Right up until mid-March, the logistics labor shortage was being fueled by a historically low national unemployment rate and a lack of both skilled and semi-skilled workers. The global pandemic swept in and quickly changed the scenario, driving overall unemployment rates up to historic highs and forcing many companies to lay-off and furlough workers.
And while warehouses and DCs clearly continued to fulfill their critical roles in getting both essential and non-essential goods to end users, few corners of the business world escaped COVID-19’s wrath. In April, The Wall Street Journal reported that warehousing and storage operators had hired 8,200 new workers in March, effectively “defying the steep employment downturn in the American economy.” By May, the logistics-related labor reports were following the national trend, with some companies reporting layoffs and others temporarily freezing hiring activity.
Some companies are already leveraging the fresh crop of entry-level and experienced workers that are now available and ready to work—a task that would have been difficult earlier this year, when the national unemployment rate was just 3.5%. In March, for example, Amazon announced that it was hiring 175,000 new workers to help run its fulfillment and delivery network. By May, the company had reportedly filled all of those positions.
“Companies are definitely starting to look at how they can upskill or find talent that they couldn’t access in the tight labor market,” says Tisha Danehl, vice president of strategy and professional recruitment, North America, at The Adecco Group in Chicago. “The flood gates aren’t opening yet, but some firms are exploring their options on the permanent hire/direct hire side of the market versus temporary employment.”
For now, Danehl says logistics and supply chain organizations are focusing on their most critical labor needs and centering on positions that were difficult to fill pre-COVID. She’s also seeing more hiring activity within essential industries (e.g., the production and/or distribution of personal protective equipment, hand sanitizer, cleaning products, and groceries). “We haven’t seen much of a hiring slowdown for these types of businesses,” she points out, “and as a matter of fact, those companies are the most active hirers right now.”
Abe Eshkenazi, CEO at the Association for Supply Chain Management (ASCM), says that the spikes in supply and demand spurred on by the pandemic have made it difficult for warehouse and DC operators to project their labor needs. Uncertainty over what could be coming around the next corner isn’t helping either, he adds, nor are the social distancing rules and the new safety precautions that companies have to take in the post-COVID world.
To help, ASCM has been working with associations like the National Retail Federation and the National Restaurant Association to see how employees in those sectors can be transitioned to logistics jobs. “It aims to help these unemployed individuals get up to speed on warehouse, logistics and distribution work with the goal of getting them back on the payroll,” says Eshkenazi.
According to Eshkenazi, the effort will require some re-skilling, but notes that warehouse and distribution jobs typically have low barriers to entry, making them a good choice for displaced workers from the restaurant and retail sectors. “We’re co-distributing content for NRF and its workers on how to prepare yourself for different types of logistics jobs,” Eshkenazi adds, “where there are good opportunities right now for interested individuals.”
Long before COVID reared its ugly head, companies in the distribution and fulfillment arenas were investing in automated solutions that could help them work more efficiently and be more productive using current staffing levels. Augmenting their human workforces with co-bots, automated storage and retrieval systems (AS/RS), and other advanced tools, some companies were well on their way to winning the race to automate.
“Everyone was talking about robotics,” says Rick Blasgen, president and CEO of the Council of Supply Chain Management Professionals (CSCMP), who expects those conversations to continue, despite the fact that labor may remain fairly accessible over the coming months or years. “We can assume that when the pandemic threat is over, many people who are out of work now are going to go back to work at the same jobs that they had pre-COVID.”
When that happens, Blasgen expects attention to be turned back to automated solutions and doesn’t expect companies to go back to “throwing more people at the problem,” like they did 10 or 20 years ago. Concurrently, he says issues like the truck driver shortage will likely resurface, namely because veteran drivers continue to retire while younger candidates shy away from such demanding jobs.
Blasgen says CSCMP has been producing numerous webinars in response to COVID, and is helping its manufacturing and retail members deal with some of their biggest challenges. And while there’s an air of uncertainty about the future of the economy and labor market right now, Blasgen cautions shippers not to assume there will be a plethora of workers to choose from in the post-COVID world.
“Unfortunately, there will be shifts in labor for restaurateurs and others that just can’t ‘open back up,’ but the Amazons of the world will likely scoop that labor up,” says Blasgen. “In my opinion, there will still be a battle for labor and a push to automate when we come out of this.”
Looking ahead, Danehl says that we could see a shift over to more “local commerce” and a world that’s less global in nature. She says some logistics service providers have already started ramping up their hiring in response to this trend, which could find more companies operating domestically instead of working with extended, overseas supply chains.
To companies that are shaping their logistics hiring strategies for the second half of the year, Danehl says that now is a great time to spread the word about those open positions. Even someone who’s currently employed may be looking to make a move to a better opportunity and can be a great candidate for your team.
A manager who was dissatisfied with his or her company’s overall response to the pandemic, for example, may want to make a fresh start with an organization that performed better in this area. This is a reality that all companies should keep in mind as they look to retain their logistics labor forces, says Danehl, who sees corporate culture becoming an even more important part of the employee retention conversation in the post-COVID world.
“Logistics professionals should continue looking at their talent acquisition strategies, company cultures, and exactly what they’re doing to attract talent that they may not have had access to before,” says Danehl, who cautions companies not to assume that a recently-laid-off worker wasn’t meeting the employer’s expectations. “A lot of companies used the ‘last in, first out’ approach when cutting staff, which means there could be some good, available talent out there right now.”
As he assesses the current logistics labor market and looks ahead at what’s coming next, Tom Derry, CEO at the Institute for Supply Management (ISM) expects technology to continue playing a prominent role in all aspects of the logistics process. “That means everything from more automation and robotics in DCs and warehouses,” says Derry, “to scheduling, transportation, and freight-forwarding applications for international trade.”
Derry is also keeping his eye on the U.S. manufacturing sector, and says if it contracts then it could drive down demand for logistics labor. “Manufacturing only makes up 11% to 12% of the U.S. economy today,” he points out. “If that declines further, there will be fewer people moving those goods from the manufacturing center to warehouses to DCs and, ultimately, to the consumer.”
Despite the disruption that companies endured during the first half of 2020, Derry is somewhat bullish on what lies ahead for the remainder of the year and into 2021. He says a COVID vaccine and more widespread testing—the latter of which will help more employees return to work with confidence, and more companies restart their engines—are the two variables that will have the biggest impacts.
“The U.S. economy was strong going into this,” says Derry, “so if those two things happen there’s no reason why we can return to a very ‘normal’ scenario pretty quickly during the second half of the year.”