Labour shortages in supply chains accelerate industry push for automation and workforce reform

With persistent labour shortages impacting manufacturing and logistics sectors, companies are increasingly turning to technology, workforce development, and innovative strategies to combat operational challenges and safeguard growth.

Labor shortages continue to pose significant challenges for members of the Material Handling Equipment Distributors Association (MHEDA) and their customers, reflecting a broader trend affecting industries across the supply chain. Despite a slowdown in hiring during the spring and summer months, the U.S. unemployment rate has remained near historic lows, at 4.2% in July, perpetuating a tight labour market that limits growth and drives costs upward.

The critical difficulty in hiring and retaining workers is underscored by findings in the 2025 MHI Annual Industry Report, where over half of supply chain executives identified workforce issues as a top challenge. Almost half viewed the talent shortage as a major obstacle, alongside forecasting and customer demands. The financial impact of unfilled positions is substantial. Research cited by Forbes and the Society for Human Resource Management reveals that each vacancy costs companies on average $4,129 every 42 days, with positions in sales potentially costing up to $10,000 monthly due to lost revenue. The Work Institute adds that employers spent nearly $900 billion in 2023 replacing the 45 million workers who quit their jobs, with replacement costs often amounting to about one-third of an employee’s salary.

The manufacturing and warehousing sectors, key customer bases for MHEDA members, are among the hardest hit by labour shortages. In June, manufacturers faced 415,000 job openings, while trade, transportation, and utilities sectors reported over a million vacancies, including 315,000 in warehousing alone. These gaps have prompted wage increases: manufacturing workers earned an average of $35.30 per hour in July, up nearly four percent from the previous year, and transportation and warehousing workers saw their wages rise to $31.52 per hour, slightly above the average for production and nonsupervisory private-sector employees.

The shortage has tangible effects on operational capacity and profitability. Manufacturing plants operated at just 72.6% of their full capacity in early 2025, an improvement from late 2024 but still constrained by labour availability. Notably, 20% of those plants identified insufficient labour as a key limiting factor, double the rate seen in earlier years, indicating that the labour shortage is increasingly suppressing production. On a positive note, the quit rate in manufacturing has recently stabilised, dropping from a peak in 2022, suggesting some easing of turnover pressures. Yet, the National Association of Manufacturers projects a need to fill nearly 4 million new manufacturing jobs by 2033, warning that without robust workforce strategies, nearly half could remain unfilled.

Experts stress the urgency of multifaceted approaches to workforce development. Carolyn Lee, president of the Manufacturing Institute, highlights the necessity of early engagement and comprehensive strategies involving apprenticeships, training, and public-private partnerships to inspire future generations to pursue manufacturing careers. This workforce challenge is framed not simply as an economic issue but as a matter of national security.

The logistics and transportation sectors face similarly acute challenges. Surveys indicate that over three-quarters of supply chain and logistics leaders report significant worker shortages, with corresponding detrimental impacts on financial performance, customer service, and peak season operations. High turnover rates exceeding 45% and the difficulty in filling roles within 30 days reflect a shrinking talent pool exacerbated by increasing wage demands. These shortages contribute to operational inefficiencies, such as billing delays and errors, compliance risks, and slower warehouse throughput.

Increasing wages and benefits have become necessary but insufficient on their own to retain workers. The Work Institute and other researchers cite workplace environment as a critical factor driving employee departures, with a toxic culture, poor leadership, burnout, and lack of career development cited frequently. In response, industry leaders advocate for investments in training programs, enhanced on-boarding processes, flexible scheduling, and fostered workplace respect and recognition to improve both recruitment and retention. Promoting career advancement from within also shows promise in sustaining a committed workforce.

Given persistent labour shortages and the continued operational impact, many supply chain companies are turning to technology and automation to supplement human labor. Ahead of peak seasonal demands, a majority of supply chain leaders plan to expand their workforce despite ongoing constraints, while significant proportions are also investing in logistics software improvements and automation solutions. This dual approach aims to mitigate workforce deficits while maintaining service levels.

The labour shortage crisis in supply chains thus necessitates both immediate tactical responses and long-term strategic investments. Without decisive action to enhance recruitment, retention, and workforce development, including adapting to changing worker expectations and embracing technology, the cost of unfilled positions will continue to burden companies’ profitability and capacity for growth.

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• ^[1] (MHEDA) – Paragraphs 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11
• ^[2] (MHL News) – Paragraph 3
• ^[3] (MHL News) – Paragraph 7
• ^[4] (ADECSolutions) – Paragraph 7
• ^[5] (MHL News) – Paragraph 7
• ^[6] (SupplyChainBrain) – Paragraph 7, 8
• ^[7] (MANH) – Paragraph 8

Source: Fuse Wire