Businesses across the country are struggling to find workers, and transportation and logistics may be among the hardest hit.
U.S. job openings hit a record high of 8 million in March according to labor department data released Tuesday, but many companies are having a tough time finding workers to fill those slots; the data showed that job vacancies outstripped hires by more than 2 million during the month, the highest gap on record. The news came on the heels of Friday’s disappointing April jobs report, in which the labor department said employers added 266,000 jobs—far less than the roughly 1 million some economists had forecast.
The results paint a tough picture for transportation and logistics, which continues to roar back from the pandemic lows of a year ago but is struggling to find enough truck drivers and warehouse workers to meet surging consumer demand for everything from household goods to apparel and recreation items. The government’s preliminary jobs data for April showed that transportation and warehousing employment declined by 74,000 jobs during the month, following gains in February and March.
Mark Allen, president and CEO of the International Foodservice Distributors Association (IFDA), said the issue is especially acute in the food industry, which has bounced back quickly this year as pandemic restrictions have eased and Covid-19 vaccinations have ramped up. IFDA represents distributors that sell food and related supplies to restaurants, schools, hospitals, and other institutions.
“I don’t think anyone expected for our industry to come back as quickly as it did,” Allen said, pointing to a recent conversation he had with three large food-industry distributors that, combined, told Allen they need to hire 8,000 truck drivers and warehouse employees to meet demand. He said the industry has been feeling the pinch for drivers since the early part of the year, but didn’t see demand heating up on the warehouse side until mid- to late March.
Finding those workers remains tough for a variety of reasons, including the federal government’s expanded unemployment insurance benefits, lingering fears of contracting Covid-19, and the need for some workers to care for children who are still in remote schooling, Allen explained.
“My guess is there are a lot of things going on,” he said, adding that most business leaders point to expanded unemployment insurance as the biggest culprit. “Paying people to stay out of the workforce is not beneficial to industry.”
The federal government continues to offer $300 in additional unemployment benefits to workers sidelined during the pandemic, and although Allen and others say companies are increasing wages and offering other incentives to attract employees, they say such efforts often can’t compete with the stay-at-home benefits.
“Clearly there is a subset of America that, for whatever reason, has not reentered the workforce,” Allen said.
But there’s hope that some of these issues are only temporary. A handful of states have begun tightening reporting requirements to receive unemployment benefits and some have said they would opt out of the enhanced federal unemployment programs before they are scheduled to end in the fall. Some states are offering return-to-work incentives in lieu of the benefits. Allen said there’s a grassroots effort among IFDA members to support such state and local efforts to find “creative solutions to get people back to work.”
The retail sector is plagued by the same hiring concerns, according to Jack Kleinhenz, chief economist for the National Retail Federation (NRF). Retail jobs were down 15,000 in April, following gains in February and March, and employment in retail trade overall is 400,000 lower than it was in February 2020, according to the April jobs report.
Retail job openings continue to exceed hires, and Kleinhenz points to the same mix of reasons for retailers’ difficulty in finding workers—enhanced unemployment benefits, health and safety concerns, and so forth. He says the retail industry continues to “feel its way forward” by offering higher wages, where possible, adding that it will take some time for supply and demand to get back in line.
Like Allen, Kleinhenz says the rapid economic recovery from the pandemic is fueling much of the issue.
“There are a lot of positives, looking forward,” Kleinhenz said, pointing to the strength of the consumer economy as an example. “A year ago, you wouldn’t have thought things would come back so quickly.”
J.B. Hunt President and CEO Shelley Simpson answers a question from the audience at the Tuesday afternoon keynote session at CSCMP's EDGE Conference. CSCMP President and CEO Mark Baxa listens attentively to her response.
Most of the time when CEOs present at an industry conference, they like to talk about their companies’ success stories. Not J.B. Hunt’s Shelley Simpson. Speaking today at the Council of Supply Chain Management Professionals’ (CSCMP) annual EDGE Conference, the trucking company’s president and CEO led with a story about a time that the company lost a major customer.
According to Simpson, the company had a customer of their dedicated contract business in 2001 that was consistently making late shipments with no lead time. “We were working like crazy to try to satisfy them, and lost their business,” Simpson said.
When the team at J.B. Hunt later met with the customer’s chief supply chain officer, they related all they had been doing for the company. “We told him that we were literally sitting our drivers and our trucks just for you, just to cover your shipments,” Simpson said. “And he said to us, ‘You never shared everything you were doing for us.’”
Out of that experience, came J.B. Hunt’s Customer Value Delivery framework. This framework, according to Simpson, provides a roadmap for creating value and anticipating customer needs.
Framework for Excellence
J.B. Hunt created the above framework to help them formulate better relationships with customers.
The framework consists of five steps:
Understand customer needs: It all starts, according to Simpson, with building a strong relationship with the customer and then using the information gained from those discussions to build a custom plan for the customer.
Deliver expectations: This step involves delivering on the promises made in that custom plan.
Measure results: J.B. Hunt believes that they are not done when freight makes it to the destination. They also need to measure how successful they were versus what the customer expected from them.
Communicate performance: This step involves a two-way exchange, where J.B. Hunt walks the customer through their performance and gets verbal agreement on whether or not they have met the customer’s needs.
Anticipate new value: Here J.B. Hunt looks at what they are hearing from their customer today and then uses that information to derive what the customer may be looking for in the future.
Simpson said the most important part of the process is the fourth step, communicating performance (perhaps reflecting the piece that went wrong in that initial failed customer relationship).
Not only can this framework be used to drive excellence in a company, but it can also be adapted as a model for driving personal excellence, Simpson said. Instead of understanding the customer needs, the process starts with understanding yourself: what your strengths and interests are. This understanding helps drive a personal development plan and personal goals for the year, which can be measured and assessed. For example, each year, Simpson gives herself a letter grade on each of her personal goals and communicates her assessment back to her boss. She has also found it helpful to anticipate where opportunities lie beyond what she is personally doing.
Confronted with the closed ports, most companies can either route their imports to standard East Coast destinations and wait for the strike to clear, or else re-route those containers to West Coast sites, incurring a three week delay for extra sailing time plus another week required to truck those goods back east, Ron said in an interview at the Council of Supply Chain Management Professionals (CSCMP)’s EDGE Conference in Nashville.
However, Uber Freight says its latest platform updates offer a series of mitigation options, including alternative routings, pre-booked allocation and volume during peak season, and providing daily visibility reports on shipments impacted by routings via U.S. east and gulf coast ports. And Ron said the company can also leverage its pool of some 2.3 million truck drivers who have downloaded its smartphone app, targeting them with freight hauling opportunities in the affected regions by pricing those loads “appropriately” through its surge-pricing model.
“If this [strike] continues a month, we will see severe disruptions,” Ron said. “So we can offer them alternatives. We say, if one door is closed, we can open another door? But even with that, there are no magic solutions.”
Turning around a failing warehouse operation demands a similar methodology to how emergency room doctors triage troubled patients at the hospital, a speaker said today in a session at the Council of Supply Chain Management Professionals (CSCMP)’s EDGE Conference in Nashville.
There are many reasons that a warehouse might start to miss its targets, such as a sudden volume increase or a new IT system implementation gone wrong, said Adri McCaskill, general manager for iPlan’s Warehouse Management business unit. But whatever the cause, the basic rescue strategy is the same: “Just like medicine, you do triage,” she said. “The most life-threatening problem we try to solve first. And only then, once we’ve stopped the bleeding, we can move on.”
In McCaskill’s comparison, just as a doctor might have to break some ribs through energetic CPR to get a patient’s heart beating again, a failing warehouse might need to recover by “breaking some ribs” in a business sense, such as making management changes or stock write-downs.
Once the business has made some stopgap solutions to “stop the bleeding,” it can proceed to a disciplined recovery, she said. And to reach their final goal, managers can use the classic tools of people, process, and technology to improve what she called the three most important key performance indicators (KPIs): on time in full (OTIF), inventory accuracy, and staff turnover.
CSCMP EDGE attendees gathered Tuesday afternoon for an update and outlook on the truckload (TL) market, which is on the upswing following the longest down cycle in recorded history. Kevin Adamik of RXO (formerly Coyote Logistics), offered an overview of truckload market cycles, highlighting major trends from the recent freight recession and providing an update on where the TL cycle is now.
EDGE 2024, sponsored by the Council of Supply Chain Management Professionals (CSCMP), is taking place this week in Nashville.
Citing data from the Coyote Curve index (which measures year-over-year changes in spot market rates) and other sources, Adamik outlined the dynamics of the TL market. He explained that the last cycle—which lasted from about 2019 to 2024—was longer than the typical three to four-year market cycle, marked by volatile conditions spurred by the Covid-19 pandemic. That cycle is behind us now, he said, adding that the market has reached equilibrium and is headed toward an inflationary environment.
Adamik also told attendees that he expects the new TL cycle to be marked by far less volatility, with a return to more typical conditions. And he offered a slate of supply and demand trends to note as the industry moves into the new cycle.
Supply trends include:
Carrier operating authorities are declining;
Employment in the trucking industry is declining;
Private fleets have expanded, but the expansion has stopped;
Truckload orders are falling.
Demand trends include:
Consumer spending is stable, but is still more service-centric and less goods-intensive;
After a steep decline, imports are on the rise;
Freight volumes have been sluggish but are showing signs of life.
CSCMP EDGE runs through Wednesday, October 2, at Nashville’s Gaylord Opryland Hotel & Resort.
The relationship between shippers and third-party logistics services providers (3PLs) is at the core of successful supply chain management—so getting that relationship right is vital. A panel of industry experts from both sides of the aisle weighed in on what it takes to create strong 3PL/shipper partnerships on day two of the CSCMP EDGE conference, being held this week in Nashville.
Trust, empathy, and transparency ranked high on the list of key elements required for success in all aspects of the partnership, but there are some specifics for each step of the journey. The panel recommended a handful of actions that should take place early on, including:
Establish relationships.
For 3PLs, understand and get to the heart of the shipper’s data.
Also for 3PLs: Understand the shipper’s reason for outsourcing to a 3PL, along with the shipper’s ultimate goals.
Understand company cultures and be sure they align.
Nurture long-term relationships with good communication.
For shippers, be transparent so that the 3PL fully understands your business.
And there are also some “non-negotiables” when it comes to managing the relationship:
3PLs must demonstrate their commitment to engaging with the shipper’s personnel.
3PLs must also demonstrate their commitment to process discipline, continuous improvement, and innovation.
Shippers should ensure that they understand the 3PL’s demonstrated implementation capabilities—ask to visit established clients.
Trust—which takes longer to establish than both sides may expect.
EDGE 2024 is sponsored by the Council of Supply Chain Management Professionals (CSCMP) and runs through Wednesday, October 2, at the Gaylord Opryland Resort & Convention Center in Nashville.