The hiring numbers for the overall US economy in July showed a slight slowdown compared to previous reports; however, logistics hiring seems to be bucking the trend in a way that most other sectors are not.
The overall U.S economy added 157,000 jobs in July, which fell below the prevailing expectations of economists. While the number still shows a healthy economy, a missed jobs number always adds a little uncertainty to the overall market.
Logistics hiring, however, surpassed expectations – it has been showing steady and healthy growth over the last 12-18 months.
According to the report released in early August, transportation and warehousing companies added 15,600 new jobs in July alone. The surge in hiring could be explained by several factors:
- eCommerce’s Continued Growth
- Upcoming Peak Season
Other indicators that showed promise within logistics included the increase in hiring for warehouse and storage firms, which added over 3,500 jobs in July. Trucking was another area in which jobs growth outpaced the overall economy. Operators of trucking companies added nearly 30,000 jobs over the last 12 months, even in the face of a dwindling supply of qualified drivers to meet the demand.
So what does all this mean for shippers and the logistics sector as a whole going forward?
Here are 5 potential indicators of the logistics jobs numbers
- Growing consumer confidence
The increase in hiring in the logistics sector is a clear indication that companies are seeing a greater confidence in consumers. While the increase in official consumer confidence numbers in July, it’s very likely that companies in the logistics sector are seeing trends in their own data that tell them that consumers’ propensity to consume is increasing.
If true, this certainly bodes well for the economy as a whole, but particularly for companies within retail (both online and offline).
- eCommerce continues to dominate
Speaking of retail, there’s a clear line that could be drawn between the immense growth in eCommerce and the positive logistics jobs numbers. Everyone knows that eCommerce is a huge factor in the retail world, but how much more room does it have to grow?
The above graph from Statista shows the current and projected percentage of overall sales in the United States that are eCommerce (as opposed to in-store). As you can see, there is no indication of a slowdown in this growth and by 2021 eCommerce sales will hit 14% of overall retail sales.
- Huge peak season ahead
In the world of shipping and logistics, particularly around retail, the “peak season” for shipping spans from November through December. As we get closer and closer, the indicators are all pointing to the fact that this peak season will blow all previous years out of the water.
It has already been reported that peak season has come early this year – two of the largest ports in the United States have seen close to 10% increase in containers coming through their ports compared to the same time last year.
These two factors combined bode very well for a peak season that will be gangbusters for shippers.
- Is the labor supply finally meeting demand?
In short, probably not. As demand increases and the percentage of retail that happens online grows, the need for qualified drivers and warehouse workers will also increase. As a result, an increase like this in hiring is unlikely to fully alleviate the issue. However, there are some fixes being proposed – for example, allowing younger drivers into the work force and lowering the restrictions on who can take on such a job.
- Uncertainty still exists
While there is no doubt that the economy is booming, especially within logistics, uncertainly is still looms large. Potential trade wars, and geo-political risks have all played a part in creating an air of uncertainty. Trade wars, in particular, could put a significant hamper on future hiring and growth within logistics and shipping.