Logistics worker shortage: Automation rising

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Logistics worker shortage: Automation rising

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Logistics worker shortage: Automation rising

Subheading text
Supply chains grapple with human labor shortages and may turn to automation for a long-term solution.
    • Author:
    • Author name
      Quantumrun Foresight
    • August 28, 2023

    Insight highlights

    Mounting labor shortages in the supply chain industry, particularly in logistics and manufacturing, are pushing the sector toward significant transformation. Advanced technology solutions like automation and AI, while a potential remedy to workforce shortages, could lead to job displacement, requiring reskilling efforts and transforming the labor landscape. These shifts come with wider implications, such as fluctuating product prices, increased cybersecurity concerns, and a greater emphasis on tech-focused education.

    Logistics workers shortage context

    The supply chain industry is facing labor shortages, with 11 percent of the millions who left their jobs in 2021 in the US coming from logistics. In addition, worker shortages are expected to continue, particularly in transportation and manufacturing. The American Trucking Associations reported a deficit of 80,000 drivers and predicted this number could double by 2030, while studies project millions of unfilled manufacturing jobs by the same year. 

    Meanwhile, the logistics sector in the UK is projected to face substantial worker shortages, with a deficit of around 400,000 employees expected by 2026, mainly due to unappealing working conditions and low pay. This study by City & Guilds revealed that the unprecedented impacts of Brexit and the COVID-19 pandemic are creating employment difficulties in the supply chains that have not been witnessed in several decades. Other critical industries are also experiencing labor shortages, including food manufacturing and construction.

    A third of supply chain workers considered leaving due to limited career advancement opportunities. As such, upskilling and certification programs in supply chain automation and logistics are being explored as solutions. Meanwhile, disputes over pay have led to strikes in Iran, Germany, South Korea, and the UK. In the US, Congress mandated a 24 percent pay increase for rail workers from 2023 to 2028 to prevent a strike. 

    Disruptive impact

    The persistent shortage of logistics workers may disrupt the efficiency and reliability of supply chains, potentially leading to increased costs for businesses, reduced competitiveness, and delayed deliveries. For instance, the lack of truck drivers could mean longer transportation times, more expensive goods, and even shortages of essential items. A case in point is the 2021 holiday season in the US when an acute shortage of truck drivers, coupled with global supply chain issues, led to increased prices and delayed deliveries.

    As businesses struggle to cope with the worker shortage, there may be increased adoption of automation and artificial intelligence (AI)-driven technologies in the logistics sector. Self-driving trucks, warehouse automation systems, and logistics management platforms could become commonplace. While these technologies could alleviate the labor shortage, they could also lead to job displacement. Amazon's implementation of robotics in their warehouses is an early example of this transition. However, they've also begun programs to reskill their workers, anticipating the shift and the need to adapt their workforce.

    This transformation may inevitably change the nature of jobs and businesses in the logistics sector. The industry may need fewer manual laborers but more skilled workers capable of operating, maintaining, and improving advanced technological systems. For instance, truck drivers might transition into roles as fleet managers, monitoring and coordinating autonomous vehicles from a central command center. Labor unions and governments will also play a key role in managing this transition, ensuring fair wages and protecting worker rights in an automated environment.

    Implications of logistics workers shortage

    Wider implications of logistics workers shortage may include: 

    • Inefficiencies causing fluctuations in product prices. As businesses struggle with increased costs, consumers may face higher prices for goods and services.
    • Governments introducing legislation promoting worker retraining and regulating automation while also grappling with issues around unemployment benefits and social safety nets.
    • A demographic shift toward urban areas with more educational and technological resources, leading to increased urbanization.
    • Concerns over data privacy and cybersecurity becoming more prominent as supply chains increasingly adopt automation, leading to increased cybersecurity investments.
    • The growth of new industries and services, such as AI and automation consulting, maintenance, and management services.
    • A greater emphasis on education and training in technology, data analysis, and other relevant skills, leading to changes in the education system with more vocational and tech-focused training programs. This shift will, in part, be driven by an increased demand for skilled technicians, data analysts, and AI specialists. 
    • Decreased dependency on global supply chains as labor shortage intensifies worldwide. Governments might need to renegotiate trade agreements and manage potential conflicts.

    Questions to consider

    • If you work in logistics, how is your company handling the labor shortage?

    • How might supply chains increase worker retention?

    Insight references

    The following popular and institutional links were referenced for this insight: