November 18, 2021

The Economics of Labor and Supply Chain Disruptions

The Flexe Institute surveyed logistics service providers about current labor constraints and strategies to overcome hiring and retention challenges.

Flexe Institute WP Supply Chain Economics Labor 2880x1336

Every industry, irrespective of focus, feels the effects of the labor shortage. However, those in supply chain are under particular pressure. In a recent Flexe Institute survey, industry professionals detail the hiring and retention challenges they face in an ultra-competitive market.

Key Takeaways

  • 71% of logistics companies experience difficulty in hiring
  • 61% find it more difficult to hire today than in 2020
  • 84% expect to increase their staff to meet increased demand
  • 76% implemented, or plan to implement, eCommerce capabilities, which require more labor
Pie chart highlighting 71 percent

18.7% increase in eCommerce logistics costs

Armstrong & Associates, 2021

Introduction #

Supply chain disruptions are common: Inclement weather, manufacturing issues, seasonal demand imbalances, and evolving buying behaviors can all affect the market. But COVID-19 is different. It continues to impact every industry, every link in the supply chain, and now, everyday consumers.

Supply chain disruptions are nightly news. But beyond the headlines about the ports, out-of-stocks, or delayed deliveries, there is a systemic issue bubbling below the surface—labor.

When businesses shut down in response to the pandemic, employment fell substantially. Approximately 25 million Americans found themselves out of work in the spring of 2020. Among those, only 15.6 million were back to work by the summer of 2021, 1.7 million remained unemployed, and 7.1 million left the workforce permanently.

Black and white shot of lighting fixtures hanging from factory ceiling

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