Trending Now

The Economic Impact of a TikTok Ban in the U.S.

New Articles

Addressing Labor Shortages in the Logistics and Transportation Industry

global trade labor
Global Logistics, Global Trade Daily

Addressing Labor Shortages in the Logistics and Transportation Industry

Leave a comment

Labor shortages in the supply chain industry are having a significant impact on logistics and transportation. While some predicted that the economy would improve post-pandemic, many organizations still struggle to find and retain labor. 

Read also: Embracing Inclusivity and Diversity to Solve Labor Shortage in the Trucking Industry

A Descartes study on the supply chain and logistics workforce found that 37% of organizations are experiencing high labor shortages, 61% have transportation disruptions from understaffing, and 58% said that shortages impacted customer service. 

While other areas of the economy are rapidly recovering, supply chain labor is still in the red. This trend indicates that things can’t return to normal without drastic changes.

Logistics and transportation are challenging sectors to work in. With pressures like long hours, low pay, and labor-intensive work, organizations must start rethinking their workforce strategies to attract and retain labor.

A Closer Look at the Impact of Labor Shortages on Supply Chains

When there aren’t enough workers to get the job done, it seriously impacts business performance. According to the Descartes study, the areas that have been most impacted by the labor shortage include transportation operations (67%), warehouse operations (56%), transportation planning (51%), inventory and distribution planning (51%), customer service (42%), and demand planning (37%). 

This market disruption translates into lost revenue, more supply chain delays, higher costs, and issues meeting the capacity shippers seek since there aren’t enough drivers. Of course, this also leads to dissatisfied customers when their products aren’t delivered on time, or they can’t access the products they need. 

What’s Causing These Labor Shortages?

While the COVID-19 pandemic is viewed as a catalyst that triggered the labor shortage issue, the truth is that several underlying problems have already plagued the supply chain. The pandemic simply highlighted and exacerbated these issues, leading to a mass exodus of workers. 

For starters, an aging workforce is a significant part of the problem. As baby boomers leave the industry, there aren’t enough younger workers coming in to replace them. According to the U.S. Bureau of Labor Statistics, the median age for warehousing, manufacturing, and transportation employees is 45 and older. 

Another issue is changing priorities. Younger generations want different things from their jobs, including better pay, healthier work environments that prioritize their well-being, and more flexibility regarding remote work and time off. 

There is also competition among other industries. According to the U.S. Chamber of Commerce, there are currently 8.1 million jobs available across various industries, but only 6.6 million people are seeking work. While this is good news for job seekers, it’s bad news for organizations trying to fill those open roles because there aren’t enough workers. Logistics and transportation have to compete with all those other industries, some of which may compensate workers more.

Effective Strategies to Address the Labor Shortage

All of these issues point to the need for more meaningful intervention. To compete with competition from other industries and attract younger generations to replace an aging workforce, organizations must be proactive in their recruitment and employee retention strategies and consider the changing priorities of today’s workforce. 

1. Automation

If there is too much work and not enough people to do it, then you might want to consider automation. Automation can help alleviate labor shortages by streamlining workflows and digitizing processes. Automation shouldn’t be a long-term solution to replace human workers, but it can reduce the load for the workers you do have, so they focus their efforts where they can be more productive. 

2. Employee Training

A key element in attracting and retaining talent is nurturing that talent. Workers today want to know that there is room for growth and that the company they are working for cares about their development. Companies trying to retain employees should provide these opportunities through training and certificate programs. 

It’s also important to note that organizations need to focus on upskilling and reskilling as new technologies enter the playing field. This helps address knowledge gaps when introducing innovative strategies and software.

3. Internal Communication

Internal communication plays a crucial role in worker retention. Studies show that organizations that prioritize effective communication increase their employee retention rates by 4.5 times. Good internal communication makes workers feel seen, valued, heard, and better supported, making them more likely to commit to their work and the company.  

Additionally, effective workplace communication can boost employee well-being. When communication in the workplace is good, it helps workers feel more connected, helps them develop better professionally, fosters innovation and leadership growth, and allows workers to better address their concerns and manage workplace stress.  

4. Employee Value Proposition

According to McKinsey & Company, organizations that build attractive value propositions for their employees, such as offering better wages, find it easier to retain their workforce. While offering more competitive wages is a start, a major part of showing employees they are valued is rewarding and incentivizing them in other meaningful and impactful ways. 

Your company can provide incentives like better benefits programs,  more flexible time off, and simply having appreciative and hard-working managers. Engagement here is critical. The more workers feel engaged and valued by their employer, the more committed they will be to staying and helping the company achieve its goals. 

5. Workforce Planning

Finally, a crucial aspect of addressing labor shortages in the supply chain is strategic workforce planning, which involves reviewing the skills and needs of a workforce on an ongoing basis. However, it’s not just about training and development; it’s also about how the recruitment process is handled and making sure workers are paired with tasks that are best suited to their skill sets, career goals, and working styles. 

To accomplish this or build this kind of strategy, companies must start by performing a workforce gap analysis. Identify current workforce capabilities, skill gaps, and other issues (such as high turnover rates). You can then use that information to build an effective action plan for your organization.

Conclusion

While the labor shortage presents complex challenges, it is not unsolvable. It does, however, mean that companies might have to make drastic changes to attract and retain quality talent. This means bold interventions and acquiring executive support to implement the needed changes, but they are necessary to address the labor shortage effectively in the long run. 

 

IA SUN labor Automation Group Highlights Innovative Corrugated Converting Solutions at CCE International beckhoff
Archives, Commentary, Global Trade Daily, International Trade, Technology

How Can Automation Help Alleviate Labor Shortages?

Leave a comment

Labor shortages are often discussed in fields such as logistics and trucking, but a growing number of industries have more job openings than people to fill them. Manufacturing, education, health services and retail are many industries struggling to bring in new hires and retain existing employees.

Automation and robotics may have a negative reputation for stealing people’s jobs, but in almost every case, it supplements floundering workforces. Here’s how it can help alleviate labor
shortages in various industries and help bolster the economy.

Labor Shortage Statistics

Looking at any industry from the outside, it might seem like everything is working as it’s meant to. However, behind the scenes, the problem becomes glaringly apparent. Foodservice and hospitality-related businesses experienced a 6.6% quit rate in September 2021. Durable goods manufacturing is seeing even worse resignation levels. Companies are struggling to hire enough workers to fill vacant positions and stay ahead of the competition.

Industries worldwide have lost millions of workers due to COVID-19 and the Great Resignation that followed. Many of those who left the workforce during the pandemic decided that taking early retirement was a better option than returning to work once things returned to normal. The best choice for employers would be to make the necessary changes to bring in new workers and retain those already employed. However, automation may be able to help fill in some of the gaps.

Freeing up Skilled Workers for Critical Tasks

Most industries have many mundane or repetitive tasks that are necessary to complete the job. They are all necessary, but thanks to automation, they do not need to take up the time or skills of an employee better suited to more complex or critical work. It can also be a valuable tool for helping people get ahead, allowing them to expand their skills and build a career that they will genuinely enjoy.

Relegating these mundane or repetitive tasks to robotics or automation services can also help reduce the number of repetitive stress injuries in the workplace. Poor posture, repeated motions, bad lifting techniques and other repetitive movements can cause injuries which, in turn, can lead to missed work and workers’ compensation claims. Widespread use of automation and material handling solutions could help reduce those numbers dramatically.

Capturing and Using Data Efficiently

The human race generates enormous amounts of data. In 2020, that amounted to 1.7 megabytes a second for each person or 2.5 quintillion bytes of data every day. Much of this information languishes in digital limbo in its raw form. By using automation specifically, machine learning and artificial intelligence — companies can take these sheaves of raw data and turn them into actionable points that can improve workplace efficiency. It can also offset some of the problems caused by labor shortages. An example of a tool that can easily sort and collect data with just one click is using Sheets Genie, a Google Sheets add-on.

In the past, sorting through these databases required human analysts. Today, all it takes is a skilled programmer to create a machine learning algorithm that can sort through raw data while
eliminating human error and turn it into actionable insights that companies can use to improve their business. It’s not a perfect solution — at least not yet. There are still some limitations to the
technology that could potentially hold companies back. Still, as it continues to progress and evolve, it will likely become an invaluable tool to help offset the lack of new employees.

Fewer Injuries and Less Downtime

Many industries utilize production methods that, while necessary, can be hazardous to human life. Safety precautions can help keep employees safe, but they are not accident-proof, no matter how hard they try. More than 155,500 manufacturing workers and 17,000 warehouses workers missed time in 2018 due to a workplace injury. In 2017, those injuries cost businesses upwards of $161 billion.

Automation can help reduce workplace injuries and associated downtime by taking over many hazardous jobs. Even skilled positions that can’t be automated can be made safer through robotics that distance the worker from the action. It does require some new training and significant investment initially, but it can help reduce some of the growing costs associated with workplace injuries. Many tasks, such as cleaning tank interiors in a low-oxygen environment, would be better served by automation than by a human in protective gear.

Bringing in More Young Employees

The Great Resignation and the COVID-19 pandemic aren’t the only things causing these massive labor shortages. Millions of people retired in the United States during the pandemic, most of them choosing to permanently leave the workforce rather than taking an extended pandemic-related sabbatical. There aren’t enough new workers to replace them, especially not among the younger generation.

One of the most significant benefits of bringing in automation is that it requires new technology and teaches employees how to utilize it. This is the perfect environment for workers from younger generations who have grown up in a world steeped in technology. Young millennials and members of Gen Z often avoid the traditionally blue-collar careers because they are some of the slowest to adopt new technologies. Bringing in automation is the perfect way to entice these new workers into an industry that might otherwise be lacking tech.

Utilizing Automation to Alleviate Labor Shortages

There is no simple solution to overcome these labor shortages. So many people have left the workforce throughout the pandemic for various reasons that it will take some time to recoup those losses. Companies have the option to make all the necessary changes to overcome these labor shortages without spending too much time and money trying to bring in new workers.

Adopting automation is just one piece of the puzzle for adopting new technologies as tools to overcome labor shortages. Things like data management and machine learning algorithms can help turn existing databases into actionable insights that can make all the difference. Business owners need to take the time to analyze their current labor statistics and demographics to see where problems lie and where new technologies like automation can help fill in the gaps.

shippers
Archives, Global Logistics, Global Shippers 101, Ocean Ports

Dear Shippers, It’s Time for Creativity

Leave a comment

To offset many of the problems we are encountering today ― inflationary pressures, port delays and labor shortages ― shippers must think and act differently to ensure resilience. To be successful, leaders must take a new, more creative approach to minimize today’s adversities to increase revenues. Here are some new ways companies are successfully mitigating the plethora of challenges facing global trade today:

1. Creativity Within Modes and Port Selection: Presently, more than 100 container ships await dock space at the Los Angeles and Long Beach ports1, and the World Container Index price for 40 ft. containers stands at $9,669.472, 276% higher than a year ago. Shippers are not only struggling to secure capacity due to port inefficiencies but are paying premium prices even when they can secure containers. Once reserving container space, shippers then have to deal with long lead times. The door-to-door transit time for a container from China to Chicago is now 73 days versus 35 days in pre-pandemic times.

Minimizing the impact on your organization will require teams to think more creatively and collaboratively. For example, in the past, when Coca-Cola could not supply their production facilities due to limited vessel space, they refused to accept the current situation as their only option. Instead, their procurement and supply chain teams collaborated to leverage a nontraditional method of shipping. They decided to ship their manufacturing materials via bulk vessels typically used to ship dry cargo3. Coca-Cola safely shipped their products by securing the materials using plastic wrap and unloading at noncongested ports to avoid excessive demurrage fees being levied on shippers. Their priority was to keep the product lines running, and they accomplished it by actively seeking out alternatives.

Organizations need to think more broadly and explore the feasibility of using all available options, such as Coca-Cola did. Also, they must consider avoiding the West Coast ports whenever possible, as other ports, such as those on the East Coast, are currently less congested.

2. Seek Unconventional Partnerships: The boost in e-commerce sales and the growing driver shortage have negatively affected domestic trucking capacity. The result is like what we see in ocean shipping: premium prices and increased lead times. In pre-pandemic times, consumers took advantage of quick and reliable e-commerce delivery channels made popular by the likes of Amazon. Now, however, they are left hoping their products arrive within their expected delivery window, as shipping delays continue to become more common.

Understanding that customers have an insatiable appetite for fast and reliable delivery, Home Depot found a way to offer added convenience to its e-commerce business. Home Depot will become the first retail client in Walmart’s new delivery-as-a-service business called GoLocal. According to a Home Depot spokesperson, by leveraging Walmart’s existing delivery network, Home Depot will offer same-day and next-day delivery in select stores, with plans to expand by the end of the year.

In a market where capacity is hard to come by, Home Depot expanded its options by leveraging new partners who had capabilities that spanned beyond their own while offering convenience to the customer. As a result, they will reach more customers than before at lower costs to the consumer. Stephanie Smith, a senior vice president of supply chain for Home Depot, said, “This partnership brings us even closer to our goal of offering same-day or next-day deliveries to 90 percent of the U.S. population.”4 Seeking partnerships, even from those who may be competitors, is an excellent way to reduce the consumer’s expenses. Also, shippers should begin exploring alternatives in last-mile delivery to increase customer satisfaction, including added convenience and reduced shipping costs.

Difficulties in the supply chain are impacting shippers and consumers alike. On the one hand, consumers are experiencing inflation in certain products; on the other hand, shippers see their profits eroded. From either end, this situation is far from ideal. Labor shortages and capacity constraints are but two of several factors are contributing to higher costs. Organizations will have to wrestle with whether they will pass some of these costs on to consumers or allow them to affect margins. Either way, to overcome this dilemma, shippers must get creative to offset rising costs.

__________________________________________________________________

Alex Hayes and Derrick Lopes are Senior Associates at GEP, a leading provider of procurement and supply chain solutions to Fortune 500 companies.

1 https://apnews.com/article/business-california-los-angeles-long-beach-shipping-ffbbf935495b0bbea064bcbb1ce330cb

2 https://www.drewry.co.uk/supply-chain-advisors/supply-chain-expertise/world-container-index-assessed-by-drewry

3 https://www.businessinsider.com/coca-cola-uses-bulk-vessels-amid-shipping-crisis-2021-10

4 https://www.forbes.com/sites/walterloeb/2021/10/11/could-home-depots-partnership-with-walmart-lead-to-other-close-working-arrangements/?sh=25aebd867b88

3PLs
3pls, Archives, Global Logistics, Global Trade Daily

THE TOP CHALLENGES 3PLs FACED DURING THE PANDEMIC—AND THEIR SOLUTIONS

Leave a comment

Prior to the COVID-19 pandemic, companies were increasingly relying on 3PLs to manage their supply chains, largely thanks to the steady rise in e-commerce and the impact of the digital marketplace on traditional brick and mortars. However, no one could have predicted the disruption of 2020, as retailers scrambled to move an unprecedented amount of goods quickly and safely in response to consumer demands. In fact, the Institute for Supply Management reports 97 percent of companies have been impacted by supply chain issues caused by COVID-19.

The pandemic forced companies to reevaluate their entire supply chains almost instantaneously to successfully adapt and meet the demands of the changing environment. Because of this, the use of 3PLs rose to the forefront for many brands in 2020 as they looked for strategic, critical guidance to best meet the challenges of the day.

Approximately one year into the pandemic, now is an optimal time to reflect on the top challenges that faced 3PLs during this period and the solutions that will continue shaping our industry in 2021 and beyond.

Problem: Pre-Pandemic Labor Shortages Escalated

The labor shortage is not a new challenge, but one that was exacerbated by COVID-19. Pre-pandemic, the steady rise in e-commerce was creating significant labor issues. In fact, CBRE reported e-commerce created demand for an additional 452,000 warehouse and distribution workers in the U.S. between 2018-2019.

On the transportation side, the driver shortage is ranked as the No. 1 industry concern, according to the American Transportation Research Institute. This is largely due to the higher-than-average age of the existing workforce (46 years old) and the subsequent impact upon exiting for retirement without having younger recruits to fill the void.

With these challenges already facing our industry, the pandemic took them to new heights as more workers were needed to accommodate the massive uptick in shipping volumes due to e-commerce. COVID-19 also presented new considerations, such as rising wage pressures due to the pandemic’s economic, political and public health challenges, as well as older drivers opting for early retirement out of safety concerns.

Solution: Incorporate Automation Advancements 

Automation is increasingly being utilized as a solution to help manage labor shortages. From a warehouse perspective, this means more frequent use of automated guided vehicles, goods-to-person robotics picking, and automated racking and shelving techniques to improve efficiency and cost-competitiveness.

GEODIS recently conducted a beta test at a distribution facility in Indianapolis to pilot the increased use of robotics in its warehousing efforts. Using 21 robotic units that offered an autonomous and smart-picking solution, a leading women’s apparel brand saw a 100 percent increase in operational efficiency. This is just one example of how automation can increase efficiencies and address labor market concerns. 

While automation has largely taken off within warehousing, we expect to see strides moving forward to specifically address driver shortages. 2020 was filled with exciting advancements in this realm, and we will continue to see innovative solutions like autonomous vehicles and drone delivery enter the market at a greater rate.

Problem: Capacity Shrank While Demand Surged

In 2020, the traditional peak season came and never left from a volume perspective. But while demand surged, capacity evaporated. As more than 50 percent of air freight is transported via cargo holds of passenger planes, capacity plummeted as flights were cancelled. For ocean freight, the lack of goods primarily out of Asia created a ripple effect that was felt globally. All the while, road shipments faced capacity issues due to skyrocketing e-commerce orders coupled with ongoing labor shortages.

The capacity constraints in the parcel delivery network were particularly a shock to the system for many in 2020, which was largely a byproduct of this acceleration in e-commerce. According to Transportation Impact customer data, parcel volume was traditionally 60 percent commercial and 22 percent residential prior to COVID-19. During the pandemic, this ratio drastically flipped with 40 percent being commercial and 46 percent residential. While delivery networks were previously accustomed to moving a large amount of goods with fewer stops, the process was reversed and created an immense strain on the current infrastructure.

Solution: Rethink Delivery Strategies

Due to the capacity constraints we saw in 2020, 3PLs will need to incorporate more diverse delivery strategies moving forward. For example, a solution for small parcel delivery issues is to build an expansive network that includes multiple international providers. By building and leveraging the network, it provides 3PLs the opportunity to identify the best small parcel provider to use in real time for its customers based on current capacity and shipping needs.

Air cargo delivery will be an interesting area to watch moving forward, as we continue to provide solutions that will help us solve 2020 challenges. Because of the increase in e-commerce, 3PLs will have more strategic control over flight patterns. For instance, GEODIS recently expanded AirDirect services to add a weekly flight from Shanghai to Guadalajara. 

Problem: Unpredictable Buying Patterns

In 2019, online retail sales in the U.S. amounted to $343.2 billion. By 2024, this is projected to skyrocket to $476.5 billion. 

The pandemic led to unpredictable buying patterns as consumers shifted away from brick and mortar stores to e-commerce platforms. While top e-commerce categories prior to COVID-19 were consumer electronics and apparel/accessories, the pandemic created an entire new demand for the type of goods being purchased online. In particular, demand for essential items such as groceries and health products grew in numbers we hadn’t seen before.

One of the biggest challenges of the pandemic—and one that will remain—will be anticipating consumer buying patterns moving forward. Brick and mortar sales will increase as vaccines are more widely distributed, and we will see a new ratio of in-person to e-commerce shopping. The convenience factor of buying online is here to stay, but the question remains what the scale will be.

Solution: Accelerate Digital Technology

While it’s impossible to pinpoint consumers’ future buying patterns, the adoption of new technology by 3PLs will help brands build resilience. For instance, providing real end-to-end visibility will be imperative moving forward. By offering a robust “control tower” that integrates complex operational systems across all modes of the supply chain in one streamlined view, companies can best track and trace shipments, strategically manage inventory, and overall receive transparency that leads to faster and smarter decision-making.

Additionally, we will see innovative technology that offers solutions to move products closer to the end customer. For example, GEODIS recently released a new digital platform, City Delivery, that enables retailers to deliver goods directly to consumers from the closest retail store in just a few hours thanks to a combined delivery network of traditional carriers and private individuals. We will continue to see new technology that revolutionizes last-mile delivery, particularly in the urban environment, as e-commerce buying trends continue in some capacity.

Looking Ahead

No one knows what challenges lie ahead, but 2020 offered lessons to 3PLs we will take with us moving forward. Due to the pandemic’s spotlight on supply chains, we expect companies will increasingly leverage 3PLs as strategic, solutions-minded partners that will help protect and enhance their operations in the face of any challenge. By incorporating lessons learned during the pandemic, we will be best equipped to provide the solutions needed to support their growth moving forward.

___________________________________________________________________

As president and CEO of GEODIS in Americas, Mike Honious is responsible for freight forwarding, transportation management, business development, strategic management office, legal, accounting & finance, human resources, engineering & technology, ProVenture, shared service center and IT. He previously was the COO of GEODIS in Americas, and before starting with the company 15 years ago, he held several senior level operations positions at Gap, Inc.