High Risk for Layoffs: Transportation and Warehousing
In a piece for CNN, economists Dana Peterson and Frank Steemers share their thoughts on the most at-risk industries for sweeping layoffs. According to The Conference Board’s new Job Loss Risk Index, the three sectors with the highest risk of layoffs are information services, transportation and warehousing, and construction.
The Transportation and Warehousing Job Loss Perfect Storm
Why are transportation and warehousing facing massive layoffs in 2023? Here are the key factors:
- Interest rate hikes
- Consumer spending shifts
- Valuation pressures
But that’s not all: A recent drop in small business credit availability, as banks stop lending to businesses, is further escalating the situation. This hasn’t happened in over 20 years.
The Mysterious Disappearance of Bank Lending
Tim Higham, CEO of AscendTMS, explains that banks have pulled loans, tightened credit standards, and turned inward, resulting in a net decrease in lending over the last two weeks.
Pair this with the Fed’s higher interest rates, and we’re seeing a new form of quantitative tightening, which means:
- Money is being pulled from the economy
- Less spending
- Lower profits for businesses
- More layoffs
Unfortunately, Higham doesn’t think bank lending will be back on track anytime soon.
How to navigate the current climate?
Higham advises companies in transportation and warehousing to take some practical steps to save themselves and push out competitors.
- Cut costs: Evaluate your expenses and cut anything that’s not essential to your core business operations.
- Reduce debt: Pay off as much debt as possible or renegotiate payment terms with creditors.
- Become smaller but profitable: Focus on your most profitable products/services and streamline your operations.
- Invest in proven technology: Use technology to automate processes and become more efficient. Consider solutions like AscendTMS or other proven technologies that can replace expensive labor with automation.
It’ll take agility and adaptability to remain competitive.
Deeper Focus on Warehousing Job Loss
The warehousing sector, in particular, has experienced a significant decline in employment.
- Warehousing employment is on the decline: In 2023 alone, the U.S. lost 11,800 warehouse and storage jobs from February to March. Since June, nearly 50,000 jobs have vanished, partly due to overstocked retailers cutting back on inventory.
- A post-pandemic surge: Between April 2020 and June 2022, warehousing employment skyrocketed by nearly 700,000 jobs, thanks to the Covid-19 pandemic driving a surge in online shopping.
- A cooling labor market: As of March, there were 1.91 million warehousing and storage jobs, the lowest number since January 2022.
First off, keep your chin up and embrace the challenge. Use this as an opportunity to trim the fat and hone your focus. Look for ways to cut costs, but do it smartly. Prioritize what’s essential to your business and cut out the fluff. Businesses that can survive the downturn are poised to do well when the industry turns around.