Driver costs have risen by 12% in some areas © Getty Images
Driver costs have risen by 12% in some areas © Getty Images

Supermarkets ask suppliers to cover rising transport costs

26 July 2021

Asda, Tesco and Sainsbury's are asking suppliers for additional payments to cover increased transport costs due to the HGV driver shortage.   

The supermarkets are asking for payment increases of 5-18% after driver costs increased by up to 12% in some areas against the backdrop of a 90,000 driver shortfall.

Asda wrote to suppliers asking for a 5% rise in payments to help cover increased costs. A spokesperson said: “Due to the unprecedented HGV driver shortage, the third-party logistics providers that we use to collect goods from suppliers and deliver them to depots have significantly increased their rates in recent months and to date we have absorbed this additional cost. 

“Whilst passing on any costs to suppliers is a last resort, the challenges in the logistics industry remain unresolved and as a result we are looking to work closely with our supply partners to change the rates we provide for this service.”

Tesco has asked suppliers for increased payments of up to 18%, while Sainsbury’s has asked for a 2.9% increase from 3 October.

Tesco said it was doing “everything they can” to mitigate ongoing logistics challenges, including increasing the volumes on their rail distribution network, supporting academies for drivers, and engaging with the government on further solutions.

A Tesco spokesperson said: “We’re doing all we can to manage the current challenges facing the logistics industry and ensure our customers are able to get the products they need. Due to higher costs across the industry, we have contacted suppliers about a rates increase for our Tesco Primary distribution service.

“We are working closely with hauliers and our suppliers to offer the best and most competitive service and we intend to review the rates again in three months.”

The HGV driver shortage has been compounded by various factors including Brexit and the Covid-19 crisis. 

Logistics UK estimates around 25,000 HGV drivers have returned to the EU following Brexit. The organisation said there was a backlog of around 25,000 HGV driver tests after tests were postponed due to Covid-19. 

This comes amid further disruptions throughout food supply chains.

Up to 20% of workers across food supply chains were forced to self isolate last week after being pinged by the NHS Test and Trace app, leading to warnings of food shortages. 

The UK Warehousing Association (UKWA) said the government's isolation rules exemption for key food manufacturers and supply chain workers should be extended to warehouse workers.  

In a letter to Rachel Maclean, parliamentary under secretary at the Department for Transport, Clare Bottle, chief executive of UKWA, said warehouse and logistics workers were awarded “essential worker” status during the pandemic, which “helped our members and the wider logistics community to maintain critical supply chains, including food and pharmaceutical supplies”.

“We believe that exemption from self-isolation should now apply to this sector by default, which would be in line with the earlier position of the government and straightforward to implement,” she said.

“While we welcome the news that supermarket workers and food manufacturers will be now exempt from quarantine, warehouse workers form a critical part of supply chains not only for food, but for pharmaceuticals and other essential supplies too; although members have been affected to different degrees, some have reported up to 40% of staff self-isolating.

“Therefore we’re also seeking urgent clarification from the government on the process for individuals and businesses to apply for exemption.”

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