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Cold Foods Industry News

Report: Labor a concern for warehouse owners, operators

Data identified multiple U.S. markets that offer combinations of availability, quality and cost of labor for warehouses and distribution.

September 5, 2018

The rapid growth of e-commerce is forecast to create demand for another 452,000 warehouse and distribution workers in the United States this year and next, signaling an acceleration of job growth, according to a new report from CBRE, Los Angeles.
 
Retailers, delivery companies and third-party logistics firms can react to the labor crunch in any or all of three ways, according to CBRE—recruiting more workers from other industries; investing in automation to enhance labor efficiency; and expanding into markets with ready and available workforces.
 
Analysis by CBRE Research and CBRE’s Labor Analytics Group of federal employment data identified multiple U.S. markets that offer combinations of availability, quality and cost of labor for warehouses and distribution. Those are led by Memphis, Tenn.; Louisville, Ky.; California’s Inland Empire, Indianapolis, Ind.; Atlanta, Nashville, Tenn.; and Dallas-Fort Worth, Texas, among others.
 
“Increasingly, development of e-commerce warehouses is contingent not only on close proximity to large customer populations, but also on finding increasingly scarce labor,” said David Egan, global head of industrial and logistics research. “Warehouse users will want to ensure that access to qualified labor is a priority in their considerations for expansion. Several markets, especially those with strong population growth, offer ideal conditions for staffing up distribution and fulfillment centers.”
 
CBRE projects demand for another 452,000 warehouse and distribution workers in 2018 and 2019 by applying a ratio of one employee per 1,000 square feet of e-commerce distribution space. That projected demand for 2018-19 exceeds the industry’s job growth of 180,300 new positions a year since 2013.
 
This report addresses two additional tools for solving the labor crunch. First, investing in more automation – robots in the warehouse and autonomous trucks – can help mitigate labor scarcity by boosting the efficiency of an existing workforce. Some measures forecast the productivity gain in the transportation and distribution industry to be as much as 46%.
 
Second, recruiting workers from other industries has worked well for the warehouse and distribution sector in recent years. Government data shows that the 66% increase in workers moving to the transportation and warehouse sector from other industries from 2011-2015 exceeded the gain rate of any other industry.
 
Still, that inflow of labor supply isn’t enough to meet the demand generated by e-commerce’s growth. That shortfall underscores the importance of targeting markets with ideal labor metrics.
 
“Site selection for today’s warehouse users and developers is a complex exercise of weighing trade-offs, including speed to customer, transportation costs, location incentives, real estate economics and labor,” said Adam Mullen, Americas leader for CBRE’s industrial and logistics business. “The most intelligent site selection efforts never lose sight of the fact that labor accounts for more than 20% of total supply chain cost, and up to 75% in final-touch distribution. Its importance can’t be overstated.”
 
“Employers often face significant challenges in assessing a given labor market and how its many facets might apply or not to their companies’ needs,” adds Kristin Sexton, senior managing director of CBRE Labor Analytics. “But, one thing is certain—labor is a critical resource for most modern employers, especially those in the rapidly expanding and evolving field of distribution and warehousing. Effectively operating in this industry will require smart analysis of labor sources for many years to come.”

 

KEYWORDS: CBRE Group design-build design-build trends e-commerce trends labor warehouse management

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