FTAI launches Manager’s Guide to Distribution Costs 2021

The average pay for commercial vehicle drivers increased by 13.4 per cent in the first half of 2021 as a result of supply and demand pressures for skilled workers during the pandemic, according to a report released today by FTA Ireland (FTAI).

Produced in partnership with Analytiqa, Harris Group, Enprova, and BWG Group, and supported by the Department of Transport, Tourism & Sport, the ‘Manager’s Guide to Distribution Costs 2021’ provides detailed insight into how the costs of staffing, operating vehicles, and haulage rates have changed in the past year.

Aidan Flynn, CEO of Logistics UK said: “From adjusting to post-Brexit trading conditions and struggling to recruit the logistics workers they need, to having to account for rising fuel costs, businesses working within the freight distribution and logistics sector are operating in a challenging and uncertain environment.

“To stay resilient and profitable, businesses must have a comprehensive understanding of their day-to-day operational costs; this is critical to aid strategic thinking and planning processes.

“By surveying a vast array of managers working in logistics operations, road haulage, manufacturing and retailing, the Manager’s Guide to Distribution Costs 2021 provides a clear overview of average costs.”

Mr Flynn continued: “The report shows that employers are taking exceptional action to retain and attract drivers within their workforce – the average pay for commercial vehicle drivers increased by 13.4 per cent in the first half of 2021 – but businesses must ensure that these pay increases are sustainable and are supported by changes in income models to compensate for the significant additional expense.

“With logistics businesses operating on such narrow margins (typically between three and five per cent) rises of this type are unsustainable in the long term, without the additional cost being passed on to the customer.

“Despite uncertainty and a lack of clarity on the future fuel choices for HGVs, the report has revealed that more than 55 per cent of respondents (up from 29.4 per cent in last year’s report) are considering electrification as an option and 33 per cent are considering either LNG (liquid natural gas) or CNG (compressed natural gas).”

For the first time, the report identified that users of alternatively fuelled vehicles are seeing on average a 5.1 per cent cost saving over their traditionally fuelled vehicles. Business overhead costs increased by 2.5 per cent on average, and average annual transport costs increased by 3.6 per cent, with over 27 per cent of respondents seeing more than five per cent increase.

Mr Flynn added: “Businesses that seek to understand their costs, prioritise profit over turnover, and support good welfare practices and terms and conditions for their employees are more prepared for shocks to the environment in which they work.

“I encourage all managers working within the logistics and freight distribution sector to study the report’s findings to future-proof their operations for 2022 and beyond.”