Logistics
30/8/2022

Why the driver shortage is becoming a supply risk

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Everyone is talking about the shortage of personnel in logistics. After the peak of the Covid19 pandemic, there is a shortage of personnel everywhere. While in recent years this was still limited to highly qualified specialists in IT, almost all occupational groups are now affected.  

There is a severe shortage of personnel in logistics in particular. Whether it is warehouse staff, order pickers or drivers, there is a desperate need for skilled workers in all areas. Current data show that about 60% of all logistics companies currently have vacancies that they cannot fill.

In logistics, this clearly means: fewer staff means longer throughput times for forwarders and thus higher costs that squeeze margins. But this cost risk is now becoming more and more acute and is also becoming a supply risk.

Shortage of staff at freight forwarders and warehouse locations
Shortage of personnel on both sides: Both freight forwarders and warehouse locations are struggling to find qualified personnel.

High lead times increase costs for the logistics site

Implicitly, the recipient has always had to bear higher costs if it takes longer. If the location is known to freight forwarders or suppliers to have unusually long lead times, the cost of transportation has been increased. Depending on who pays for the transport, these costs thus end up either directly with the recipient or indirectly via the supplier, who passes the costs on to the recipient.  

And that makes perfect sense: The lead time is of course an essential component of the profitability of all forwarders. If there are very long waiting times at one location, the forwarder's margin deteriorates drastically, which has to be offset by higher costs for the recipient. These costs are usually not explicitly stated, but implicitly accepted in a tacit agreement between the forwarder, the supplier and the consignee.  

TradeLink Check-in Terminal
With TradeLink Check-In, drivers can check themselves in at the gate in over 21 languages. This saves valuable time.

The shortage of personnel in the warehouse has now significantly exacerbated the problem. Particularly logistics locations with existing problems with throughput times in goods receiving, the shortage of personnel is putting even more pressure on the capacities at the location, resulting in even longer waiting times. This increases the implicit costs of the individual transport.  

Driver shortage leads to supply risk

The worsening staff shortage is of course also making itself felt on the driver side. As a result of the fact that forwarders are trying to optimize their existing, scarce personnel by necessity, more and more forwarders have to warn their receiving locations that they will no longer be approached due to the very high waiting and turnaround times.  

What could previously be temporarily bridged by increased costs is now developing into an extreme supply risk for logistics locations due to the shortage of drivers. Urgently needed goods, whether for retail or production, are no longer being delivered, not even at increased cost. It is obvious that this circumstance has a direct negative impact on sales and profit.  

How to increase your security of supply

What can be done now as a logistics location to continue to ensure supply by forwarders? The solution seems clear: reduce the throughput times of each transport. The faster an arriving truck can be unloaded and move on, the better for the forwarders' profit and loss account.  

The logistics location has several levers here:

1. reduce waiting times

The faster a truck can be unloaded after arrival, the better. Time slot management systems can help to coordinate the optimal time between supplier, forwarder and recipient. This can significantly reduce waiting time.  

Read here: How DEBATIN reduced truck waiting times by 95%.

Of course, traditional time slot management systems in particular entail some disadvantages for forwarders. Especially if they are not used consistently by all delivering forwarders, there are delays in the process and thus waiting times at the logistics location despite the booked time slot. Collaboration platforms such as TradeLink can often be more suitable than classic time window software due to their high adaptation rate among delivery partners.

"Shortly after the rollout at the first site, our suppliers already wanted us to quickly roll out TradeLink to all other sites as well. It's simply a win-win for everyone. TradeLink is therefore now going live as standard at all sites." - Patrick Spiegel Project Manager Logistics, Denner

2. optimize processes

But there is also a lot of potential for optimization on the process side. For example, if all delivery information can be called up centrally in advance, the right loading ramp for the load carriers can be identified much more quickly. This saves a lot of coordination work between the gate and the goods receiving department as to which ramp must be free for the truck at any given time. The central, digital storage of the delivery bill also enables significantly more efficient processes for each goods receipt and thus also reduces throughput times.  

TradeLink software automates processes
Good logistics software can automate tedious processes, making warehouse work much more pleasant for employees.

3. combating our own shortage of skilled workers

As described initially, the shortage of skilled workers is worsening the situation at the logistics location and having a negative impact on throughput times. Precisely because the shortage of qualified employees due to demographic effects will continue to affect us for a long time, it makes sense to look at how new employees can be recruited and retained under more difficult conditions.  

One approach here can be to make work more fun and avoid overtime. If a collaboration platform is established in which all transports are scheduled according to available capacities, overtime can be drastically reduced.  

Read here: How Denner drastically reduced overtime in site logistics

Most important, however, is one thing that for a long time was given far too little attention in logistics: The appreciation of individual employees. By reducing overtime and making processes less stressful, employees in logistics are shown a high level of appreciation, which has a positive effect on employee satisfaction and turnover.

So you see, it will be even more important in the future to optimize processes at the logistics site, because for the foreseeable future shortages of personnel will put pressure on costs and even security of supply, both on the part of the company's own logistics and on the part of the freight forwarders. The good news is that this can be successfully solved with early recognition and the right partners.  

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