Logistics Labor 2024: Thinking Outside The Box
The unemployment rate is hovering below 4% and payroll employment increases with every new Bureau of Labor Statistics report. Transportation and warehousing is one of the most active “job gain” categories in a world, where 11,200 Baby Boomers are expected to reach retirement age every day between now and 2027.
This perfect storm of challenges is creating new pressures for logistics, warehouse, and distribution managers that—despite the infusion of automation and technology into their facilities—need people to handle a wide range of responsibilities. It’s also driving up wages in certain parts of the country where a high concentration of distribution facilities means an even higher level of competition for workers.
Jason Krantz, CEO at Labor Titan, tracks labor costs in specific U.S. geographies. He also delves down into specific industries and sees that because warehousing requires a “physical presence” in order to get work done, it’s naturally one of the sectors that is seeing wages climb right now. Economic factors also come into play, namely the fact that warehouses, DCs, and third-party logistics (3PL) providers are all keeping pretty busy right now.
“Warehousing is one of the areas that has seen elevated, sustained, above-average growth rates,” says Krantz, who adds that the exodus of workers due to the global pandemic and retirement is only adding to the problem. “The huge spike in demand for e-commerce that emerged during the pandemic may have burned people out,” says Krantz. “This only added to the labor shortage issues that the warehousing sector is experiencing right now.”
Based on Labor Titan’s data, Krantz doesn’t see the pressure easing off anytime soon. “Wages are going to stay elevated for warehouse jobs, and will continue to grow by an average of 4% to 5% based on the specific area of the country or metro,” he says.
Companies that are stuck in this cycle and looking for ways to balance their workloads with their available labor forces should focus on developing leaders and managers that understand the value of retention, listen to employees, and provide them with flexible options. These strategies can help with both recruiting and retention.
“The bottom line is that if the work environment is terrible, moving to another DC that pays 25 cents more an hour is an easy decision,” Krantz says. “In these situations, your managers can have a significant impact on the willingness of people to stay onboard and make your company defendable against other employers that may be paying higher hourly rates.”
Stimulating Their Intellectual Curiosity
The current warehousing and transportation labor shortage is glaringly obvious to Mark Baxa, president and CEO at CSCMP, whose members credit a number of different factors for creating the dearth of available workers.
“They’re telling us that talent recruitment, retention, and development are all instrumental in terms of sustaining their companies’ operations,” Baxa says.
To address the challenge, companies are investing in workforce training and certifications, developing “reward” programs that recognize employees for the great work they’re doing, and coming up with “creative operating hours” that help employees achieve better work-life balance. The latter is especially important for Millennial and Gen Z workers who actively seek out positions that foster work-life balance, which 74% of Gen Z and 78% of Millennial employees would gladly switch jobs to attain—versus only 50% of Baby Boomer and Gen X workers.
Employers that need in-person workforces are accommodating these needs by offering part-time schedules, four-day workweeks and job-sharing. They’re also encouraging employees to take time off to give back to the community, participate in social causes and take care of their mental health needs.
Employers are also exploring non-traditional recruitment paths and hiring otherwise overlooked candidates through programs like Prisons-to-Professionals, which supports currently and formerly incarcerated individuals who want to build their careers.
“Companies that really want to engage new talent and also keep their existing talent are focusing on opportunities for development more so than ever,” says Baxa. “It goes beyond the essentials like certified forklift operators.”
For example, companies are looking at what types of technology and automation they can put in place to help make warehouse and DC jobs easier. Collaborative robots (co-bots) and robots that can manage heavy lifting and repetitive tasks can help fill in as needed and also tend to attract employees that want to work for companies that invest in modern technological tools.
“Technology helps attract a whole new workforce to the warehouse,” Baxa points out, “where someone with ‘intellectual curiosity’ might take a position that he or she wouldn’t have previously considered.”
Brains Versus Brawn
Douglas Kent, executive vice president of corporate and strategic alliances at ASCM, says that the organization’s recent KPMG Stability Index Report revealed a slight improvement in the worker shortage in 2024 versus 2023.
Companies have stepped up their investments in automation to offset the labor constraints, Kent says, and to drive efficiencies in their operations. Now, companies need more “white collar” employees who can run, maintain and operate all of that automation. This need has created a new gap in the warehouse labor picture.
“Now we’re seeing skills development issues related to these warehouses becoming more automated, and a need for individuals who have the advanced technical skills required to operate and maintain those systems,” says Kent, who adds that the most recent BLS jobs report suggests “exactly the same thing,” and namely that white collar workers are now in shorter supply than blue collar workers.
“There was a bit of a reversal over the course of the last quarter,” Kent says. “So, as the automation investments come into motion, a critical skill shortage still exists, but more at the ‘brain’ versus the ‘brawn’ level.”
Offering A Better Employee Experience
Dana Stiffler, vice president and distinguished analyst in Gartner’s Supply Chain and Research Advisory Group, is seeing some interesting innovation on the part of employers who want to fill empty warehousing and logistics positions. Most of the strategies center around offering a better employee experience.
“Whether they’re in desk-based roles in logistics or picking-and-packing orders on the DC floor, everyone wants more flexibility and choice,” says Stiffler. “They want to be able to fit work into their lives, and not the other way around.”
Companies that understand and embrace this reality can expect benefits like lower turnover, more engaged workers, and a more productive workforce overall.
In some cases, a mobile app makes all the difference. According to Stiffler, companies are using more self-serve scheduling apps that give employees more control over their own schedules. “They can structure their shifts in a way that works for them,” she says. Scheduling apps tend to have “the best impact on retention and recruiting,” she adds, and are a top investment right now.
“Examples of supply chain leaders investing in [workforce] flexibility typically involve these apps,” says Stiffler. The apps accommodate both part-time and full-time shifts and let employees plug in those schedules in a way that fits their own lives. “The apps have produced positive effects in terms of retaining workers.” They also help companies recruit and retain employees who need shift flexibility (e.g., college students, parents who have to drop off and pick up their children at school daily, etc.).
With no end in sight to current labor market woes, expect to see more companies introducing creative, out-of-the box approaches to finding and retaining labor. Tapping into overlooked populations, infusing more automation, or adding self-service apps, smart companies are doing everything they can to minimize turnover, improve employee engagement, and maximize the value of their human workforces.
Source: Logistics Management
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