Dealing with a shortage of lorry drivers

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Despite high unemployment in the UK, there is a shortage of LGV drivers and it is estimated that the UK will need an extra 150,000 drivers by 2020.

lorry-overtake-cyclist

In Nottinghamshire, it is estimated that for every nine vacancies there is only one qualified candidate. (link)

The average age of a (LGV) Large Goods Vehicle driver is 53. Only 2% of drivers are under 25.

Regular readers of this blog will know that I tend to favour green transport – Bicycles, freight by rail, solar power, higher taxes on petrol e.t.c. But, I also know that 99% of the goods that I buy are delivered by LGV vehicles. Lorries are an essential part of the economy – almost as important as perhaps coal miners were in the 1960s and 70s. If one section of workers could bring the UK economy to a standstill, it is LGV drivers.

Why Shortage of Lorry drivers?

1. We don’t value vocational careers / qualifications. Young people don’t see a career in logistics as a long-term career. As a society, we tend to place less value on non-academic qualifications which are essential for the economy.

2. Lack of funding for driver training. It costs £3-£5,000 to gain the necessary qualifications to become a LGV drivers; and only 50% of applicants pass the test. This seems a lot. (Here the Daily Mail blames the shortage of lorry drivers on the EU Regulations which require good driver training – the mandatory Certificate for Professional Competence.)

But, compared to the cost of a three year university degree, training for LGV training is a fraction of the price. (BTW: Given the importance and potential danger of driving LGV vehicles, it is quite right we have very high standards. EU regulations could save lives. The problem is that as a society we are happy to spend £100,000 to put a student through three years of university to get a degree, but we are reluctant to spend £5,000 on LGV training.)

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Fuel Consumption in UK

In the post-war period, consumption of  vehicle fuel (petrol / diesel) increased dramatically as car ownership rose and more journeys were made by car. However, since 2007, there has been a significant drop in vehicle fuel consumption, with demand falling over 20%

Many factors affect demand for vehicle fuel, including price, income, fuel efficiency, quality of alternatives (public transport) and general preferences.

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If we ignore all the income effects, social effects and changes in consumer preferences (which admittedly is very significant) we can make a very rough estimate at the price elasticity of demand for vehicle fuel.

Between Q3 2002 and Q3 2012 households consumption of vehicle fuel fell by 18% per head. During this period the annual per litre price of petrol increased 85% and diesel  88%.  Department of Energy and Climate Change

This gives a (very rough) PED for petrol of  (-18/85) = – 0.21

It is what we would expect – demand for vehicle fuel is price inelastic, but higher prices do reduce demand somewhat.

Factors affecting demand for fuel

Cost of Fuel

Due to rising costs of fuel, households are still spending more on fuel. In 2002, we spent £89 per head on fuel. In 2012, this had increased to £129. Given the rise in the fuel burden, it is not surprising people have sought to reduce consumption. (see: fuel poverty)

Income effects

The graph shows that air fuel is much more sensitive to income effects. During the start of the recession from 2007 to 2009, demand for airline fell almost 30% in a short space of time. This indicates that airline fuel is income elastic – sensitive to changes in income. Airline fuel has not really recovered from 2009. The recession will also be having an impact on demand for petrol. The biggest decline for vehicle fuel has occurred during this period. Faced with rising prices and squeezed real wages, people have been cutting back on vehicle fuel. When the economy recovers, we can expect a renewed increase in demand for vehicle fuel.

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