CSCMP's Supply Chain Quarterly
February 25, 2020
Forward Thinking

Businesses wary of Amazon expansion, tight labor market in 2020

Shippers could see rising costs from parcel carriers, human resources investments, experts say.

Global and retail supply chains will continue to endure growing pains in 2020 as they transition from the traditional brick and mortar model to e-commerce sales in the midst of a stormy business climate, according to an array of business forecasts by logistics firms.

The consensus prediction of double-digit growth in e-commerce will have a huge impact on supply chains in the new year, especially as the "elephant in the room"— Inc.—continues to build out its logistics network as it brings more parcel shipping volume in-house and away from partners such as the U.S. Postal Service (USPS), according to John Haber, Founder & CEO of Atlanta-based supply chain consultancy Spend Management Experts.

Amazon's moves will continue to put fiscal pressure on struggling USPS, which will keep hemorrhaging money unless Congress enacts significant reform to ease the burden of its pension obligations, he said.

At the same time, shippers of all sizes will see "a drastic cost impact" triggered by recent policy changes from UPS Inc. and FedEx Corp. to their "additional handling policies," Haber said. The new rules are expected to add a $24 per package charge for packages from 50 pounds to 70 pounds, resulting in projected cost increases in the millions of dollars annually for many larger shippers.

Solving those challenges would be tough enough in predictable business conditions, but companies in the logistics space face a historically tough market for attracting labor talent. "Businesses will have to think creatively to attract talent since the unemployment rate is at a 50-year low," Haber said in an email. "Increase in pay, expansion of benefits, paid education and training, flexible hours, and more are among the various ways businesses will attract labor."

To keep their warehouses staffed and their trucks moving, employers must tackle persistent human resources (HR) challenges in 2020, agrees the HR services and staffing company Randstad US. In the face of tough conditions, Randstad expects leading firms in the new year to deploy strategies such as increased diversity and inclusion (D&I) in hiring, automation including artificial intelligence (AI), "upskilling" such as labor training and development, and employer branding in managing corporate reputations.

"In 2020, we see a host of emerging trends stemming from the evolving expectations and preferences of today's workforce pertaining to areas, like diversity and inclusion management as a strategic business decision, the responsible use of advanced technologies and data, upskilling as a critical investment, and the power of technology on employer branding and reputation," Randstad North America CEO Karen Fichuk said in a release. "None of these are new trends — rather, they're concepts that are finally reaching maturity. Organizations that understand the importance of incorporating these focus areas into their business discussions and strategic priorities will pull ahead of their competition in the year ahead."

Part of the impact of that increased labor diversity will be seen in gender, as women are entering the logistics industry in greater numbers than ever before, according to DHL Supply Chain, the contract logistics arm of Deutsche Post DHL Group. Reasons for the shift to greater employment of women in logistics include a greater emphasis on STEM (science, technology, engineering, and math) fields in education, and increased technology integration that has minimized the importance of physical strength in traditional warehouse roles, DHL said.

Additional changes in 2020 should see niche technologies go mainstream—from autonomous vehicles to big data to robotics—and more sophisticated inventory positioning as stores increasingly blur the lines between traditional brick-and-mortar and e-commerce strategies like buy-online, pick up in store (BOPIS), DHL said.

Ben Ames is Editor at Large and a Senior Editor at Supply Chain Quarterly’s sister publication, DC Velocity.

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