As a result of many shippers outsourcing their logistics operations or utilizing third-party staffing agencies, they have become a layer removed from the labor market and might be unaware of the impending challenges on the horizon. The silver lining is that the labor shortage could push the logistics industry to evolve at an unprecedented rate - and present an opportunity for firms to gain a competitive advantage if they are willing to innovate and adapt quickly.

Tightening Labor Market

As the economy in North America continues to rebound, we expect the labor pool for drivers and material handlers to tighten as workers transfer back into higher-paying positions in competing industries. The current political environment in the U.S. is pointing toward a crackdown on undocumented workers, which will have a negative impact on the contract labor force. Also, an increased minimum wage could tighten the pool of available laborers as people transition into less physically demanding positions with comparable pay.

Warehouse of the Future

In addition to the economic and political pressures that make it difficult for 3PLs to find and keep labor, so too will evolving customer expectations. Customers of logistics services expect higher levels of service for lower costs. As a result, 3PLs are providing more and more value-added services such as assembly.

Kitting and converting of subassemblies into finished goods remains strong due to the pressure to quickly convert and ship an item the same day. For example, the custom sports apparel business does extensive embroidery and screen printing as an outbound service prior to shipping.

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