UK trucker shortage tows inflation in its wake

Out of use signs are placed over pumps at a Shell petrol station in London
“Out of use” signs are placed over pumps at a petrol station in London, Britain, September 24, 2021. REUTERS/Toby Melville

LONDON, Sept 27 (Reuters Breakingviews) - One way to stop a run on a bank is to drive a lorry-load of cash up to the front door and unload it in full public view. When the panic is caused by a shortage of drivers, as is the case at Britain’s petrol stations, that solution is not available. Handing out temporary visas to foreign hauliers or drafting in the army minimises the short-term disruption. The only long-term solution – sharply higher wages for truckers – puts further fire under inflation.

The supply problems that prompted British drivers to rush to fill up their cars over the weekend are the most dramatic manifestation of a trucking labour crunch dating back to the UK’s departure from the European Union. The Road Haulage Association, a lobby group, has said for months that the UK is 100,000 truckers short of a full load.

That’s a particular worry for a country like Britain, whose rail networks are primarily designed for passengers, not freight. The RHA reckons 98% of all goods sold are carried, at some point, on a truck. That’s why Prime Minister Boris Johnson’s government is pulling out the stops to try to keep distribution chains moving.

Most of the emergency measures will take time to have an impact. Soldiers cannot jump straight behind the wheel of a commercial petrol tanker, for instance. Meanwhile, letting energy giants like BP (BP.L) and Royal Dutch Shell (RDSa.L) coordinate delivery timetables makes scant difference if they do not have enough drivers. At least consumers cannot hoard fuel in the way that they stockpiled toilet paper at the start of the pandemic.

Normal service, however, cannot resume until the labour market fills the empty seats in tanker cabs. That has already happened at big supermarket chains like Tesco (TSCO.L), with anecdotal evidence pointing to pay hikes for truck drivers as high as 50% over the summer. That may have lured fuel-delivery drivers, who are historically paid more.

Such dramatic wage increases will feed through into higher prices, which in turn will make it harder for economic policymakers to dismiss the pressures as “transitory”. Even before the fuel crunch, the Bank of England said it expected inflation to top 4% in the final quarter of the year, twice its target rate. The one thing Britain’s in-demand truckers are guaranteed to deliver is higher prices.

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- Up to 90% of British fuel stations ran dry across major English cities on Sept. 27, the UK Petrol Retailers Association said, after panic buying deepened a supply chain crisis triggered by a shortage of truckers.

- The UK government suspended competition laws on Sept. 26 to allow rival fuel suppliers to share information and coordinate their response to petrol shortages.

- The government also announced plans to issue up to 5,000 short-term visas for foreign truckers to tackle the shortage of heavy goods vehicle (HGV) drivers. The Road Haulage Association, a lobby group, estimates the industry-wide shortage at 100,000 drivers.

Editing by Peter Thal Larsen and Karen Kwok

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Ed is Associate Editor of Reuters Breakingviews, based in London. He joined the London Breakingviews team in 2018 as Africa columnist. Before that, he was Reuters sub-Saharan Africa bureau chief, based in Johannesburg. During two decades at Reuters, Ed has reported from three continents, with postings in London, Edinburgh, Phnom Penh, Bangkok and Johannesburg. Along the way, he has covered everything from the dotcom bubble to the death of Nelson Mandela and fall of Robert Mugabe. He holds a degree in Classics from Cambridge University.