November 22, 2021
The warehouse shortage is a labor problem
Today approximately 70 ships filled with cargo were anchored outside the ports of Los Angeles and Long Beach, which are the points of entry for more than 40 percent of US imports. This backlog is a clear reminder that there aren’t enough workers or facilities to take in all the products that are being shipped to the United States right now. But even as supply chain problems continue to pile up, experts say progress is possible.

The unloading of cargo ships is only the first step on a complex route that carries products from ports to stores and storage facilities. But right now, those facilities are packed to the brim, in part because of an ongoing challenge to find workers.

"The reason containers are piling up at the port terminals is because of the warehouses and the distribution centers," said Noel Hacegaba, the deputy executive director and chief operating officer at the Port of Long Beach. "It's the backlog that begins in the interior of the supply chain."

Expanding space in storage facilities is pivotal to clearing up these supply chain backlogs. Right now, warehouse vacancy rates are just 0.7 percent throughout the Inland Empire, the group of California cities within 100 miles of the Port of Los Angeles that serve as the country’s largest distribution center. Retailers have also stockpiled inventory and reserved extra storage because of the recent surge in consumer demand, which has restricted the overall supply of warehouse space.

Part of the solution involves finding more room for cargo. Last month, California Governor Newsom issued an executive order directing the state’s agencies to find temporary spaces to store cargo on both public and private land. The Transportation Department has also offered California an up to $ 5 billion loan to improve its logistics infrastructure, including building more warehouses.

Warehouses help process all the products that are shipped throughout the US. Still, one of the easiest ways to increase warehouse capacity is to move these facilities to a 24/7 schedule, which would help the ports offload even more cargo. To make that happen, each of these warehouses needs to hire enough workers to staff an entire additional shift. Improving the quality of and pay for warehouse jobs should also help, as would making the jobs easier to find.

Right now, these jobs are primarily seasonal and involve a high level of turnover, as well as long hours, a lot of manual labor, and the risk of injury, including the risk of catching Covid-19. At the same time, many of the areas throughout the Inland Empire have already hired a record number of people for warehousing jobs, and there may not be a huge supply of new workers in the surrounding area left to hire.

"Part of the conversation for some of these types of facilities is really, 'Do we need to start thinking about slightly different locations that make it easier to get labor?'" said Jason Miller, a supply chain management professor at Michigan State University. "One of the first steps with this is for the logistics field to stop complaining about labor shortages and start figuring out what to actually do about it to make work attractive and to attract people."

Vlad Gasnikov, CEO & founder of OLIMP, says that potentially the warehouses of the U.S. are ready to improve their productivity. The key point here is the proper management of the supply chain. Gasnikov says, that 1400+ warehouses of OLIMP nationwide network across the U.S. are ready to accept and service any number of freights.

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