Logistics industry: The lack of staff is the main challenge

The lack of staff in Ukraine is one of the global problems caused by the war. Many specialists have temporarily changed their professions and joined the Ukrainian army to defend the country against the enemy. The deficit can be seen in nearly all industries, and logistics is no exception. Sergiy Guzenko, CEO of WEZOM, told Mind what solutions and technologies would allow the participants of the logistics chain to overcome the staff shortage in Ukraine.

Recently, we participated in Logistician Day, Ukraine's largest logistics exhibition conference, where we heard numerous valuable insights about the current state of the industry.

The speech by the Director of Communications at Work.ua was particularly noteworthy. The speaker shared some disheartening statistics: currently, the country is facing a 30% shortage of the workforce, including in the transport and logistics sector.

There is a severe shortage of drivers, especially for international routes. In general, the industry is suffering from a lack of male workers, making the informal division of professions into 'female' and 'male' categories irrelevant.

As a result, there is now intense competition for employees in the job market, and companies are desperately trying to retain their existing employees and attract new ones.

We are considering these problems from the perspective of logistic business automation.

The chronic pain for the entire industry

In fact, the staff shortage in the logistics sector didn't arise yesterday. Even before the war, market players were talking about the personnel shortage in Ukrainian logistics, which could reach 25-30%. During the pandemic, companies were already facing acute shortages of warehouse workers, drivers, and mechanics, and with the onset of war in our lives, the situation only worsened.

And it is not solely a Ukrainian issue – the lack of skilled personnel and their high turnover haunt the industry everywhere.

Indeed, a survey conducted by the Chartered Institute of Logistics and Transport (CILT) showed that 86% of logistics companies in the UK have experienced a shortage of warehouse staff in the past two years. The survey included 3PL providers, manufacturers, retailers, and public sector organisations. The British logistics industry is also struggling with the challenge of finding and retaining warehouse workers and drivers.

The American Amazon is suffering from similar issues: according to statistics, only one in three employees hired by the company stays for more than three months. In 2021, such high employee turnover resulted in losses of $8 billion for the company. Overall, searching for a new employee costs the company three times more than retaining an existing employee with stable wages.

As indicated by MHI and Deloitte research, 74% of logistics industry leaders plan to significantly increase investments in new technologies in 2023. Approximately 57% of respondents stated that hiring and retaining qualified personnel have become the biggest challenge in the logistics sector. Companies are investing in new tools to enhance operational efficiency and reduce the need for manual, conveyor labour. On the other hand, supply chain participants are striving to create a technological environment with more attractive job opportunities.

Solutions to overcome the shortage of personnel

Now let's talk about the possibilities and tools that modern logistics requires to create such a technological environment.

Platforms for process optimisation

It is no secret that employees in the industry often suffer from excessive workloads, overtime, and inconvenient schedules. Therefore, optimising working hours and efficiently allocating human and material resources become the number one task for any logistics player who aims to protect their team.

Implementing CRM systems for logistics, Warehouse Management Systems (WMS), and Transport Management Systems (TMS) will help optimise management and provide the company with much more flexibility in task assignment and employee working time. From the employees' perspective, this means more convenient shifts or even the possibility to shape their own work schedules.

Furthermore, the use of software platforms simplifies payroll calculations, leave tracking, and many other HR aspects that often lead to misunderstandings between employers and employees. Digital solutions make management transparent for all parties involved, and this indeed benefits the business.

Automation and robotisation

One of the most challenging tasks for any logistics player is to attract and retain people in positions that require an 'assembly-line' work and physical work. Few people aspire to be loaders or sorters for their entire lives – these are positions where individuals spend several months until they find more interesting and less exhausting work.

However, the solutions have long been known: warehouse automation tools, drones, and robotics. Upgrading the warehouse with conveyor belts, autonomous robot stackers, buffer racks, and put-to-light systems can significantly reduce the need for manual labour, cutting expenses, and making the warehouse space much safer. Moreover, automation speeds up operations and eliminates the human factor.

Leaders in the supply chain are simultaneously experimenting with advanced robotics. Last year, Amazon introduced its new autonomous robot, Proteus, which can work safely alongside fulfilment centre employees. The company also showcased the smart robotic arm, Sparrow, capable of handling delicate cargo like glass.

A similar project is being developed by the startup Covariant. Their robot manipulator, Pick-it-Easy, is already in use at warehouses operated by GXO Logistics, Obeta, and McKesson, performing sorting tasks for 14 hours a day.

Predictive analytics

Uncertainty puts tremendous pressure on the logistics industry: unexpected demand fluctuations and unpredictable circumstances can easily disrupt supply chains, forcing market players to work in a 'firefighting' mode. Timely market forecasting and a sober assessment of demand allow for the early engagement of additional resources in the supply chain. Consequently, this will save suppliers and carriers dozens of hours of overtime and stressful work. In recent years, we have witnessed a true breakthrough in this area.

Cloud technologies, Big Data, and machine learning offer incredible possibilities for market forecasting – both based on the analysis of archival databases and real-time information, ranging from search query dynamics to weather forecasts.

Advanced predictive analytics solutions are now being offered by an increasing number of tech vendors, from Salesforce to Nvidia. Meanwhile, leading retailers, suppliers, and logistics operators seek independence and create similar solutions tailored to their specific needs.

Creating a safe working environment

In terms of workplace injuries, the transportation industry is second only to the medical field. Every year, hundreds of people in Ukraine alone become victims of accidents on roads and infrastructure. This cannot be considered normal.

Digitising supply chains, automating warehouse operations, and moving away from physical or conveyor work minimise risks for personnel. Computer vision tools and IoT sensors will help to automate safety compliance monitoring in hazardous areas. Artificial intelligence is already capable of playing the role of a guard, for example, restricting access to a dangerous area for individuals not wearing safety gear and helmets.

Similarly, the use of telematics systems in trucks allows for careful monitoring of drivers' adherence to traffic regulations, tracking their physical condition, and alerting them to the risk of falling asleep at the wheel or about dangerous situations on the road.

GIG economy

Currently, the majority of logistics players, from retailers to postal operators, practise seasonal hiring to cope with peak periods of demand (for example, during the fall-winter sales season). However, this practice does not effectively address the issue of labour shortages and, in addition, generates numerous expenses and risks for employers.

The GIG economy model and crowdshipping can be the most effective solutions for attracting additional resources in the supply chain. The idea is to take the well-established concept of services like Glovo or Uber and scale it up in the logistics sector through new transportation platforms. In this scheme, retailers or suppliers could transfer part of the pressure to the GIG platform, avoiding excessive strain on their own workforce.

Similar startups are emerging worldwide: Amazon's Flex platform, the Italian Blink, the American Roadie, and the Brazilian Loggi – all of them offer crowdshipping services to retailers to solve last-mile logistics problems.

How to integrate these solutions into business?

Today, logistics is arguably one of the few industries that hardly hear warnings about the danger of job losses due to artificial intelligence. After all, there is an abundance of work in the supply chains – enough for everyone. Technological transformation is the key to overcoming the workforce crisis in the transportation sector: implementing leading software solutions and sophisticated equipment, such as robots, will help it reach a new level of efficiency.

Logistics currently offers numerous formats of digitalisation: cloud platforms and services, off-the-shelf solutions for on-premises deployment, developing custom solutions from scratch, forming internal IT teams, or collaborating with external teams with relevant experience and expertise. For success, it is essential to assess resources realistically, set measurable and attainable goals, and evaluate the choice of technologies based not only on cost but also on long-term objectives and business priorities.

Lastly, it is crucial to remember that technology is meant to assist people, not replace them. Therefore, working on the humanistic aspect of business is just as important as making IT decisions. If a company cannot create favourable working conditions and a comfortable atmosphere internally, no technologies will help.