Manufacturing delays. Port congestion. On-time delivery rates. Heightened consumer expectations. The list of supply chain challenges goes on. Despite a competitive labor market, supply chain leaders must find ways to attract and retain qualified applicants to stay above water.
Key Takeaways
- 71% of logistics providers say competition in the labor market is high
- 61% agree it's more difficult to hire workers than it was a year ago
- 66% say they’ll continue increasing wages to stay competitive
The following transcript has been revised for brevity and clarity.
Jordan Lawrence, Director of Logistics Strategy and Head of the Flexe Institute:
I've been working in the supply chain industry for 13 years, and for the first time, I don't have to explain to people what that means. Labor constraints. Port congestion. Out-of-stock inventory. Major supply chain disruptions are making headlines. And the world is watching.
In fact, one of my favorite statistics right now is that 82% of consumers say they are worried that the supply chain will “ruin their life plans.”
Supply chain disruptions, at the macro level, began at the start of the pandemic when manufacturing shut down in China. Since then, compounding disruptions have continued to impact entire industries and now everyday consumers, especially as we head into the holidays.
But beyond the headlines about the ports or out-of-stock inventory or delayed deliveries, there's a systemic issue, and that's labor.
To produce raw materials and finished goods, you need capacity, buildings, technology, but you also need people. To move and process goods, you need people. To deliver goods, you need people. Contingency planning for plant shutdowns, re-routing ocean freight to avoid congestion, and forward deploying inventory to combat shortages are all key. But so
To produce raw materials and finished goods, you need capacity, buildings, technology, but you also need people.
In a recent survey, we asked logistics providers about hiring and retaining labor, capacity and utilization rates, and their future plans. Not surprisingly, the labor market is competitive.
Seventy-one percent of survey respondents say competition in the labor market is high, and 61% agree it's more difficult to hire workers than it was a year ago, even in the middle of the pandemic.
Some of the biggest challenges to hiring and retaining talent are not having enough qualified applicants, and the jobs that are hard to fill are too physically demanding. Jobs with the lowest hiring and retention rates are frontline workers: Warehouse associates, machine operators, transportation workers, and warehouse management.
Hiring isn't improving. To combat this, employers plan to increase wages to solidify their employee base, especially for frontline workers—those that are in the greatest demand.
73% of our survey respondents say hiring challenges will continue over the next six months and likely further into next year.
73% of logistics providers say hiring challenges will continue over the next six months and likely into Q2 of next year.
Sixty-six percent of our survey respondents say they will continue to increase wages to combat these challenges. The number one new initiative is to invest in eComm capabilities, which require more space and more labor to operate.
The backdrop of today's market conditions is record demand. We’re in a time when tightness and labor conditions couldn't be more extreme, even relative to the onset of the pandemic. This is especially true for in-demand, frontline warehouse workers. We expect today’s disruptions to continue into the future, well into next year.
Data suggests that record-tight space, not enough employees, and persistent demand from consumers means these disruptions will continue.
The industrial vacancy rates are record low—5% nationally and sub-2% in major markets. The data suggests that record-tight space, not enough employees, and persistent demand from consumers means these disruptions will continue. We’ll continue to monitor market data and provide relevant industry insights about the downstream effects of labor shortages.
Today, it seems clear. Tightness is here to stay, well through 2022.
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