Ocado will be working to mitigate costs © Dinendra Haria/SOPA Images/LightRocket via Getty Images
Ocado will be working to mitigate costs © Dinendra Haria/SOPA Images/LightRocket via Getty Images

£5m extra costs for Ocado from driver shortage

14 September 2021

Ocado is expecting costs to rise by £5m as it raises wages and offers signing-on bonuses to attract delivery drivers amid mass shortages. 

The online retailer is the latest UK company to offer bonuses to drivers, after Tesco introduced extra payments of £1,000 and dairy company Arla bonuses of £1,500. 

“Rising costs of labour, particularly for LGV and delivery drivers, represent an increasingly important issue for the industry that may result in up to £5m of impact to full year numbers, reflecting additional measures being taken to hire new staff including raising hourly rates and offering signing-on bonuses,” said Ocado in a trading update.

“We will be working to mitigate these costs as best we can.”

Ocado said the fire in its Erith automated warehouse in July, caused when three robots collided, had resulted in around 300,000 lost orders, representing around £35m in lost revenue. The company estimated the fire would see £10m in operating losses and £10m in stock and asset write-offs. 

Ocado saw a 10.6% fall in sales for the three months to 29 August, largely caused by disruptions resulting from the fire. 

Meanwhile, logistics company Wincanton said it has vacancies for about 600 drivers, or 12% of its 5,000 driver workforce.

James Wroath, Wincanton chief executive, warned supply chain issues were set to worsen due to upcoming holidays and Black Friday sales, which will place greater pressure on demand. 

Wroath told the Financial Times: “The number of drivers will take time to increase. That’s not going to change anytime soon. At the moment, we’re in the calm before the storm. The concern will be once the Black Friday and Christmas peaks come along.”

The news comes as the government claimed an additional 50,000 HGV driver tests will be made available per year due under changes to the testing regime. 

Drivers will only need to take one test to drive both rigid and articulated lorries, cutting out a 2-3 week wait between tests. 

The government claims tests will be shortened without sacrificing quality. 

Transport secretary Grant Schapps said: “The shortage of drivers is a global problem, but we’ve been taking action here in the UK to help industry leaders attract drivers and build a more resilient sector.

“We’ve already delivered 50% more tests than were available before the pandemic, but today’s additional measures will deliver up to 50,000 more a year, helping more and more people to kickstart their career as a well-paid HGV driver.”

ParcelHero described the changes as “potentially dangerous and short-sighted reactions to the truck driver shortages created by Brexit”.

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