicle drivers in the UK.

The admission, first reported by industry publication The Grocer[1], was made during an industry-wide round-table organised by the Department for Transport and marks the first time a supermarket chain has broken cover to lay out to Government the extent to which the lack of drivers is affecting the food and drink sector.

It comes after i revealed that some products have begun disappearing from shelves[2] and prices are likely to increase because of the of the severe driver shortage.

Suppliers are being forced to delay or cancel thousands delivery loads every week to supermarkets and restaurants because haulage firms cannot find enough drivers to transport the produce.

The shelf-life of fresh produce is reduced and can spoil before it even leaves the wholesalers while Supermarkets often deem short-dated goods delivered late to distribution centres and stores unsellable.  

More than 65,000 HGV drivers are needed to make up for the shortfall, according to the Road Haulage Association[3].

The crisis is so severe one leading industry figure has called for the Government to put the Army on standby to transport food if the situation worsens.

“The situation has reached crisis point and it is likely to get worse as more hospitality venues open and demand increases,” said James Bielby, chief executive officer of the Federation of Wholesale Distributors.

“We are concerned enough to suggest that the Government considers having Army trucks on standby to ensure there are enough vehicles and drivers to distribute food.”

The shortage has been attributed to a combination of factors including Brexit, which led to an exodus of EU-based drivers, tax changes, which have driven up hauliers costs and a lack of driver training and tests during the pandemic preventing newcomers from joining the workforce.

@kt_grant[4]

References

  1. ^ The Grocer (www.thegrocer.co.uk)
  2. ^ some products have begun disappearing from shelves (inews.co.uk)
  3. ^ Road Haulage Association (www.rha.uk.net)
  4. ^ @kt_grant (twitter.com)

Iceland opens Northern Irish depot to tackle Brexit red tape

Iceland store

Iceland[1] has opened a new depot in Northern Ireland in an attempt to return some of its EU trade “to the way it was pre-Brexit”.

It is the latest bid by a major supermarket to minimise post-Brexit trade disruption with the EU.

Iceland’s new distribution centre will serve its European customers and help to bypass the tariffs and red tape that emerged following the UK-EU trade deal.

“The primary reason for doing it is to make exporting to the EU easier,” head of Iceland International Alistair Cooke told The Grocer. “It’s more cost efficient as there are no tariffs and it’s effectively back to the way it was pre-Brexit.”

The warehouse will act as a dedicated international hub for supplying countries including Spain, Netherlands and Norway, as well as potentially the US. Cooke said it will create a “dedicated international depot as opposed to sharing a depot with Iceland UK”.

Iceland MD Richard Walker voted to leave the EU in 2016 but backed a second referendum in 2019 calling the “opportunity cost” of Brexit[2] “now unacceptable”.

An executive at another major supermarket told The Grocer this week it was abandoning ‘just in time’ deliveries to Northern Ireland because of the disruption caused by the NI protocol. Just-in-time delivery models consist of frequent deliveries of small quantities, a method reliant on each lorry load transporting up to 100 different product lines.

This has become impractical for moving goods between Great Britain and Northern Ireland since checks began on goods moving from Great Britain to Northern Ireland.

“We’re now only putting three products in a lorry,” said the supermarket executive. This is possible because of the retailer’s distribution centres on the island of Ireland, however they highlighted this will not be possible for supermarkets who supply their NI stores directly.

With just under four months until full checks begin on the Irish Sea border, all retailers are working on plans to address the burden. Tesco[3], for example, has started asking[4] some British suppliers to ship directly into the Republic of Ireland, where the supermarket will then transport their goods into Northern Ireland.

Iceland’s new Northern Irish depot comes as part of broader plans to expand its international network. It is currently witnessing double-digit growth year on year, said Cooke, with “no limit” to the level of business that could be generated around the world.

As well as opening new franchise stores across Norway and Scandinavia, the retailer is expecting “huge growth” in China over the next five years through ‘bricks and mortar’ sites as well as online retailers.

Asked why Iceland’s international business was succeeding where many others struggle, Cooke said it was important to recognise that supply chains are often set up to service the UK rather than abroad, and find ways to work with this “rather than trying to change the way the ‘mothership’ operates”.

References

  1. ^ Iceland (www.thegrocer.co.uk)
  2. ^ Brexit (www.thegrocer.co.uk)
  3. ^ Tesco (www.thegrocer.co.uk)
  4. ^ started asking (www.thegrocer.co.uk)