Layoffs at UPS are the latest in a string of job cuts throughout logistics to start the year—and many who work in the industry say they are feeling the impact of fewer employees across their company.
Seventy-six percent of supply chain and logistics leaders say they are experiencing notable workforce shortages in their operations, according to a survey from Descartes.
A portion of the 1,000 respondents surveyed are even more concerned, with 37 percent characterizing the workforce shortage they face as “high to extreme.”
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Chris Jones, executive vice president, industry at Descartes, says more companies have to take on the role of being “the shipper of choice” for prospective employees.
“I think that’s the theme here, for people in terms of, they need to be the employer of choice,” Jones told Sourcing Journal. He referred to the recent shifts in job market conditions as a “war for talent” as potential applicants flock elsewhere. “You’re not just competing with your fellow retailers or your fellow 3PLs, you’re competing now with everybody because people have no problems with crossing industries.”
Fewer employees can ultimately take a toll on a company’s financial, peak season and logistics partner performance. Fifty-eight percent of respondents even agreed that it’s taking a toll on customer service performance, with 58 percent specifying that workforce shortages have negatively impacted service levels.
According to the survey results, the areas suffering the most from resource shortages were transportation operations (61 percent) and warehouse operations (56 percent), which aligns with the overall drop in employment across the transportation and warehousing industry.
Overall, the sector has 100,000 fewer jobs as of December 2023 than it did 14 months prior in October 2022, according to data from the U.S. Bureau of Labor Statistics (BLS). That month alone, 23,000 jobs were cut. Companies like GXO, Coyote and Flexe all announced layoffs a month later, while brands like Fanatics and Fruit of the Loom are shuttering warehouses, leaving the firms to cut the jobs at those locations.
Despite the doom and gloom stemming from the shortages, the landscape of jobs in these sectors changed for the better during the pandemic, according to Jones, as more hiring ramped up and forced companies to escalate wages. This effectively turned employment in this from a “seller’s market” to a “buyer’s market.”
“All of a sudden, now you had way more jobs than people—2X—for a while there,” said Jones. “They were looking across industries, but they weren’t just looking at the warehouse down the street.”
Although there has been a recent restructuring at UPS, as well as job cuts elsewhere at supply chain companies, whether it be firms like Flexport, Veho or FourKites, Jones observed “there are still way more jobs out there than there are people for them.”
The challenges for the logistics industry are now more noticeable when it comes to filling open positions. This stems from one of the changes highlighted by Jones as a result of the new “buyer’s market” in logistics jobs, in which there is now more of a focus on not just laborers, but “knowledge workers.” The lack of knowledge workers is what’s leading to some shortfall among customer service levels, Jones says.
The Descartes survey said open positions for these knowledge workers, who often serve in roles like supply chain planners and analysts, were the hardest positions to fill. As many as 55 percent described the hiring process as hard to extremely hard, while managers are right behind at 54 percent.
“Knowledge workers are a huge issue,” Jones said. “It’s about understanding your performance, everything from customer service to individual driver or warehouse worker performance. It’s so data-driven these days. Where are you getting the people to do that kind of work? This is an area where we believe that there needs to be more focused on I’ll call it upskilling your people to do it.”
Almost one-third (32 percent) of respondents said replacing traditional warehouse workers was not hard, compared to only 13 percent for knowledge workers.
In another hurdle, Jones also said too many knowledge workers are spending time on tasks that don’t benefit the
“For the knowledge workers you have, they spent a lot of time doing non-value-added work, like data gathering and cleansing and running reports and things like that. Those tasks are not really that value added,” said Jones. “They’re important to have them but if you’re paying for somebody for their mind and their ability to help you assess your performance, that’s what you want them doing instead.”
