The Current State of the Warehousing & Logistics Labour Market

Many sectors in the UK are suffering from wide-scale labour shortages and warehousing and logistics are no exception.

In a recent survey, conducted by Descartes, of 1,000 supply chain and logistics leaders in Europe (including 150 from the UK) and North America, 37% of organisations said they were grappling with high workforce shortages and overall, 76% of respondents indicated a notable shortage. In terms of the effect of these shortages, 58% indicated that labour shortages have impacted customer service (How Bad Is The Supply Chain and Logistics Workforce Challenge? February 2024).

As an Employment Solicitor I work with a range of clients across the warehousing and logistics sector and here is my take on some of the workforce issues currently effecting businesses in the sector.

Client feedback – what’s going on and what’s caused this?

Direct discussions with many of my clients reflects the overall view that labour shortages are not improving and creating quite an impact on service delivery.

Post-covid, there had been some expectations among logistics leaders that recruitment and retention would increase, leading to a more stable workforce in the sector.

However, improvements have been slow and at least one operator thought that the commencement of the Ukrainian war, and its effect on immigration, had a direct impact. In particular, there is a perception that Eastern European workers were returning home or staying away in the first place.

Those least affected appear to be small to mid-scale organisations which focus on one particular area of the supply chain.

Some of the firm’s warehousing clients, for example, reported that because they have an existing stable workforce this was proving less of a problem for them, although there has been no opportunity to grow that workforce and expand business.

The biggest challenges appear to be for companies in more remote locations, with a small pool of local talent to draw from. As one client put it: “you’ve got to do what you can with what you’ve got”. However, the other side of the coin is that businesses in larger areas may have a greater talent pool to recruit from, but more competition.

One client considered that attracting and retaining drivers was easier than other warehousing and logistics staff. They have more pay, due to the longer hours, and a “nice warm cab” to work in.

There were also some choice thoughts about the current generation of younger job-seekers. The post-covid young workforce is seen as more willing to quit and move on quickly, without worrying about consequences or loyalty.

What can operators do to alleviate labour shortages, both short term and long term?

One way to increase the pool for logistics sector workers is to look further afield. However, a new, very tight immigration policy that does not allow warehouse staff access to visas, makes recruitment for UK warehousing firms especially difficult.

Although in 2021, the UK government introduced temporary visa measures to address a crisis on driver shortages following a mass exodus of European citizens after Brexit and the Covid-19 pandemic, these temporary measures have come to an end.

Under the current immigration system, it is not possible to sponsor HGV drivers on a skilled worker route, but vehicle technicians and mechanics are permitted.

The Government’s focus has been on encouraging more drivers from the resident labour market through a host of measures. The indication is that there are certainly ‘green shoots’ of recovery as the Department for Transport had reported record levels of HGV tests being carried out.

However, a recent article in the Grocer has stated that the “driver shortage is far from over and a tipping point is looming”. The reason being that the average age of a driver is 53, meaning that many drivers will be heading for retirement whilst they are reporting significant growth in meal and grocery deliveries.

Ultimately, an increase in pay rate is always an option to attract new people, and it is perceived that the larger corporations, including supermarkets, have been able to continue to fill their lorries and warehouses by raising pay.

What do the next 12 months look like?

Many businesses feel that, with the way of the world at the moment, their next 12 months will focus on sustainability, rather than growth.

Politically, there may well be uncertainty over UK employment and immigration laws, especially as we are so close to the next General Election in July and a potential change of country leadership.

The Labour party have already proposed some fairly seismic changes to employment law if they come to power, and the policy on immigration might well follow suit.

The UK economy does seem to gradually be improving, which it is to be hoped will have a knock-on effect, improving cost of living and business, reducing overheads and returning companies to growth rather than survival.

Another consideration is ensuring that employment contracts prohibit employees from poaching other staff if they leave an organisation. Along with my colleagues, I have seen several enquiries in recent months protecting against employees poaching business-critical individuals.

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