Logistics Sector Facing Shrinking Talent Pool and Demand for Higher Wages

The transportation, distribution and logistics(TDL) sector is in a tough spot. A majority (70%) of leaders say labor isn’t effectively aligned with demand fluctuations at their organizations, and more than one-third (35%) report they don’t have enough workers to consistently fill schedules.

This is according to a new survey from UKG.

Add this to employees in this sector asking for higher wages. The survey found that 79% of TDL organizations report increased labor costs over the past year, with 91% saying their overtime (OT) costs have gone up.

Wages and benefits also rank as the No. 1 most significant workforce-cost pressure that increased year-over-year.Hourly earnings increased 4.8% throughout TDL from July 2024 to July 2025, compared with a 1.4% wage increase across all frontline industries, after accounting for price inflation. This is according to another survey,  UKG Workforce Activity Report,  which is a  monthly analysis of frontline shift work utilizing employee time punch and payroll data from more than 6 million hourly employees in the United States

Jobs Remain Difficult to Fill

Leaders don’t expect their financial challenges to disappear anytime soon, as rising labor costs top the list of workforce issues TDL organizations believe will have the biggest impact on business performance in the coming year. According to the UKG survey, the top five concerns are:

1. Rising labor costs
2. Inflation and the cost of goods
3. Geographic uncertainty (e.g., tariffs, onshoring)
4. Supply chain disruptions
5. Productivity losses

Among the key operational challenges at their organizations — from compliance risks to employee engagement — TDL leaders say their workforce strategies are the least effective at addressing labor shortages, yet most effective at managing compliance risks.

Tied to the labor shortage, turnover continues to trouble TDL organizations, too. More than 1 in 5 leaders (22%) report turnover rates above 45% at their organizations, and at least half are unable to fill open roles within 30 days of a job being posted. Leaders say a lack of qualified candidates and competition for talent are their most frequent hiring and onboarding challenges. Unpredictable scheduling is cited as a top turnover driver by 1 in 5 TDL leaders (20%).

AI is Helping TDL Better Navigate Scheduling and Industry Challenges 

There are some bright spots uncovered in the survey, particularly in the transportation industry, which is leading the way in areas such as hiring increases, employee retention, and scheduling alignment — thanks, in part, to the early adoption of AI and workforce management technology.

For example, 78% of transportation organizations report they have increased hiring volumes over the past 12 months, far surpassing the 51% of organizations in distribution and 46% in logistics that have increased hiring.

Transportation companies are turning to AI as follows: 

• 47% of organizations currently use AI-driven technology for workforce planning 
• 46% employ self-service tools
• 39% leverage predictive labor-forecasting solutions.

The results of using this technology are being realized with 64% of transportation leaders say fewer than 10% of shifts go unfilled due to employee absenteeism, compared with 40% of leaders in distribution and 29% in logistics.

“From the smallest organizations to the largest multinationals looking to scale, AI-powered workforce management tools provide workers with more autonomy around their schedules and greater flexibility, which is king for the frontline workforce,” said Robert O’Dwyer, logistics industry principal at UKG, in a statement. “This will help organizations prevent understaffing issues, while data-driven solutions and people analytics empower leaders to better anticipate hidden labor expenses, such as unbudgeted OT or long time-to-hire rates.”