What Does the Labor Shortage Mean for Your Supply Chain?
Labor shortages exacerbate supply chain issues, creating a perfect storm for disruption. Here’s why it’s happening and what to do about it.
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 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 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 American workers. For example, parents who once worked on site now 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 nearly one million U.S. lives lost. This tragedy has had wide-reaching implications, including contributing to the labor shortage.
- Competition among industries. According to the U.S. Chamber of Commerce, there are 10.9 million job openings and only 6.9 million available workers. 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 aforementioned examples are only some of the ways labor shortages exacerbate supply chain issues. 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.