The jolt to business as usual from the COVID-19 pandemic was followed by a mass exodus of workers from the labor force. The Great Resignation saw 47.8 million Americans quitting their jobs in 2021, and another 50.6 million in 2022. And the ripple effects on the workforce continue to impact employers today.

In the U.S., the labor force participation rate remains below pre-pandemic levels, hovering at 62.5% as of May, 2024, and representing approximately 2.3 million fewer workers compared to February, 2020 levels. Interestingly, the lack of open jobs isn’t the issue: with 8.5 million job opportunities in the U.S. and only 6.5 million unemployed workers (as of April, 2024), millions of open jobs would remain if every unemployed person in the country found a job.

As a result of this persistent supply-and-demand imbalance, organizations are struggling to secure the labor, knowledge workers and leaders they need to thrive — and logistics and supply chain-focused businesses have been hit particularly hard. According to a recent Descartes survey, 76% of supply chain and logistics leaders are experiencing notable workforce shortages in their operations, with 37% of respondents characterizing the resource shortage as high to extreme.

Although competition for resources is an enterprise-wide issue, the acuteness of the labor challenge varies by organizational function. According to survey data, transportation operations (61%) and warehouse operations (56%) were hardest hit by resource shortages, from truck drivers to the fulfillment team on the warehouse floor, as companies struggle to meet customer demands with fewer workers.

While these areas are admittedly highly labor-intensive, 55% of supply chain and logistics leaders said knowledge workers are the hardest to hire — and they are becoming increasingly important as supply chain and logistics operations become more technology-enabled and data-driven.

Throw the extreme demands of peak season into the mix — only 9% of logistics and supply chain leaders said workforce shortages didn’t impact peak-season performance at some level — and companies are feeling the pressure. Not only is the labor shortage affecting companies’ financial and logistics partner performance, it’s also taking a toll on customer service, with 58% of respondents specifying that workforce shortages have negatively impacted service levels.

Turning the Tide

Staring down the barrel of critical labor shortages, logistics-focused organizations are centering their operational strategies around automation and technology tools to ease the resource burden. Another recent Descartes study of 1,000 supply chain and logistics decision-maker found that 54% are focused on automating repetitive tasks and non-value-added services — a logical step in reducing the resource footprint to perform at higher levels with fewer workers.

The survey also found that 50% of the logistics-focused organizations surveyed are leaning into centralizing operations (such as transportation planning). Typically executed through cloud-based applications as shared services across the enterprise, this strategic approach helps increase operational efficiency without increasing headcount.

Technology in Action

How does the goal of automating repetitive, low-value tasks to drive efficiencies translate to the warehouse floor or transportation operations? Driverless vehicles, robots, drones and automation both soft and hard are all on the table, but there are some clear productivity-boosting technology winners in the pursuit of mitigating current labor challenges in these areas.

Descartes’ 2023 survey focused on three sectors: manufacturing, distribution and retail; carriers; and logistics services providers. It revealed delivery-route optimization (54%), driver mobile productivity (45%) and automated real-time shipment tracking (53%) applications as the top technology choices.

For distribution-focused organizations, applications that optimize route planning and execution, and mobile apps that help drivers perform more effectively, translate to significant productivity gains.

Strategic route planning, for example, increases route density and asset utilization while reducing planning time and resources. And intelligent dispatch and tracking software using real-time GPS ensures more consistent on-time delivery performance.

In the warehouse, some companies are turning to robotics and automated guided vehicles (AGVs) to eliminate the need for manual labor. On the back end, additional ways to minimize labor cost and fulfil more orders include warehouse management systems (WMS) with barcode-based pick-and-pack workflows, multi-carrier parcel and less-than-truckload shipping automation, and capabilities for real-time visibility into the order journey.

Perhaps even more importantly, automated logistics and supply chain technology not only ramps up productivity, but plays a role in improving employee retention. It streamlines and simplifies daily workflows for warehouse staff, planners, dispatchers and drivers.

AI Makes Waves

In the wake of the launch of generative artificial intelligence tools like ChatGPT, interest in AI has surged. Supply chain and logistics leaders are also looking to AI to help improve operational efficiency and worker productivity. According to the Descartes survey, almost 30% of respondents are in the process of investigating AI technology, while 53% are planning to deploy, have partially deployed, or have fully deployed their AI implementations.

As logistics becomes increasingly data-driven, the ability of AI to analyze vast volumes of data in the blink of an eye will continue to propel technology innovations. While AI-based capabilities such as event prediction and detection for transportation management have been embedded in logistics technology for years now, AI’s the capacity to evaluate tens of thousands of data points and variables and make learned adjustments will help to further automate logistics processes, eliminate inefficiencies, and increase worker productivity.

For supply chain and logistics leaders faced with the challenge of keeping operations profitable with fewer resources, technology is transforming strategies, tactics and best practices. For laborers bogged down with repetitive and time-consuming low-value tasks, and knowledge workers spending an inordinate amount of time preparing data, compiling reports, or tracking shipments manually, automation is a gamechanger.

Chris Jones is executive vice president of industry with Descartes.