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How the Supply Chain and Logistics industry is getting affected by the Scarcity of Workers?

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The shortage of labor in the logistics industry is affecting the business. Companies have no choice except for increasing the wages to attract the workers – which is increasing the business’s expenditure. The lack of labor is also resulting in delays and disruptions within the supply chain. Some of the key causes and effects of labor scarcity are discussed below:

What are the Causes of Labor Scarcity?

The supply chain fulfillment and logistics industry feel the effects of labor shortage. There are different reasons behind this shortage, but some of the most critical ones are lack of training programs, increased benefits, and demographic variations.
The population is aging, which means there are fewer people with the required age to fill the jobs. Also, unemployment rates have decreased in recent years. Now more people are eligible for the benefits i.e., healthcare – making them away from employment.
Another major reason behind labor scarcity is that people don’t have the needed skills for the jobs. The demand for skilled workers has dramatically increased in the logistics industry and the training programs are just not enough to provide the required skills. It has led to a shortage of skilled workers, which is going to get even worst in the future.
The tight labor market is economically affecting the logistics industry. The companies are struggling to find enough workers to manage the company’s workflow due to which the deliveries are taking too long, and the shipping costs are increasing. By keeping the current situation in mind, it’s obvious that it will get more worst, so the businesses need to get prepared for it.

How is Labor Scarcity Affecting the Businesses?

The workforce is the company’s greatest possession as they play a major role in the success of your business. Whether it’s streamlining workflows or managing operations – you do require workers for it.
When a company encounters a shortage of workers, it impacts the productivity level of the current employees. Every employee matters in keeping the supply chains running swiftly and smoothly. Some of the effects of labor scarcity are as follow:

  • Delayed Delivery – Companies need to move their products fast into the production and warehouse to run their supply chain faster than ever before. However, with fewer workers available at the logistics companies, the deliveries take longer than usual which results in dissatisfied customers.
  • Resulting in Higher Costs for Everyone – When the demand is increased but the supply is restricted, businesses have no choice but to increase the prices. If businesses won’t increase the prices, they won’t be able to bear the expenditure costs – resulting in the company’s shutdown. This inflationary pressure affects both the producers and consumers as they all must adjust to the industry’s standards. Ultimately, cost inflation in the entire supply chain industry is observed.
  • Breakdown in the Supply Chain Process – supply chain is very complex, and it involves various parties working together. When there is an issue at any step of the process, the whole chain gets disturbed. This results in severe consequences and many businesses get affected by this breakdown. For example, delay in delivery of products from the manufacturers to distributors leads to retailers running out of products.
  • Effects on Different Industry
  • The scarcity of labor is sensed throughout the E-commerce, supply chain, and logistics industry. Companies are facing a hard time in filling the positions, resulting in delays and disruptions in the supply chain. The situation is probable to get worst, so what happens with labor storage in each industry?
  • Logistics Industry – The transportation industry is facing a lot of issues due to labor scarcity. According to research by the American Trucking Association (ATA), there would be a 330,000 shortage of logistics workers by 2024. So instead of recruiting new employees, the companies should focus on keeping the ones working.
  • E-Commerce Attainment– Like others, E-Commerce fulfillment centers are also struggling with finding enough workers to manage the work influx. Many centers are even forced to increase their wages so they can attract workers. It has increased the business’ expenditure and the delivery time.
  • Order Consummation – It’s another major area that’s impacted by the labor shortage. Companies are trouble finding people who can work swiftly and efficiently to pack the products. It’s causing a delay in delivering products to the consumers – causing a drop in sales.

Furthermore, a labor shortage is experienced both by businesses and consumers in the industry. Not only finding enough workers for different levels of a supply chain is a problem, but sourcing a workforce for transportation, E-commerce, and warehousing is also a concern. With time, this issue will inflame as retailers are expanding into new markets to satisfy online customers’ needs.
Businesses in the logistics and supply chain industry need to take some serious measures to retain their current workforce and prevent this problem from getting worst.


There are different reasons behind the shortage of workforce in the industry but it is important for management to find a solution for it. Outsourcing could be a way for companies to meet their needs without increasing the wages or hiring new employees. At BLK &GLD Logistics, we have experience in providing logistics, E-commerce, and supply chain management consulting. For further assistance, feel free to call us!

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