The Logistics Labor Crisis: Why 3PLs & Retail Struggle with Hiring

The logistics industry in the US, particularly 3PL providers and retailers, is facing significant labor challenges in 2025. Despite remarkable growth, hiring and retaining employees remains a cause of concern for logistics providers nationwide. With rising labor costs, increased competition and shifting workforce dynamics, logistics providers and retailers are being forced to rethink their approach for talent acquisition and workforce management.

What is causing persistent labor shortages?

The warehousing and logistics sectors have seen employment growth rates exceeding 47% between 2013 and 2023. Yet labor shortages persist, creating innumerable challenges for retailers and 3PLs alike. 

• 20.6% of manufacturers report insufficient labor supply as a leading constraint in early 2025

• The BLS (Bureau of Labor Statistics) predicts a 28% increase in employment across the logistics sector between 2021 and 2031, far surpassing the national average.

• High attrition rates continue to destabilize warehouse and fulfillment operations, necessitating long-term staffing solutions. 

Why is the talent market so competitive?

Logistics companies grapple with manufacturers, consultants and retailers to attract talent from the same pool of logistics and supply chain professionals.

• Entry level applicants are in short supply, particularly in fast growing markets where demand often outstrips available workforce.

• Potential applicants perceive other industries as a more attractive proposition, which leads to a difficulty in recruiting younger professionals into the sector.

• An e-commerce boom has intensified demand and made competition for skilled labor even fiercer.

Rising costs & operational challenges

Labor expenses account for one of the most pressing challenges for logistics companies, further squeezing already razor thin margins.

• Labor expenses account for approximately 40% of total operating costs for nearly 60% of 3PL providers.
• 79% of logistics providers reported their concerns surrounding increased labor costs and the ability to offer competitive wages.

• Retailers and consumers bear the costs of supply chain disruptions and shipping delays as a result of worker shortages.

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Changing workforce dynamics

An aging working population, coupled with an influx of less skilled workers is shifting the logistics landscape and disrupting operational efficiency.

• While quit rates across manufacturing and logistics industries may have stabilised to pre-pandemic levels, labor shortages are expected to worsen in the coming months.

• Companies are increasingly struggling to meet the rising salary demands and expectations of skilled workers, further exacerbating an already challenging labor stability.

• Shifts toward contact and “gig” work have reduced the pool of full-time logistics workers, further impacting long-term workforce stability. 

Technological and regulatory pressures

A need for increased efficiency is driving businesses to integrate AI driven solutions and automation in an attempt to reshape the logistics workforce.

• AI adoption and warehouse automation processes are expanding, reducing the reliance on manual labor but creating demand for technology-savvy workers.

• Hours-of-service policies, electronic logging mandates, and other such regulatory changes add compliance burdens to logistics providers.

• Upskilling employees is seen as a must have investment for employers looking to manage the transition to tech-powered logistics operations.

How can 3PLs and retailers address the crisis?

In an effort to navigate workforce challenges, logistics providers must adopt robust and innovating recruitment and retention strategies:

‍Enhance workforce accessibility

The provision of reliable employee transportation can significantly reduce attrition and support hiring policies. Many logistics providers are based far from conventional public transit hubs, making solutions like shuttle services a game changer for businesses looking at transport as a benefit to reduce absenteeism and increase employee satisfaction.

Offer competitive compensation

In a bid to attract top tier talent, competitive salaries and benefits (such as retention incentives and signing bonuses) are becoming increasingly common. Investing in career growth opportunities and learning/development are additional tools businesses can use to help retain workers. 

Invest in workforce technology/automation

While advancements in automation are helping to reshape logistics, businesses must upskill their workforce in order to support and handle AI-powered operations. Training for advanced logistics software and robotics management is another way that logistics providers can boost efficiency and retain talent. 

Improve workplace conditions

A reduction of excessive overtime, addressing burnout and improving schedule flexibility can all aid in boosting productivity and retaining employees. Ergonomic improvements and safety considerations/enhancements in warehouses can support reduced attrition.

The US logistics labor crisis is not going away anytime soon, though 3PLs and retailers can make proactive steps to mitigate the fallout. The provision of transportation as a benefit, competitive compensation, continuous development and better working conditions can aid businesses in building a more resilient workforce. Addressing labor challenges requires long term strategy and innovation, though only those who invest in their workforce today will be the ones leading the supply chains of tomorrow.