Transportation & Storage SMEs gain most from marketing
UK Transportation and Storage businesses feel they have the most to gain from increased marketing, following research by Pitney Bowes.
Research conducted in the first two months of 2013 show that the SMEs are losing out on up to £122 billion in sales by allowing their marketing to slip off the radar, with the transport and storage sector claiming they have the most to gain from increased marketing activity.
The research was conducted by Pitney Bowes in support of its pbSmart Essentials launch, and found that the average SME is only achieving 39 percent of its planned marketing activity. Yet when business owners were asked to predict the sales impact produced by increased marketing activity, results showed average growth of 9.2 percent compared to 2011 prices. This is most apparent in the Transportation and Storage sector, which predicted an average growth of 18.9 percent.
The research, carried out with the Centre for Economics and Business Research (Cebr), demonstrates a clear disparity between planned marketing activity and the reality of what takes place.
Three-quarters (77 percent) recognise that it is important to the success of their business, however a third rate their efforts over the last six months at under 5/10, with a total of 11 percent admitting to doing none of the marketing they had planned.
When asked what’s holding them back, SME owners cited time (21 percent) and money (36 percent). Prioritisation is also a clear issue as the average owner juggles seven different roles on a daily basis and admits that buying stationery (35 percent) is ahead of marketing (32 percent). More established SMEs (25 years plus) are closest to achieving planned levels of marketing, with just under a third (31 percent) claiming to have achieved their marketing plan.
Ryan Higginson, Vice President Digital Channel Europe, at Pitney Bowes says: "There is a great opportunity for savvy SMEs, particularly in the Transportation and Storage sector, to grab a slice of the £122billion but to do so they must look for ways to embrace every sales opportunity and maximise profit.
“Implementing digital marketing is one way of doing this and easy-to-use, low-cost online tools, can help set up a digital marketing campaign in under a day.”
*The £122 billion and £43 billion figures were calculated by the Centre for Economics and Business Research in the following way:
- SMEs report that they can raise sales by an average of 15.2% if they maximise the impact of their marketing effort
- Taking sales gained from other SMEs into account, Cebr estimates that this would result in a 9.2% sales increase for the SME sector, a rise of up to £122 billion in 2011 prices
- According to survey results, the sector which would benefit most from a rise in sales is ICT – 13.4% - and lowest is the wholesale and retail trade – 5.6%
- If a stable relationship between value added and turnover still holds under these circumstances, this would result in a rise in value added of £43 billion on 2011 prices
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