As the federal government gets more involved in regulating the supply chain, shippers are looking more to logistics service providers for their subject-matter expertise in specific regulatory requirements. Take the Food Safety Modernization Act, for example. It became law on January 4, 2011, and will be implemented in stages during the next few years. The act governs the storage and distribution of goods. Food and pharmaceuticals are two major focus areas under this legislation and rulemaking.
See Also: Global Supply Chain Logistics Management
It may seem this will be a boon for third-party logistics providers, but their true economic health is directly tied to U.S. economic activity. As companies increase their supply chain investments, this will have a more beneficial effect on the logistics industry.
There's one area of particular concern for logistics providers: workforce development. The 3PL industry is so labor intensive—particularly on the value-add portion—that finding, training and retaining employees is a struggle that has long-term implications. The task is a large one because logistics and its opportunities are not well understood by workers entering the workforce at the floor level. That's why the International Warehouse Logistics Association produced a video on the career ladders in logistics.
Of course, the cost of labor is another issue affecting the industry's access to talent. As the unit cost of available labor increases, automation will become a more and more attractive way to reduce the unit cost of production. In fact, the National Labor Relations Board (NLRB) decision to draft inflexible labor rules may very well push 3PLs to invest in as much automation as possible.
Logistics service providers will need talent and automation to take advantage of one of industry's greatest opportunities—the rise of global markets in developing nations. While international trade regulations and NLRB activities shape the employment opportunities logistics service providers offer, IWLA members will follow the freight.
If it is coming from overseas because that's where shippers are sourcing, then we will help them manage it. If the shipper moves the point of manufacture closer to the United States to shorten the supply chain, then we will help there too. There are so many factors governing the manufacturing site selection decision—fuel costs, labor cost, talent availability, environmental impacts and trade policies—and disciplined shippers really need to address them.
Should Congress approve a NAFTA agreement with Central and South American countries, we do expect more near-shoring, and that will make supply-chain rationalization even more important.
Joel Anderson is president & CEO of the International Warehouse Logistics Association (www.IWLA.com), and a member of MH&L's Editorial Advisory Board.