Key Insights to Global Supply Chain Disruption

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.