Ocado says delivery driver wage rise to cost it up to £5m

Ocado says attracting new delivery drivers through higher wages and sign-on bonuses will cost it up to £5m.

The online food delivery company is the latest of many to announce it has deployed incentives to hire new staff amid chronic shortages of lorry drivers across the UK.

Its statement comes after the government confirmed plans to speed up HGV driving tests.

The UK has a shortfall of about 90,000 drivers, which is causing disruption to food, petrol and other goods supplies.

In a trading statement, Ocado said the "rising costs of labour" particularly for LGV and delivery drivers, represented "an increasingly important issue for the industry that may result in up to £5m of impact to full year numbers", due to higher hourly rates and new sign-on bonuses.

"We will be working to mitigate these costs as best we can," the company added.

The scarcity of lorry drivers has been a long-term problem, however, the coronavirus pandemic, Brexit and tax changes have exacerbated the issue further, which has affected supply chains.

Ocado is the latest supermarket to offering perks to lorry drivers. Tesco, Aldi and John Lewis have increased driver wages and in some cases, offered lucrative joining bonuses, in the scramble to retain and attract drivers.

The government said on Friday up to 50,000 more HGV driving tests would be made available each year by shortening the application process and tests.

Transport secretary Grant Shapps said the changes would generate additional test capacity "very rapidly".

However, industry groups remain sceptical about the plans and have warned the changes could risk road safety.

They have made calls for temporary work visas to enable more EU drivers to return to the industry - something the government has rejected.

In its trading update, Ocado reported a 10.6% fall in revenue in its latest quarter. It said a fire in July at its warehouse in Erith, southeast London, had disrupted operations.

The company said it expects expects to deliver strong revenue increases in 2022, as it increases its warehouse capacity at Bristol, Andover, Purfleet and when its new site opens in Bicester.

Melanie Smith, Ocado's chief executive said the company had seen a "positive response" from customers after it began delivering Marks and Spencer food to customers.

"We are looking forward to another bumper Christmas and an exciting year of growth in 2022," she said.