December 9, 2018
Column | outbound

The data don't lie

The DC worker shortage we've all been warned about is here.

By Mitch Mac Donald

After a while, it just becomes background noise. For years, we've heard the warnings about a growing shortage of workers: truck drivers, supply chain executives, data specialists, technicians, and more recently, warehouse/DC workers. But over time, we've learned to tune them out. And though the warnings have grown more insistent of late, they've been greeted with a collective shrug—and perhaps a promise to deal with the problem when it hits.

It's here. According to my freshman economics professor, when the unemployment rate reaches 3 percent—and we're very close to that in Q4 2018—we are essentially at full employment. (The rationale behind that contention is a separate column in and of itself, but let's all just agree that there are a lot of jobs out there in logistics, but not enough bodies to fill those slots.)

In the meantime, demand for workers is growing. According to November U.S. Department of Labor statistics, logistics hiring spiked in October at the fastest pace in over a year. Logistics-related companies, mostly in DC and trucking operations, added 24,800 jobs to their work force.

Indications are that the demand is about to explode. According to a new report from commercial real estate firm CBRE, U.S. DCs and fulfillment centers will need to hire another 452,000 warehouse and distribution workers this year and next just to keep pace with demand—demand fueled largely by the boom in e-commerce. "That projected demand for 2018-19 exceeds the industry's job growth since 2013 of 180,300 new positions a year," CBRE said in a statement announcing the report's release.

Notice the difference between the jobs added in October (24,800) and the CBRE forecast for workers needed this year and next (452,000). It certainly doesn't require a calculator to see the disparity in the numbers.

So what's the solution? As the analysts at CBRE see it, firms have three options. One is to recruit more workers from other industries—a technique that "has worked well for the warehouse and distribution sector in recent years," according to the report. "Government data show that the 66-percent increase in workers moving to the transportation and warehouse sector from other industries from 2011 to 2015 exceeded the gain rate of any other industry," the authors wrote.

Another is to take a "bring the mountain to Muhammad" approach—that is, to locate DCs in markets with ready and available work forces. As for where those markets might be, CBRE's latest analysis found that Memphis and Nashville, Tenn.; Louisville, Ky.; California's Inland Empire; Indianapolis; Atlanta; and Dallas-Fort Worth "offer advantageous combinations of availability, quality, and cost of labor."

"Increasingly, development of e-commerce warehouses is contingent not only on close proximity to large customer populations but also on finding increasingly scarce labor," said David Egan, CBRE's global head of industrial and logistics research, in the statement. "Warehouse users will want to ensure that access to qualified labor is a priority in their considerations for expansion."

Still, poaching workers from other industries and repositioning DCs to areas with an abundant labor supply is not likely to be enough. There's a third option for dealing with the worker shortage, and ironically, it has nothing to do with finding more people. Instead, it's about investing in machines that can help human workers be more productive—typically by freeing them from repetitive, nonvalue-adding tasks. The CBRE report notes that "investing in more automation—robots in the warehouse and autonomous trucks—can help mitigate labor scarcity by boosting the efficiency of an existing work force," adding that the equipment could boost industry productivity by as much as 46 percent.

But even at that, we have a long way to go in matching available jobs in logistics with available bodies. The time to act is now.

About the Author

Mitch Mac Donald
Group Editorial Director
Mitch Mac Donald has more than 30 years of experience in both the newspaper and magazine businesses. He has covered the logistics and supply chain fields since 1988. Twice named one of the Top 10 Business Journalists in the U.S., he has served in a multitude of editorial and publishing roles. The leading force behind the launch of Supply Chain Management Review, he was that brand's founding publisher and editorial director from 1997 to 2000. Additionally, he has served as news editor, chief editor, publisher and editorial director of Logistics Management, as well as publisher of Modern Materials Handling. Mitch is also the president and CEO of Agile Business Media, LLC, the parent company of DC VELOCITY and CSCMP's Supply Chain Quarterly.

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