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An increase in logistics jobs during May and June 2020 signal a rebound for the industry as well as the U.S. economy overall. The United States Labor Department released a statistics report that demonstrated couriers/messengers, trucking, manufacturing, and producing have all seen a rise in hiring in June. This is especially positive considering the challenge of severely low job months from the end of February to April. The report seems hopeful that there is one again confidence in American freight, especially as companies continue to work tirelessly to meet the increasing demands of e-commerce consumers by leveraging partnerships with 3PLs and tech platforms such as RedwoodConnect 2.0.
What does this hiring boost look like, where is it coming from, and what does it mean for future employment in the logistics industry?
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We’re excited by the numbers we’re seeing in the Statistics Report by the U.S. Labor Bureau. To summarize the report:
This hiring surge, especially among trucking companies, is proving to be one of the greatest job gains in the sector since September 2018. It’s hard to compare apples to oranges, though, since we also saw a severe amount of job loss in March and April. This hiring surge doesn’t necessarily mean the industry is thriving more; rather, it means we’re working to get back to where we were before the pandemic while also pushing for a more employed future.
Payrolls in the logistics sector are still down about 95,000 jobs from a year ago, but this boost in hiring from June gives us hope that we’ll continue whittling that number away quickly throughout 2020 to get us back to strong employment rates.
With that being said, the growth rate is larger than the industry’s growth pre-pandemic. The hiring boost is spiking faster and steeper than we’ve seen in a couple of years.
We all knew that the loss of jobs in March and April wouldn’t last forever, but most weren’t expecting the resurgence so quickly. (We’re thankful for it, though.) There are a few factors impacting how and why the logistics sector was able to increase so quickly following the initial pandemic panic.
First, consumers were stuck in their homes, so they were ordering more goods online. Even groceries and pharmaceuticals moved to the online sphere. A surge in ecommerce purchases meant a lot more movement of goods in warehouses and the last mile.
June also brought lighter restrictions across American states. Businesses could start to reopen, which meant manufacturing and production could open in turn. That meant manufacturers could finally start producing in order to meet the increasing demand of ecommerce purchases. With the ecommerce surge, there has especially been a need for inventory replenishment, so manufacturing is working double-time to meet demand, thus why logistics labor has skyrocketed.
Although trade is still closed or partially closed internationally, local goods are being produced at higher rates. We anticipate “made in the USA” will become a primary trend in logistics moving forward following the concerns of the international trade lockdown during COVID-19. The logistics industry needs to fill more jobs to meet the demands of more goods being produced and transported in America.
Let’s take FedEx, an ecommerce powerhouse, as an example. FedEx’s recent earning release from June showed that 72% of their American shipments were sent to residences in this last quarter. Last year, the same quarter had 56% of their shipments going to residences. Their average daily shipping volume at FedEx Ground (their ecommerce sector) also rose 25% from this same time last year. This tells us that ecommerce shipments are taking hold as one of the primary drivers of U.S. freight in the post-pandemic world.
We expect that consumers will continue to shop primarily online for the remainder of the year. This may even be an ongoing trend that lasts indefinitely, especially as retailers and transportation companies continue to improve delivery efficiency.
Although the logistics industry, on the whole, has seen an employment boost in June, not all individual sectors within logistics have seen an equal increase in job production.
Warehousing companies are having difficulty finding and keeping warehouse workers, especially at the salaries they were previously paid. Additionally, warehouses are quickly implementing digital efforts, like transportation management systems and automated robots, which a lot of workers have been resistant to. These pushbacks have caused friction in warehousing employment, where managers are looking to advance the digitalization aspect while also enhancing human labor conditions. The balance is proving difficult for a lot of companies. (A lot of our Redwood Logistics clients have found they can’t manage this balance, so they come to us to help with tech implementation, human labor training, and growth strategy.)
This slowdown in warehouse hiring is starting to create a holdup in the middle of the supply chain. To see a true boost in the industry for 2020 post-pandemic, the warehousing sector will need to keep up to avoid creating any friction along the supply chain.
The logistics industry employment increase is a representation of the U.S. economy on the whole. March and April brought job slashing, but May and June are demonstrating that the economy is working to pick up the pieces. In June, the U.S. economy gained more than 4.8 million jobs, which was significantly better than the anticipated 2.9 million. The unemployment rate thus fell to a crisis low of 11.1%, compared to the 12.4% estimate. Though there are still fewer jobs than in February pre-pandemic, the growth is highly promising for the future of the country post-pandemic.
These numbers come from June, which doesn’t account for the rollbacks and resurgence of coronavirus cases at the end of June and early July. We hope to see a continued rise in hiring, but we’ll continue to check back with the numbers. Subscribe to the Redwood Logistics newsletter to get trends and news delivered right to your inbox. Be in the know as fast as we know it!
The economy is coming back, faster, and healthier than initially anticipated. The March and April slowdown is going to have an impact on the logistics industry, but there’s a chance it could have a positive long-term impact with the implementation of greater digitalization such as with logistics tech platforms such as RedwoodConnect 2.0 in partnership with human labor and training throughout the supply chain. We hope that employment will continue to rise as ecommerce and production resume their increase in the coming months.
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