Tight Labor Market Continues To Disrupt Shipping, Freight Operations

Labor market constraints are expected to continue to have a detrimental effect on shipping timelines and efficiencies in the coming months—particularly through the holiday gift-giving season. The issue’s impact on the market is illustrated in FedEx’s recent release of its fiscal first quarter’s operating results, when the Memphis, Tennessee-headquartered company noted that it had registered an estimated $450 million year-over-year increase in costs due to the labor market.

The constrained labor market has impacted labor availability, resulting in network inefficiencies and higher wage rates, and increased transportation expenses. FedEx Express operating results also declined in the past quarter due to higher operating expenses, largely driven by staffing challenges and COVID-19-related air network impacts.

“The FedEx teams continue to diligently deliver for our customers under unique and challenging circumstances,” says Raj Subramaniam, FedEx Corp. president and chief operating officer. “The current labor environment is driving inefficiencies in the operation of our networks and significantly impacting our financial results. For the peak season ahead, service remains our focus, and we are making investments in resources and capacity to meet our customers’ needs.”

The labor shortage has been ongoing for some time and its effects have created delays and disruptions in supply chains across almost all industries and carriers.

A Yahoo! Finance story noted that processing bottlenecks could wreak havoc on the holiday season if FedEx is unable to address the worker shortage. Promotional products companies planning for the remaining months of 2021 and into 2022 should factor ongoing delays into their shipping and supply chain expectations and build extra time into ordering processes.

filed under September 2021
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