Warehouse Efficiency: A Talent and Technology Partnership By Hire Dynamics CATEGORY: Blog POSTED: January 20, 2022 Overview of Current State of the E-commerce/Logistics Sector Our E-commerce/Logistics clients are reporting incredible growth within their sector; Bureau of Labor Statistics data and other indexes bear them out: The Logistics Manager Index decreased in September to 72.2 (compared to 73.8 in August). Yet, anything above 50 indicates that the E-commerce/Logistics industry is expanding. We believe that consumer demand brought on by the pandemic – and therefore the growth in E-commerce/Logistics staffing needs – will stay at this level or grow even higher for the foreseeable future (2-3 years). Additional Issues With yet another record number of people quitting their jobs (4.4 million quits took place in September, surpassing the record made just the previous month), finding – and retaining – warehouse and distribution center talent continues to be…a challenge. We find that the best way to attract talent to this sector, in the short term, is by raising wages to a competitive market rate. In fact, we believe that wage growth in this sector, Will continue for the next three years; At a minimum of 5 percent growth year-over-year; With pre-pandemic $12/hour warehouse positions now at $15/hour and potentially growing to $20/hour in three years. Already average earnings in this sector are at $22.71/hour. What we’re seeing with the current labor shortage – and high pay rates – is leading the Logistics/E-commerce sector to turn to technology for greater efficiency. You understandably might think this will mean a move to fewer employees. It doesn’t. The sector won’t move entirely to tech/AI but more automation of repetitive tasks, coupled with humans performing higher-level work that will necessitate upskilling of employees. Employers may want to add more automation (and thus cut down on labor costs) now, but the extremely high, short-term capital infrastructure spend inherent in installing such technology could be prohibitive. Yet, we predict the cost of this technology will continue to be more cost-effective over the next three to five years, making AI/robotics much more attractive to the E-commerce/Logistics sector. In the meantime? We also predict – and we are not alone in this – that even with the greater labor costs that will be passed on to the consumer, this sector will continue to see phenomenal growth for the next two to three years. Warehouse space is already at capacity, and the building of additional space continues at a record pace. After all, the Logistics Manager Index for September, while slightly lower than it was in August, was still 72.2, which is an incredibly robust figure considering that an index of 50 and above is an indicator of growth. Wages to continue to increase over the next two or three years. Wages in the warehouse sector (including E-commerce, logistics, and distribution) have increased (as of the October Jobs Report) to $22.71/hour. Higher-skilled positions such as forklift drivers are already starting to be paid at a $20/hour wage, while lower-skilled positions such as pickers/packers – are now receiving upwards of $15/hour or more. We predict that other lower-level positions also could see $15/hour or more within three years. Looking toward the future More technology will result in fewer lower-level positions or change the meaning of “lower-level.” Yet we also believe that this means opportunity for both companies and talent. Here’s why: Let’s take pickers/packers. These positions probably will disappear. Yet higher-level/higher-paying positions that actually partner with the technology will be created, and former picker/packers can be trained for them. An example: A smart conveyor delivers a product to an individual stationed nearby. The person scans the product, prints out a label, places the label on it, and puts it on another smart conveyor that reads the label, and the conveyor or robot then takes it where it needs to go in the facility for shipping. This provides a genuine opportunity for lower-skilled individuals: they can be trained in these relatively easy-to-learn skills allowing them to receive higher wages. Providing this on-the-job upskilling also is a great way to attract and retain talent. Attract them with a great pay rate now; keep them with the chance for advancement (and an even higher wage that goes with it). Technology probably WILL result in fewer low-level positions within each facility. Yet all the technology available won’t make a warehouse more efficient without the right people to work alongside it. More importantly, the right people already could be working for you right now. What’s more, the current growth in this sector and the consequent massive warehouse construction now and for the next several years, potentially could result in more people working in this sector than ever before. Wrapping Up The logistics/e-commerce/warehouse/distribution sectors are growing at a record pace and show no signs of slowing for the next two or three years, minimum. Labor is in incredibly short supply and should remain so for the foreseeable future. Bringing on technology/robotics for increased efficiency over time while also upskilling current talent to work with alongside this technology is a terrific recruitment and retention tool. Hire Dynamics ‘E-commerce/Logistics workforce staffing services are here to help businesses within this sector, as well as the people who work within it, thrive now and well into the future. Looking for your next job? Whether you’re searching for a job in logistics, forklift jobs near me, warehouse work, or just any job near me hiring. 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