We’ve all heard the stories: Massive backlogs at the Ports of Los Angeles and Long Beach, complemented by a backup at the Port of New York and New Jersey. Warnings of a Christmas toy shortage. Encouragement to order more and order earlier to keep  supply chains running smoothly.  

What’s behind the increasing chaos in the supply chain? Obviously, like many supply chain issues, it’s complicated. (If you work in the industry, you probably expected that answer!) Supply chains are, by nature, interconnected. A disruption in one link can easily cascade through the network. Additionally, supply chain disruptions are truly nothing new. Material shortages, natural disasters, labor strikes, economic trends, and more have long been par for the course, as many supply chain managers will tell you.  

That said, the disruptions in the marketplace have felt more significant and widespread since early 2020. This is especially true for American consumers, who have weathered shortages of items like toilet paper, shelf-stable food, frozen fruits, flour, and at-home exercise equipment.  

Although the recent disruptions have numerous causes, there is one thread running through several links in the supply chain: a widespread labor shortage. In this article, we’ll take a look at the impact of labor on ports, trucking, and warehouses. You’ll get insight into the trends and statistics that may be affecting the links in your supply chain as manufacturers, retailers, carriers, 3PLs—practically everyone in the logistics industry—scramble to keep things moving forward. 

We’ll start with a quick look at the overall state of employment in the logistics industry. 

Transportation and Warehousing Jobs: By the Numbers 

The bottom line is this: Thanks in large part to the pandemic, consumers shifted spending away from services and toward goods.i Online shopping orders went through the roof, as did package volume in the U.S. Although the number of employees in transportation and warehousing has grown as well, it hasn’t kept pace with demand. 

The following numbers help paint the picture: 

6.8%

increase in transportation and warehousing employees

According to Bureau of Labor Statistics data, the number of employees in transportation and warehousing increased 6.8% in August 2021 over 2020 levels.ii  

32.4%

increase in eCommerce revenue

However, revenue spent with online merchants in 2020 was up an impressive 32.4%, according to the U.S. Department of Commerce.iii  

37%

increase in parcel volume

Additionally, parcel volume in the United States rose by more than one-third in 2020, as compared to 2019.iv  

600M

more holiday packages than 2019

In fact, during the 2020 holiday shipping season alone, 800 million more packages were sent than in 2019.v 

It’s easy to see that the number of employees in logistics simply isn’t growing at nearly the same rate as the demand for goods and shipping. This may lead you to ask questions such as:

Why aren’t companies hiring more people?
Where are all the workers?

Again, it’s a complex topic, but a few factors affecting the entire industry include:

Now that we’ve examined labor trends in the logistics industry, let’s take a closer look at several key links in the supply chain, namely: ports, trucking, and warehouses/distribution centers.

Labor Issues at U.S. Ports

The backups at U.S. ports have received significant press, and some point to labor shortages as one of the causes. Inbound Logistics reported that only four work gangs are working each ship in the Ports of Los Angeles and Long Beach, whereas the norm is as many as seven.x

However, others suggest that the problem isn’t as simple as a labor shortage, but, instead:

  • An unwillingness by terminal operators to spend money on the necessary labor. For example, in an op-ed in the Wall Street Journal, William Adams, International President of the International Longshore and Warehouse Union (ILWU), said that his workers would gladly work the third shift to ease congestion. However, by his account, the terminal operators won’t hire them.
  • A challenge to procure skilled labor—crucial at a port where warm bodies aren’t enough. Instead, you need trained workers to operate specialized equipment, such as the cranes that lift containers from ships.
  • Operational issues such as poor chassis management, which creates shortages and backlogs.xi

Whatever the root causes, the delays and slow movement of goods continue.

 

Labor Issues in Trucking

The trucking industry is certainly seeing its share of worker shortages. A few of the factors playing into this challenge include:

 

Labor Issues at Warehouses and Distribution Centers 

With eCommerce orders—and overall spending on goods—booming, demand for warehouse and distribution center workers is high. Even large companies with significant resources, such as FedEx and Sysco, are struggling to hire workers. In fact, FedEx estimated that labor problems cost them $450 million last year.xv 

While robotics and automation offer some hope, most warehouses and DCs still need humans for many tasks. As a result, some employers are turning to incentives, such as: 

  • Pay hikes – Walmart’s distribution and fulfillment center employees make an average of $5.76 more than the companywide hourly average (excluding drivers).xvi 
  • Bonuses – Walmart also offered $1,000 bonuses for workers who didn’t miss any shifts during the second half of the summer.xvii 
  • Flexibility – To make warehouse jobs more attractive, employers are increasingly offering more flexibility, including split shifts, the ability to adjust start and end times, and more. 

Looking to the Future of Supply Chain Labor Shortages 

Many wonder if there’s an end in sight, a return to a time when supply chain issues stop dominating headlines and giving supply chain managers nightmares. Craig Fuller, CEO at FreightWaves, believes that increased domestic spending on U.S. infrastructure may only squeeze the market tighter. As he argues, the materials to support the projects need to move, which will require market capacity and drivers to move it.xviii 

The bottom line is this: Continued challenges will continue to ask the logistics industry to innovate and require supply chains to be flexible. Even once the pandemic is behind us, challenges like global conflict, material shortages, and natural disasters, will continue to crop up. Supply chains—and the people managing them—need to be nimble enough to respond. 

Looking to make your supply chain more flexible for the future? We’d love to talk with you. Just reach out for a complimentary consultation with an expert, and we’ll take a holistic look at your supply chain—together.  

i https://www2.deloitte.com/us/en/insights/economy/us-consumer-spending-after-covid.html

ii https://data.bls.gov/timeseries/CES4300000001?amp%253bdata_tool=XGtable&output_view=data&include_graphs=true

iii https://www.digitalcommerce360.com/article/us-ecommerce-sales/

iv https://www.statista.com/chart/10922/parcel-shipping-volume-and-parcel-spend-in-selected-countries/

v https://marker.medium.com/americans-will-ship-3-billion-packages-this-holiday-season-c90dce987135

vi https://www.bls.gov/news.release/empsit.nr0.htm

vii https://www.joc.com/port-news/longshoreman-labor/longshore-labor-availability-improves-significantly-la-lb_20210416.html

viii https://www.npr.org/2021/06/24/1007914455/as-the-pandemic-recedes-millions-of-workers-are-saying-i-quit

ix https://www.washingtonpost.com/business/2021/09/19/childcare-workers-quit/

x https://www.inboundlogistics.com/cms/article/Analyzing-Congestion-at-U.S.-Ports/

xii https://www.shrm.org/resourcesandtools/hr-topics/talent-acquisition/pages/how-trucking-companies-are-responding-to-a-critical-driver-shortage.aspx

xiii https://www.shrm.org/resourcesandtools/hr-topics/talent-acquisition/pages/how-trucking-companies-are-responding-to-a-critical-driver-shortage.aspx

xiv https://www.shrm.org/resourcesandtools/hr-topics/talent-acquisition/pages/how-trucking-companies-are-responding-to-a-critical-driver-shortage.aspx; https://www.trucking.org/news-insights/ata-releases-updated-driver-shortage-report-and-forecast

xv https://s21.q4cdn.com/665674268/files/doc_financials/2021/q4/Earnings-Transcript-Q4FY21.pdf; https://seekingalpha.com/article/4447856-sysco-corporation-syy-ceo-kevin-hourican-on-q4-fiscal-year-2021-results-earnings-call

xvi https://www.retailwire.com/discussion/the-hunt-for-warehouse-help-heats-up/

xvii https://www.wsj.com/articles/walmart-gives-weekly-bonuses-to-keep-warehouse-workers-11628251212

xviii https://www.freightwaves.com/news/why-are-supply-chains-so-messed-up

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