Charlotte Street Partners

DAILY BRIEFING

DAILY BRIEFING

Haulier than thou

Written by Charlie Clegg, senior associate 
Edited by Kevin Pringle, partner
26 August 2021

Good morning,

Christmas gets cancelled earlier every year. As Britain sipped up the dregs of summer, Richard Walker, managing director of Iceland, this week warned supply issues could mean under-stocked stockings.

Iceland is not the only company experiencing shortages. Steven Murrells, chief executive of the Co-operative Group, called the shortages the worst he had ever seen while McDonald’s has run out of milkshakes. Key to supply is a shortage of lorry-drivers. The shortfall may be as many as 90,000.

When supply issues first manifested themselves last month, the “pingdemic” was widely blamed. Yet the problem has persisted despite changes in tracking apps. Industry leaders have blamed the lack of EU drivers returning post-withdrawal. This explains why the UK is experiencing worse supply issues than other European countries. But the seeds of the industry’s current woes were sown long before anyone knew the words Brexit and Covid.

Too many drivers are leaving the sector while too few are entering it. Sixty-two per cent of drivers are over 45: up from 50% two decades ago. Dougie Rankine, editor of Truck and Driver magazine and himself a former driver, identified a long-term deterioration in working conditions as part of the difficulty.

Some employers are trying to rectify this. Electronics retailer Dixons has offered drivers a £1,500 retention bonus while John Lewis has jacked up drivers’ pay by £5,000. Drivers’ wages are now increasing at over seven times the UK average.

Yet, as Sarah O’Connor points out in the Financial Times, these are quick fixes in a broken economic model. For years, small benefits for consumers have been prioritised over the wellbeing of supply chain workers.

Even those trying to enter the sector face a massive backlog in driver testing, which the UK government plans to tackle with 40 extra examiners. Extra-long lorries and calling in the army are among the government’s other proposals.

Brexit and the pandemic have exacerbated and accelerated a long-standing problem. The solution will likewise require a longer-term view on how we value the workers who keep shelves stocked in the first place. That way, we may be a little more certain of a merry Christmas.

News

Australia, the US and UK have all warned that there is a high risk of a terror attack at Kabul airport. Those countries have warned their citizens who are already outside the airport to leave the area immediately. Eighty-two thousand people have fled via the airport already, while thousands remain even as the Taliban has refused to extend the 31 August deadline for evacuations.

The Treasury is aiming to scale back HS2 with plans to cut the eastern leg of the coming rail line. Project costs have tripled to £100bn, while Rishi Sunak’s department is attempting to rein in spending post-Covid. The eastern spur, between Birmingham and Leeds, could be under threat. (£)

Europe recorded its hottest year overall in 2020. Overall, temperatures beat the previous record by 0.5C and were 1.9C above the 1981-2010 baseline. (£)

Business and economy

Last month, UK car production dropped to its lowest level since 1956. Production dropped 37.6% month-on-month to 53,438 vehicles. A global semiconductor shortage and the “pingdemic” are believed to have contributed to the drop.

The UK’s Financial Conduct Authority has ruled that crypto-currency app Binance cannot be effectively regulated. The decision reinforces the FCA’s previous moves to prevent supervised trading on the app.

Citigroup is asking its junior bankers across Europe, the Middle East and Africa to take two weeks off work by the end of September. The move was announced las month amid increasing scrutiny of how the finance industry treats its youngest employees.

Columns of note

Bien-pensant city-dwellers have long sneered at the putative drab conformity of the suburbs. But, across Europe, more young people are fleeing cities for the joys of bungalows and pebble-dash. In the Times, James Marriot welcomes the change, exploring how suburbs offer stability in a dislocating world. (£)

Why has Nicola Sturgeon brought the Scottish Greens into government? In the Spectator, Alex Massie suggests a lack of ideas is behind the first minister’s move. Otherwise, he argues, alignment with the Greens’ policies poses more risks than benefits for the SNP. (£)

Cartoon source: The Times

Markets

What happened yesterday?

On Wall Street, the S&P500 and the Nasdaq Composite both closed up 0.2% as US government debt prices fell. In Europe, markets followed a similar pattern: the Stoxx600 index closed flat while London’s FTSE100 closed up 0.3%.

The pound was trading at 1.38 against the dollar and at 1.17 against the Euro.

In company news:

Weir and ITV are set for demotion in the FTSE100’s latest reshuffle, while Morrisons and Meggitt are expected to join the index.

EY has been fined £3.5m over its faulty 2017 audit of Stagecoach.

What’s happening today?

Interims
Chesnara
CRH
Faron Pharma
Glenveagh
Hunting
Macfarlane Grp.
Pjsc Rus

Trading anouncements
Hays

AGMs
Braemar Shipping
D4t4 Solutions
New Cent
Triple Pt. Engy

Int. economic announcements
(07:00) Import Price Index (GER)
(12:00) MBA Mortgage Applications (US)
(15:30) Crude Oil Inventories (US)

Source: Financial Times

did you know

The Raleigh Chopper, the Reliant Robin, and Marble Run were all designed by the same man, Tom Karen, who turned 95                                                                                                                this year.

Parliamentary highlights

House of Commons

The House of Commons is in recess. The House will next sit on 6 September.

House of Lords 

The House of Lords is in recess. The House will next sit on 6 September.

Scottish parliament 

The Scottish parliament is in recess until 30 August.

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