Did you know that there are over 3.5 million warehouses worldwide today? You would think that, with that number of facilities available, there is more than enough storage space to support the volume of goods being manufactured and distributed across the seven continents. But there isn’t.

The explosion of eCommerce is fueling a new building trend: 82 percent of decision makers surveyed in Zebra’s newly-released Warehouse Vision Study revealed that they anticipate increasing the number of warehouses between now and 2024. Eighty-seven percent of survey respondents said they are planning to expand the size of their own warehouses over the course of the next five years. They simply need more space in more locations to keep pace with rising fulfillment volumes and shorten the distance to “the last mile.”

They also need more workers.  In 2017, the Wall Street Journal described how the job market was rising steadily for warehouse and distribution center workers, and a report from the Bureau of Labor Statistics that same year indicated that warehouse employment had risen 90 percent since 2000. In September 2018, a Wall Street Journal article cited a CBRE Group, Inc. report claiming U.S. warehouses and distribution centers alone still “need an additional 452,000 workers in total” before the end of 2019. That lines up with a March 2019 BLS report confirming the U.S. warehousing sector had one of largest increases in new job openings that month.

Yet, 60 percent of warehouse and distribution center operators just confirmed in Zebra’s latest Warehouse Vision Study that labor recruitment is among their top operational challenges and will continue to be over the next five years. This may be a bit of a surprise to those who live near one of the many warehouse and distribution center “clusters” that have continued to emerge in the last few years. (Or anyone who remembers the more than 20,000 people that showed up for a single Amazon Jobs Day in Baltimore in 2017.)

People are flocking to major fulfillment hubs in droves with the sole intention of working in a warehouse. In North America, the expanding size of the warehouse labor pool in certain locales is evident in the housing market booms and renewed strength of previously recession-beaten economies. Consider North Las Vegas. The city, once on the brink of bankruptcy, focused on “expanding its appeal to warehouse developers and logistics centers” to aid with its recovery. The strategy worked. In a 12-month period around 2017, Amazon, The Honest Company and other major retailers opened up (or announced plans for) massive distribution centers right around the corner from one another, promising to infuse money into the economy and jobs for those who live in the tens of thousands of homes nestled nearby.

Of course, it helped that thousands of potential workers are literally within walking distance to these warehousing facilities. Many may have expected worker recruitment to be easy in the area. And perhaps it was in the beginning. At least for Amazon, who opened its doors first. But once The Honest Company started hiring, and then Bed, Bath and Beyond, Fanatics and others who moved in, workers started to job hop. It also didn’t help that there are dozens of other distribution centers in a 10-mile radius of that particular distribution park.

It quickly became clear that the clustering trend, which helped to attract skilled warehouse workers to the area, was ironically increasing competition for those skilled workers in North Las Vegas and around the world. A 2017 report from Indeed Hiring Lab revealed that 50 percent or more of warehouse job-seekers at the time were already employed in the sector – and that problem persists today. Unemployment remains at an all-time low.

The tight labor market has driven warehouse and distribution center operators, especially those located in major fulfilment hubs, to offer higher wages to lure job seekers. Yet many are still having trouble finding willing and capable workers. Others are having trouble keeping the ones they have.

This isn’t just a North America problem, either. Companies in the European Union are facing the same labor challenges, some of which are being amplified by Brexit. Many workers in the region are migrating away from warehouse/DC clusters, creating new talent shortages. And companies operating in Japan have been working for two years now to overcome one of the worst labor shortages in the country’s history.

So, what are warehouse and distribution center operators to do?

Introducing New Labor Initiatives

Warehouse leaders have identified seven areas that they will focus on this year – and over the next five years – to address current labor challenges:

1. Worker comfort and ergonomics            
2. Optimizing the use of temporary/seasonal labor at peak periods              
3. Increase training to retain labor and develop a career path (technical, supply chain training)             
4. Training labor more quickly to reduce time and expense              
5. Recruiting labor with more technical skill sets
6. Addressing labor shortages due to the increased demand for labor
7. Replacing an aging workforce    

The hope is that, through these initiatives, they will be able to expand their workforce at a rate that keeps pace with their physical expansion while maximizing the output of workers currently on their payroll, without creating a situation that leads to burnout and fuels the churn cycle.

In fact, the drive to improve the warehouse culture and boost employee morale is one of the reasons why industry leaders are planning to employ more droids, Android, and other advanced technologies on the front lines. I know that seems contradictory, but it’s one of the best ways they can invest in their people. Seventy-nine percent of respondents to our Warehousing Vision Study agreed the warehouse environment will become a more desirable career because of the technological transformation taking place.

Despite fears that robots are going to take over the world, or at least the job market, the goal here is clearly not to replace workers. (Why would warehouse leaders be so worried about recruitment and retention or investing so heavily in the above labor initiatives if that were the case?) Instead, they want to augment the workforce with automation and mobile technologies to minimize the impact of labor shortages. By reducing their reliance on human workers in constrained labor environments, warehouse and distribution center operators can increase worker satisfaction, which helps with recruitment and retention.  In fact, 80 percent of respondents to our latest Warehouse Vision Study say that implementing new technology is important to stay competitive.

Of course, the right technology can also expedite new employee on-boarding and increase the efficiency and productivity of the workers they already have, which increases agility and competitiveness when it comes to customer recruitment and retention. (Did you know that the average time for a worker to reach full productivity for inbound or outbound operations is about 4.5 weeks?)

I’ll offer more context around these labor issues – as well as recommended technology and training solutions – in the coming months as I further dissect feedback on our Warehouse Vision Study in upcoming blog posts here on Your Edge.

In the meantime, I encourage you to check out the infographic and white paper highlighting some of the other key trends that will impact the warehousing sector over the next five years, and feel free to join our discussion below or on social media.