A study commissioned by the World Bank and carried out by KLU’s Professor Alan McKinnon, Professor Kai Hoberg and Dr. Christoph Flöthmann has identified a critical shortage of logistics specialists and workers worldwide. Professor Hoberg explains why the industry is struggling to attract, retain and train their personnel, and what needs to be done to stop the situation from worsening.
Why are logistics organizations struggling to recruit skilled personnel?
First, it has to do with competition within the industry. The logistics industry has been growing for the past couple of decades with an average growth rate of 5%, and there is clearly a need for more personnel. Then there is competition with other industries, such as manufacturing, where skilled labor is also highly sought after.
Where in the industry do skills shortages exist?
In our study we look at four levels of logistics skills – managers at the top level; supervisors; administrative staff; and operators such as warehouse workers. We see skilled people missing on all levels, partly because they are attracted to other industries and partly because the right education isn’t there. In the developed world, we clearly see a shortage at the operative level. In developing countries there is more need to develop talent at the supervisor and manager level, which has to do with a lack of training programs. This in turn is probably due to a lack of available funds.
How can that lack of funds be remedied?
The World Bank is funding infrastructure projects in developing countries and investment in human capital is also necessary to have the right people to manage and run them. That’s what many international funding organizations have realized. In terms of government funding of education, logistics has to compete with other sectors. In developing countries, for example, health education funding is needed to increase life expectancy. Hence, funding for logistics might not seem as critical in the short term, but if you think about a country’s long-term development, it is. Also, businesses are facing challenges retaining talent. In developing countries especially, you can easily switch jobs, and competitors will headhunt skilled workers. Accordingly, companies might see few benefits from investment in training, because they might lose the workers they’ve trained, so that’s clearly another complication.
Are there any countries or areas not experiencing a skills shortage?
We conducted dozens of interviews and surveyed hundreds of participants and the picture we got was that the logistics industry is really struggling across the globe to attract the right talent. Where do you see the logistics sector in five to ten years’ time? We’re seeing a rapid development of technology, such as warehouse automation, that might reduce the need for logistics labor at a more operative level in the next ten years. But I think there will still be shortages of people with a more advanced skill set. Supply chains are becoming more complex and we need a continuous boost of education to ensure managers steering our supply chains have the skills to do so.
What can professional associations, such as the BVL in Germany, do to help the situation?
Many small and mid-sized players don’t have the funds or volume of staff to set up their own training programs and professional bodies need to take the lead role to develop materials and provide training.
What can tertiary and training institutions do to make studying logistics more attractive?
We have to start at the school level and highlight that logistics is not about moving pallets around, but it’s really about designing material, information and financial flows. Thus, we can hopefully convince them logistics is an interesting field of study.
Read more about the World Bank study on logistics competencies, skills and training