- Joseph Sarcona
How Is the Shortage of Skilled Labor Affecting the Logistics Industry?
Updated: Dec 16, 2021
The US warehouse, manufacturing, and transport sectors are currently experiencing massive labor shortages, a problem that is only predicted to become worse in coming year. According to data from the US Bureau of Labor and Statistics, logistics jobs will increase by around 30% between 2020 and 2030, with studies suggesting that demand within professional supply chains will outstrip supply by a ratio of 6 to 1.
Covid-19 placed unprecedented pressure on supply chains, stretching them to the breaking point and bringing many aspects of industry to an abrupt halt. Stay-at-home orders, school closures, health regulations, and social distancing policies made it difficult for many American companies to retain employees. In fact, Covid-19 caused unemployment to skyrocket in the United States, reaching higher levels in the first three months of the pandemic than during the whole two years of the recession.
As the US economy shifts gears, the need for skilled labor has never been greater. Ports, factories, and warehouses are impacted by an ever-widening skills gap, partly driven by Covid-19 and by an aging workforce which simply is not being replaced.
Supply chain workers are finally recognized for what they are: essential. Nevertheless, research from Korn Ferry suggests that by 2030 we could see a global labor shortage of 85.2 million skilled workers, triggering an $8.45 trillion reduction in revenue.
Labor shortages not only affect companies, but whole countries, with declines in corporate profits and growth translating to lower tax revenue and a shrinking GDP. Labor shortages ultimately end up costing consumers, too, with understaffed manufacturers, carriers, and distributors forced to increase their prices. As the world returns to some semblance of normality in this post-Covid world, many industries continue to experience the pressures of a tight labor market.
How can businesses combat labor shortages?
Every organization is unique and will need to develop their own strategy to beef up their workforce and increase staff retention. However, there are some basic steps businesses can take to recruit and retain a new generation of workers.
1. Hire Proactively
Successful business leaders pre-empt problems, taking action before they arise. Staff turnover comes in several forms, including resignation, retirement, and internal promotion. Forward-thinking companies are aggressive about recruiting the best and the brightest, staving off staff shortages by recruiting before gaping holes in the workforce arise.
2. Provide a Stable Work Schedule
In the warehousing sector, most full-time employees have what appears on the face of it to be a stable work schedule, working 40 hours a week. Nevertheless, in reality, fluctuating demand can cause significant scheduling issues, with workers often required to stay late in response to a surge in customer demand. The problem was exacerbated by the pandemic, triggering a sudden societal shift to online shopping that manufacturers and transport firms struggled to keep pace with.
Warehouses, factories, and indeed all employers must have empathy for their employees. Unstable and unpredictable schedules can take a toll on workers’ personal lives, putting pressure on relationships, and limiting family time. By enabling workers to achieve a satisfactory work/life balance, employers eliminate the risk of employees burning out and leaving the industry for a better quality of life.
3. Communicate Effectively
A recent poll suggested that 85% of employees regard effective communication as an important quality for an employer, with 69% of respondents reporting that they would be less likely to quit a company that communicated effectively, even if they were receiving less than ideal pay.
Strong, two-way communication provides management with valuable feedback from employees. It is important for companies to recognize that the work ethic of each of their employees is driven by unique desires and needs. It is therefore vital for employers to establish relationships across all levels of the company, emphasizing transparency to enable owners and managers to better understand what drives their workforce to help them retain talent.
4. Train Employees
As Henry Ford pointed out, the only thing worse than training employees only for them to leave is not training workers and having them stay. Every business needs skilled workers. Once an organization has gone to the trouble and expense of recruiting quality talent, they must invest in employee development.
A recent study by IBM revealed that employees who do not feel that they are developing within a company are 12 times more likely to leave. Investing in your workforce not only encourages staff retention and enhances employees’ abilities, but it reduces stagnation while simultaneously boosting the company’s reputation, showing the world that it cares about and invests in its staff.
5. Incentivize Staff
As employees gain new qualifications and proficiencies, they become more marketable. It is therefore crucial for operational leaders to work closely with HR teams to ensure that pay and perks are fair and balanced in order to motivate the staff and inspire loyalty.