News / Recent lay-offs in logistics could well be 'a harbinger of headwinds'

© Much Irvan Khamid

Last month saw a spate of layoffs in the logistics arena: in the space of three weeks, some 2,400 jobs disappeared from the payrolls of large logistics providers and shippers in the US. 

Some of these were casualties of business failure. Wholesaler True Value topped the list, with 1,108 jobs in its warehouses gone after it filed for Chapter 11 bankruptcy protection and announced it was going to sell its assets. PepsiCo closed a plant and warehouse in Chicago, which spelled the end of 131 jobs in logistics. 

GXO laid off 343 employees in California, which brought its tally of redundancies for the year to 902. DHL Supply Chain said goodbye to 164 staff in California and another 53 in Texas. Other casualties involved Kuenhe + Nagel, Americold and Amazon. 

The lay-offs could well be a harbinger of headwinds, reckons Helmut Berchtold, head of the US arm of logistics recruitment specialist adi Consult. Forwarders have often acted as a kind of ‘canary in a coalmine’, sensing shifting trends in the market ahead of others, he said. 

“There is so much uncertainty right now,” he commented. “There’s going to be a market slowdown.” 

He added that the headwinds were not confined to the North American arena’s prospect of tariffs under the incoming administration. The Eurozone is struggling, and China is having to look for new markets as it faces rising barriers to its products in North America and Europe as well as in emerging economies like Brazil, he pointed out. 

Over the past year, industrial demand, traditionally a key driver of demand for transport, has been struggling, with manufacturing purchasing managers indices in contraction most months. Recent numbers have not improved, and new orders point to further weakness ahead. Tariffs could dent growth in global trade next year, according to the Organisation for Economic Cooperation and Development, as well as the UN Conference on Trade and Development in recent market updates. 

Meanwhile, ecommerce, which has driven much of growth in trade flows, particularly for air cargo carriers, is facing attempts to derail its momentum through changes of de minimis rules that would undermine the viability of shipping low-cost merchandise by air. 

Abe Eshkenazi, CEO of the Association for Supply Chain Management, sees a convergence of multiple factors behind the recent lay-offs. He mentioned efforts to boost efficiency and reduce costs, sometimes triggered by contract renegotiations, but there are also long-term trends, such as shifting demographics and technological advancements at work, he said. 

Tariffs apply more to short-term contingencies, whereas trends like near-shoring play out over longer period of time, he added. 

Radical swings in political direction, such as the energy policies of the outgoing and incoming US administrations, posed a real challenge for organisations in their business planning, added Mr Eshkenazi. Planning horizons had shortened dramatically, whereas scenario planning had increased exponentially, he said. 

“The policy side is starting to become a big concern for a lot of organisations. Are measures like tariffs going to have short- or long-term effects?” he asked. Imposing a 25% tariff on imports from two neighbours that have been locked in a free-trade agreement with the US would be significant, he added. 

Mr Berchtold hopes that darker market conditions are not causing companies to stop sponsoring education and training programmes.

“Those are your future,” he stressed.