What Does The Labor Shortage Mean For Your Supply Chain?

Talent Shortage

A talent shortage continues to create problems for American businesses across all industries.

While the pandemic gets the brunt of the blame for ongoing supply chain disruptions, the logistics, and transportation labor shortage makes it increasingly difficult for companies to mitigate supply chain risk.

The truck driver shortfall hit 80,000 drivers in 2021 and is expected to grow to 160,000 by 2030.

Meanwhile, 61% of respondents to a Peerless Media survey reported they are hiring warehouse workers to address materials handling, logistics, and supply chain operational challenges.

Among respondents, 45% also report hiring in transportation and logistics, while 42% are hiring warehouse managers to address these same issues.

Where Have All The Workers Gone?

Despite this strong demand for logistics labor, many companies can’t find the warehousing and transportation talent they need to remain fully staffed. Multiple causes contribute to the lack of supply chain labor, such as:

• Changing priorities. The pandemic has changed priorities for many people in the American workforce. Parents who once worked need the flexibility to stay at home and supervise children when schools and daycares can’t operate in person. Concerns about safety and changing priorities caused others to leave in-person jobs to pursue remote options.
• COVID-19 deaths. The coronavirus pandemic has been responsible for more than 900,000 U.S. lives lost, with that number expected to exceed 1 million by spring. This tragedy has had wide-reaching implications on U.S. society, including contributing to the labor shortage.
• Competition among industries. Simply put, there are not enough workers to fill all of the available jobs. According to the S. Chamber of Commerce, there are 10.9 million job openings and only 6.9 million available workers. As a result, the logistics and transportation sectors must compete with various other industries for workers, including retail, hospitality, and construction, among others.

5 Ways a Logistics Labor Shortage Hurts the Supply Chain

Labor shortages in all industries can directly impact local, regional, and global supply chains. For example, understaffing at a factory will cause production slowdowns, resulting in inventory stock-outs for distributors and retailers. However, in logistics, the shortage of available labor directly impacts the ability to move goods between parties.

Here are some impacts the labor shortage is having on the supply chain right now:

• Without enough longshoremen and dockworkers, ships face delays getting unloaded at U.S. ports of entry.
• An exodus of drayage drivers from the trucking industry has resulted in shipping containers sitting in ports much longer than they should.
• The long-haul truck driver shortage has created capacity shortages among trucking carriers, making it difficult for shippers to move inventory from ports to distribution centers promptly.
• Understaffed warehouses and distribution centers can’t operate at full capacity, creating delays that result in material or inventory shortages for manufacturers and retailers.
• A dramatic rise in e-commerce sales volumes has made it difficult for understaffed fulfillment centers to keep pace with order fulfillment volumes.
• The above examples are only some of the ways labor shortages can exacerbate supply chain issues. Though each of these problems would reverberate along the U.S. supply chain on its own, together, they create a perfect storm for supply chain disruption. To fight back against the logistics labor shortage, shippers must reevaluate hiring and retention practices, compensation packages, and work/life balance for employees.

Partnering with a third-party logistics (3PL) provider offers another alternative to ensure you have the staff you need to keep your inventory moving. A 3PL can help to stabilize your transportation capacity and staffing, even in tight labor markets.

About Phoenix Logistics

Strategic Real Estate. Applied Technology. Tailored Service. Creativity. Flexibility. These fundamentals reflect everything we do at Phoenix Logistics. We provide specialized support in locating and attaining the correct logistics solutions for every client we serve. Most logistic competitors work to win 3PL contracts, and then attempt to secure the real estate to support it. As an affiliate of giant industrial real estate firm Phoenix Investors, founded by Frank P. Crivello, we can quickly secure real estate solutions across its portfolio or leverage its market and financial strength to quickly source and acquire real estate to meet our client’s needs.