Reaching up for additional space
The continued shift towards online retail – which reached its highest level ever of 21.5% in November 2018 – is driving unprecedented demand for warehouse space. But with costs also rising, moving to new space is not always an option. Add in the shift towards 24x7 operations and the labour shortage, how can existing logistics operations be reconsidered to both deliver more efficiency and improve worker experience? Steve Richmond, Director – Logistics Systems, Jungheinrich UK, considers the value of the latest generation of reach trucks.
Demand for warehouse space continues to rise. In addition to the current contingency planning, which has led retailers and distributors to stockpile for Brexit, figures from the latest Savills’ Big Shed Briefing suggest that the continued shift online is fuelling warehouse demand. Based on online spend forecasts – set to reach £75bn by 2023 – the company predicts an additional 20 million square feet will be required.
While the Brexit inspired stockpiling is more of a once in a lifetime event, supply chain models remain at tipping point. Rising customer expectations are creating huge demand, not only for additional warehouse space, but for efficient 24x7 operations. With retail margins tight, rising costs – of both land and space – are prompting many organisations to reconsider the utilisation of existing warehouse space instead. Furthermore, given the labour challenges, companies are looking to build on existing workforce resources rather than create another recruitment overhead – another compelling reason for making the most of the current location.
One obvious solution is to optimise the space by adding more racks. From the creation of narrow aisles to increasing the height of racking, reconsidering space can add significant capacity. However, efficient and effective stock management will require a reach truck that is both manoeuvrable and extensible. Equipment must be more compact to handle the narrow aisle layout, while also delivering greater agility and higher lift. Improved acceleration and reach speeds are also required to maximise throughput.
Flexible Working Models
At the same time, customer demands for rapid and accurate delivery are driving a new era of flexible working, including 24x7 shift operation. With the need to maximise productivity and performance, there is growing recognition of the value delivered by Lithium-Ion battery technology. The combination of longer battery life with opportunity-based charging means there is no need for a worker to interrupt a shift to change a battery. As a result, fleets can be in operation almost continuously, enabling warehouse processes to be further optimised in line with customer demand.
Given the well documented labour shortages facing the logistics industry, any improvements in working practices are key to morale and retention. In addition to the productivity improvements achieved by removing the need to replace batteries during a shift, progress in the ergonomics of reach truck design is helping to transform worker experience. One of the additional benefits of the Lithium-Ion battery technology is its smaller size, freeing up space to create a much larger driver workplace. With perfect all-round visibility and more freedom of movement, drivers can safely and efficiently navigate the new warehouse environment.
There is little doubt that demand for warehouse space will continue to rise during 2019 as retailers continue to invest in supply chains able to support profitable multi-channel business. Given the escalating costs, however, it is clearly essential for companies to look first at existing operations and determine how best to maximise the current warehouse environment.
By Steve Richmond, Director – Logistics Systems, Jungheinrich UK
Driver shortages: Why the industry needs to be worried
While driver shortages are a global problem, with a recent survey from the International Road Transport Union suggesting that driver shortages are expected to increase by 25% year-on-year across its 23 member countries, the issue has very much made itself felt for UK businesses in recent weeks.
A perfect storm of factors, which many within the industry have been wary of, and warning about, for months, have led to a situation wherein businesses are suddenly facing significant difficulties around transporting goods to shelves on time, as well as inflated operating costs for doing so.
What’s more, the public may also see price rises as a result due to demand outmatching supply for certain product lines, which in turn brings with it the risk of customer dissatisfaction and a hit to brand and stakeholder reputation. Given that this price inflation has been speculated to hit in October, when the extended grace period on Brexit customs checks comes to an end, the worst may be yet to come.
"Steps must be taken to make a career in the industry a more attractive proposition for younger drivers, which will require a joint effort from government, industry bodies, and the sector as a whole"
That said, we have already been hearing reports of service interruption due to lack of driver availability, meaning that volumes aren’t being transported, or delivered, to required schedules and lead times. A real-world example of this occurred on the weekend of 4-6 June with convenience retailer Nisa, with deliveries to Nisa outlets across the UK affected by driver shortages to its logistics provider DHL.
But where has this skills shortage stemmed from?
Supply is the primary issue. Specifically, the number of available EU drivers has decreased by up to 15,000 drivers due to Brexit alone, and this has been further exacerbated by drivers returning to their home country during the COVID-19 pandemic, as well as changes to foreign exchange rates making UK a less desirable place to live and work. This, alongside the recent need to manage IR35 tax changes, has also led to significant inflation in driver and transport costs.
COVID-19 complications have also meant that there have been no HGV driver tests over the past year, meaning the expected 6,000-7,000 new drivers over the past year have not appeared. With the return of the hospitality sector we understand that this is a significant challenge with, for instance, order delivery lead times being extended.
It is little surprise, therefore, that the Road Haulage Association (RHA) earlier this month became the latest in a long line of industry spokespeople to write to the government about the driver shortage for trucks. The letter echoed the view held by much of the industry, that the cause of this issue is both multi-faceted and, at least in some aspects, long-standing.
So, many in the industry are in agreement as to the driving factors behind this crisis. But what can be done?
Simply enough, outside of businesses completely reorganising their supply chain network, external support is needed. In the short-term, the government should consider providing the industry with financial aid, and this can also be supported more widely with legislative change.
Specifically, immigration policy could be updated to place drivers on the shortage occupations list, which would go some way towards easing the burden created by foreign drivers returning to their home countries. Looking elsewhere, government should also look for ways to increase the availability of HGV driver tests after the blockage created by the coronavirus lockdowns.
Looking more long-term, steps must be taken to make a career in the industry a more attractive proposition for younger drivers, which will require a joint effort from government, industry bodies, and the sector as a whole. As it stands, multiple sources suggest that the average age of truck drivers in the UK is 48, with only one in every hundred drivers under the age of 25. We must therefore do more to increase the talent pipeline coming into the industry if we are to offset more significant skills shortages further down the line.
On the back of a turbulent year for the supply chain industry, it has become increasingly clear that the long-foretold shortage of drivers is now having a tangible and, in places, crippling effect on supply chains.
Drivers, and the wider supply chain industry, have rightly been recognised for the seismic role they played in keeping the nation moving and fed over the past year under unprecedented strain. If this level of service is to continue, we must now see Government answer calls to provide the support the sector needs, and work hand-in-hand with the industry to find a solution. If we do not see concrete action to this effect soon, we are likely to be in for a turbulent few months.
Rob Wright is executive director at SCALA, a leading provider of management services for the supply chain and logistics sector