CBRE: Labor a Chief Concern For Warehouse Owners and Operators

On Sep 18, 2018

The rapid growth of e-commerce is forecast to create demand for another 452,000 warehouse and distribution workers in the U.S. this year and next, signaling an acceleration of job growth in the already labor-strapped industry, according to a new report from CBRE. The report highlights New Jersey among the top industrial and logistics labor hubs with the best mix of labor supply, quality and cost.

Retailers, delivery companies and third-party logistics firms can react to the labor crunch in any or all of three ways, according to CBRE: recruiting more workers from other industries; investing in automation to enhance labor efficiency; and expanding into markets with ready and available workforces.

Analysis by CBRE Research and CBRE’s Labor Analytics Group of federal employment data identified multiple U.S. markets that offer advantageous combinations of availability, quality and cost of labor for warehouses and distribution.

Among the markets with the highest labor supply and affordability was New Jersey, which had the fifth fastest growing transportation-and-warehousing workforce among hubs included in the CBRE study, registering a 40 percent increase from 2013 to 2017.Notably, New Jersey’s 69,960 total transportation and warehouse jobs as of year-end 2017 accounted for 5 percent of the state’s employment.

“New Jersey has long been recognized as a superior labor market, thanks to an abundance of local jobs, an excellent location, unparalleled infrastructure and access to a multitude of transportation modes,” said Jeff Hipschman, Senior Managing Director, CBRE. “Over the past few years the state has continued to attract warehousing and logistic companies, further driving both the growth in new job opportunities and the need for more developments.”

CBRE came to its projection of demand for another 452,000 warehouse and distribution workers in 2018 and 2019 by applying a ratio of one employee per 1,000 sq. ft. of e-commerce distribution space to its forecast for warehouse-construction completions in the U.S. this year and next. That projected demand for 2018-19 exceeds the industry’s job growth since 2013 of 180,300 new positions a year, an acceleration that reflects the growing volume of e-commerce sales.

CBRE’s report addresses two additional tools for solving the labor crunch. First, investing in more automation – robots in the warehouse and autonomous trucks – can help mitigate labor scarcity by boosting the efficiency of an existing workforce. Some measures forecast the productivity gain in the transportation-and-distribution industry to be as much as 46 percent.

Second, recruiting workers from other industries has worked well for the warehouse-and-distribution sector in recent years. Government data show that the 66 percent increase in workers moving to the transportation-and-warehouse sector from other industries from 2011 to 2015 exceeded the gain rate of any other industry.

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