Dive Brief:
- Employment in the transportation and warehousing industries fell 1,300 from June to July, according to preliminary data from the Bureau of Labor Statistics (BLS).
- Not all subsectors of the industry shed jobs, however. The truck transportation industry added 4,400 jobs last month.
- So far this year, logistics and transportation has added 88,600 jobs, American Shipper reported.
Dive Insight:
The reduction of jobs in the United States logistics and transportation sector is not necessarily bad news, except perhaps to those impacted by the cuts. But it is good news for the companies and logistics sector in general. This shows an understanding that business cycles don’t last forever, and that pruning the jobs ranks now reveals a healthy, forward thinking company.
The global economy does show some signs of slowing. The bull market and rapid economic expansion of the last several years is actually late in its forecasted decline. While the recent BLS Employment Situation Summary was positive, it does begin to show a bit of a slowdown in employment levels. Coupled with unemployment now under 4%, it also shows the labor market remains constricted.
During periods of strong growth, and especially in a tight labor market, some marginal hiring decisions are made. Employees, whose poor performance may have been hidden in the haze of business activity, may finally be separated. Other employees, who might have been hired to meet future capacity needs, may be let go once supply and demand are aligned.
Still other companies hire more than they need to compensate for employees who cannot perform their jobs or leave for other opportunities. This yield adjustment may be coming into play at this time as well. Productivity enhancements that run the gamut from lean to autonomous warehouse can also impact employment levels.
This employment level adjustment may not just be affecting the transportation and logistics business sectors. All companies will be looking at staffing levels, trying to make sure they can meet customer demand while maintaining their financial goals. Supply chain managers may be seeing manufacturing lead times extend, not because of high demand and capacity constraints, but due to reduced labor levels or changes in work schedules to meet a reduction in orders. Companies may begin to reduce or eliminate shifts, as well as employees, should the economic situation warrant.
While there are still job shortages in the transportation and logistics industry, including a massive need for CDL drivers, the trimming of other jobs sends a clear signal that changes are coming. Economics drives the supply chain. Proactive companies, and supply chain managers, will take notice.
