Distribution/logistics salaries show signs of recovery
After dropping from 2008 to 2009, salaries for distribution and logistics professionals have started to creep up again, according to DC Velocity 's annual survey.
Susan Lacefield has been working for supply chain publications since 1999. Before joining DC VELOCITY, she was an associate editor for Supply Chain Management Review and wrote for Logistics Management magazine. She holds a master's degree in English.
Did the recession of 2008-2009 take a toll on distribution and logistics professionals? The results of DC VELOCITY's 2010 annual salary survey indicate that the answer is yes. The median salary for the 1,010 readers who responded to this year's poll was $85,000—down about 5 percent from the pre-recession peaks of $89,000 in the 2008 survey and $90,000 in 2007. (Last year's survey can be found here.)
But the news on the compensation front isn't all grim. This year's median salary is up slightly from last year's median of $83,000, suggesting that salaries may have bottomed out and are now on the rise again.
Indeed, 41 percent of the respondents to the survey, which was conducted via an online questionnaire in February and March, said their salaries had risen in the past 12 months, while 39 percent said their salaries had held steady. When the results are broken down by job title, a similar picture emerges: For the most part, salaries are comparable to or higher than last year's figures (see Exhibit 1). The one anomaly is the median salary for corporate officers, which dropped 16 percent. However, this finding might reflect the small sample size (33 respondents).
These findings align with what Donald Jacobson of the recruitment firm Optimum Supply Chain Recruiters has seen in the market. There's no doubt that the downturn threw many out of work, he says, but "overall salaries have not changed. If anything, they may have increased because of the higher level of sophistication that the companies are demanding," he says. "Even smaller and mid-sized companies need the same level of sophistication as bigger companies, and that pushes salaries up."
But not everyone was so fortunate. Some 20 percent of the survey respondents reported that their salaries had dropped from the previous year. That's a significantly higher percentage than we've seen in past surveys—14 percent in the 2009 survey and 3 percent in the 2008 edition.
Industries particularly hard hit include transportation services, third-party logistics (3PL) services, and wholesale/retail. The survey showed that 32 percent of respondents working in transportation services were making less than they were a year earlier. Similarly, 22 percent of respondents from the third-party logistics services sector and 19 percent from the wholesale/retail industry said their pay had declined. (See Exhibit 2 for median salaries by industry.)
The survey also found a correlation between shrinking paychecks and company size, with workers at smaller companies more likely to be feeling the pain. One-third of all respondents who work at companies with fewer than 100 employees saw their compensation drop in the past 12 months. By contrast, only 12 percent of respondents from very large companies (5,000 employees or more) took a hit in pay.
Wanted: Jack of all trades
In addition to salary cuts, last year saw a rash of layoffs as companies desperately tried to trim costs to offset weak sales. As jobs were cut, however, that work didn't necessarily go away. Instead, companies asked their remaining employees to do more.
One result is that jobs are being combined in new and unusual ways. "We are seeing an interesting phenomenon in the industry. Due to the economy and reduced head count, companies are combining skill sets that don't normally go together," says Jacobson. For example, Jacobson says he's seen some clients combine sourcing/purchasing positions with planning and transportation positions. One even combined responsibility for its co-packing operation with responsibility for sourcing and transportation.
DC VELOCITY's salary survey results reflect this trend. It's a rare respondent who doesn't have direct or indirect control or influence over more than one of the following functions and activities: supply chain management, logistics management, transportation management, warehouse and/or distribution center management, fleet operations, import/export operations, and procurement/purchasing. In fact, 57 percent of all respondents said they had direct or indirect control or influence over three or more functions.
Yet Jacobson says companies have been slow to adjust salaries to reflect this increase in responsibility. "The only way to find that combination [of skills] is to look at people with more experience, which means higher dollars. But they're not raising the salary. Companies aren't adjusting their compensation to attract the candidates that have the combined skills," he says.
What's in a paycheck?
Besides industry and job responsibility, there are a number of other factors that influence logistics professionals' salaries. Few of them will come as much surprise.
For example, as experience increases, so does pay. Our survey results show a strong correlation between salary and years of logistics experience (see Exhibit 3). Similarly, older employees tend to be paid more than their younger counterparts (see Exhibit 4).
Likewise, those working for larger companies typically earn more than those in smaller ones. In fact, there is a significant gap in median salary between those companies with more than 500 employees and those with a smaller workforce. (See Exhibit 5.)
Few will be surprised to hear that a graduate degree typically translates to higher pay. Logistics professionals with a master's degree or doctorate generally earn more than their colleagues with a bachelor's degree or high school diploma. Interestingly, however, the median salary for respondents with a Ph.D. was lower than the median salary for those with a master's degree (see Exhibit 6).
As in the past, our 2010 survey indicated that gender has a bearing on pay. There is still a significant salary gap between men and women. While the median salary for males is $87,100, the median salary for females is $66,500. This gap persists no matter what the position (see Exhibit 7). The difference is less noticeable at the supervisor level, however, which suggests that salaries might equalize as more women rise through the ranks.
Geography also plays a role in compensation. As Exhibit 8 shows, median salaries vary based on region of the country. The results of this year's survey are consistent with what we've seen in the past, with salaries in the Midwest on the low end and salaries in the West on the high side.
Hope for the future?
So what does all this portend for the future? Have salaries been reset at a new, lower level, or can logistics professionals reasonably expect to see their pay rise as the economy recovers?
Jacobson for one believes there are glimmers of hope. His firm is now seeing more companies—particularly small and mid-sized companies—reaching out to recruitment firms to help them fill supply chain positions. Expertise in global logistics and global purchasing is in particularly high demand right now, he says.
Jacobson says hiring in the 3PL industry is also picking up. He believes the downturn encouraged more companies to outsource non-core competencies. Optimum Supply Chain Recruiters receives requests from third-party providers looking to fill business development positions at least once a week, he adds.
Even so, the hiring process continues to be slow across the board, according to Jacobson. The recession and the high unemployment rate have given rise to unrealistic expectations among human resource professionals, he says. They expect a large pool of candidates for every single position and, as a result, take a long time looking for the perfect candidate. "It's really stretched the hiring cycle," he says.
But this trend cannot last for long, Jacobson believes. Companies will soon realize the cost of letting a position go unfilled for an extended period, he says, and they'll respond by offering the job to the candidate who best matches their requirements rather than waiting for that perfect person. At the same time, he says, they will begin offering salaries that are more consistent with the level of sophistication and experience they're seeking.
If Jacobson's read on the marketplace proves correct, then the 2010 salary survey results seem to point to a better future. Maybe by this time next year, we'll be seeing salaries recovering to the levels recorded in 2007 and 2008.
Most of the apparel sold in North America is manufactured in Asia, meaning the finished goods travel long distances to reach end markets, with all the associated greenhouse gas emissions. On top of that, apparel manufacturing itself requires a significant amount of energy, water, and raw materials like cotton. Overall, the production of apparel is responsible for about 2% of the world’s total greenhouse gas emissions, according to a report titled
Taking Stock of Progress Against the Roadmap to Net Zeroby the Apparel Impact Institute. Founded in 2017, the Apparel Impact Institute is an organization dedicated to identifying, funding, and then scaling solutions aimed at reducing the carbon emissions and other environmental impacts of the apparel and textile industries.
The author of this annual study is researcher and consultant Michael Sadowski. He wrote the first report in 2021 as well as the latest edition, which was released earlier this year. Sadowski, who is also executive director of the environmental nonprofit
The Circulate Initiative, recently joined DC Velocity Group Editorial Director David Maloney on an episode of the “Logistics Matters” podcast to discuss the key findings of the research, what companies are doing to reduce emissions, and the progress they’ve made since the first report was issued.
A: While companies in the apparel industry can set their own sustainability targets, we realized there was a need to give them a blueprint for actually reducing emissions. And so, we produced the first report back in 2021, where we laid out the emissions from the sector, based on the best estimates [we could make using] data from various sources. It gives companies and the sector a blueprint for what we collectively need to do to drive toward the ambitious reduction [target] of staying within a 1.5 degrees Celsius pathway. That was the first report, and then we committed to refresh the analysis on an annual basis. The second report was published last year, and the third report came out in May of this year.
Q: What were some of the key findings of your research?
A: We found that about half of the emissions in the sector come from Tier Two, which is essentially textile production. That includes the knitting, weaving, dyeing, and finishing of fabric, which together account for over half of the total emissions. That was a really important finding, and it allows us to focus our attention on the interventions that can drive those emissions down.
Raw material production accounts for another quarter of emissions. That includes cotton farming, extracting gas and oil from the ground to make synthetics, and things like that. So we now have a really keen understanding of the source of our industry’s emissions.
Q: Your report mentions that the apparel industry is responsible for about 2% of global emissions. Is that an accurate statistic?
A: That’s our best estimate of the total emissions [generated by] the apparel sector. Some other reports on the industry have apparel at up to 8% of global emissions. And there is a commonly misquoted number in the media that it’s 10%. From my perspective, I think the best estimate is somewhere under 2%.
We know that globally, humankind needs to reduce emissions by roughly half by 2030 and reach net zero by 2050 to hit international goals. [Reaching that target will require the involvement of] every facet of the global economy and every aspect of the apparel sector—transportation, material production, manufacturing, cotton farming. Through our work and that of others, I think the apparel sector understands what has to happen. We have highlighted examples of how companies are taking action to reduce emissions in the roadmap reports.
Q: What are some of those actions the industry can take to reduce emissions?
A: I think one of the positive developments since we wrote the first report is that we’re seeing companies really focus on the most impactful areas. We see companies diving deep on thermal energy, for example. With respect to Tier Two, we [focus] a lot of attention on things like ocean freight versus air. There’s a rule of thumb I’ve heard that indicates air freight is about 10 times the cost [of ocean] and also produces 10 times more greenhouse gas emissions.
There is money available to invest in sustainability efforts. It’s really exciting to see the funding that’s coming through for AI [artificial intelligence] and to see that individual companies, such as H&M and Lululemon, are investing in real solutions in their supply chains. I think a lot of concrete actions are being taken.
And yet we know that reducing emissions by half on an absolute basis by 2030 is a monumental undertaking. So I don’t want to be overly optimistic, because I think we have a lot of work to do. But I do think we’ve got some amazing progress happening.
Q: You mentioned several companies that are starting to address their emissions. Is that a result of their being more aware of the emissions they generate? Have you seen progress made since the first report came out in 2021?
A: Yes. When we published the first roadmap back in 2021, our statistics showed that only about 12 companies had met the criteria [for setting] science-based targets. In 2024, the number of apparel, textile, and footwear companies that have set targets or have commitments to set targets is close to 500. It’s an enormous increase. I think they see the urgency more than other sectors do.
We have companies that have been working at sustainability for quite a long time. I think the apparel sector has developed a keen understanding of the impacts of climate change. You can see the impacts of flooding, drought, heat, and other things happening in places like Bangladesh and Pakistan and India. If you’re a brand or a manufacturer and you have operations and supply chains in these places, I think you understand what the future will look like if we don’t significantly reduce emissions.
Q: There are different categories of emission levels, depending on the role within the supply chain. Scope 1 are “direct” emissions under the reporting company’s control. For apparel, this might be the production of raw materials or the manufacturing of the finished product. Scope 2 covers “indirect” emissions from purchased energy, such as electricity used in these processes. Scope 3 emissions are harder to track, as they include emissions from supply chain partners both upstream and downstream.
Now companies are finding there are legislative efforts around the world that could soon require them to track and report on all these emissions, including emissions produced by their partners’ supply chains. Does this mean that companies now need to be more aware of not only what greenhouse gas emissions they produce, but also what their partners produce?
A: That’s right. Just to put this into context, if you’re a brand like an Adidas or a Gap, you still have to consider the Scope 3 emissions. In particular, there are the so-called “purchased goods and services,” which refers to all of the embedded emissions in your products, from farming cotton to knitting yarn to making fabric. Those “purchased goods and services” generally account for well above 80% of the total emissions associated with a product. It’s by far the most significant portion of your emissions.
Leading companies have begun measuring and taking action on Scope 3 emissions because of regulatory developments in Europe and, to some extent now, in California. I do think this is just a further tailwind for the work that the industry is doing.
I also think it will definitely ratchet up the quality requirements of Scope 3 data, which is not yet where we’d all like it to be. Companies are working to improve that data, but I think the regulatory push will make the quality side increasingly important.
Q: Overall, do you think the work being done by the Apparel Impact Institute will help reduce greenhouse gas emissions within the industry?
A: When we started this back in 2020, we were at a place where companies were setting targets and knew their intended destination, but what they needed was a blueprint for how to get there. And so, the roadmap [provided] this blueprint and identified six key things that the sector needed to do—from using more sustainable materials to deploying renewable electricity in the supply chain.
Decarbonizing any sector, whether it’s transportation, chemicals, or automotive, requires investment. The Apparel Impact Institute is bringing collective investment, which is so critical. I’m really optimistic about what they’re doing. They have taken a data-driven, evidence-based approach, so they know where the emissions are and they know what the needed interventions are. And they’ve got the industry behind them in doing that.
The global air cargo market’s hot summer of double-digit demand growth continued in August with average spot rates showing their largest year-on-year jump with a 24% increase, according to the latest weekly analysis by Xeneta.
Xeneta cited two reasons to explain the increase. First, Global average air cargo spot rates reached $2.68 per kg in August due to continuing supply and demand imbalance. That came as August's global cargo supply grew at its slowest ratio in 2024 to-date at 2% year-on-year, while global cargo demand continued its double-digit growth, rising +11%.
The second reason for higher rates was an ocean-to-air shift in freight volumes due to Red Sea disruptions and e-commerce demand.
Those factors could soon be amplified as e-commerce shows continued strong growth approaching the hotly anticipated winter peak season. E-commerce and low-value goods exports from China in the first seven months of 2024 increased 30% year-on-year, including shipments to Europe and the US rising 38% and 30% growth respectively, Xeneta said.
“Typically, air cargo market performance in August tends to follow the July trend. But another month of double-digit demand growth and the strongest rate growths of the year means there was definitely no summer slack season in 2024,” Niall van de Wouw, Xeneta’s chief airfreight officer, said in a release.
“Rates we saw bottoming out in late July started picking up again in mid-August. This is too short a period to call a season. This has been a busy summer, and now we’re at the threshold of Q4, it will be interesting to see what will happen and if all the anticipation of a red-hot peak season materializes,” van de Wouw said.
The report cites data showing that there are approximately 1.7 million workers missing from the post-pandemic workforce and that 38% of small firms are unable to fill open positions. At the same time, the “skills gap” in the workforce is accelerating as automation and AI create significant shifts in how work is performed.
That information comes from the “2024 Labor Day Report” released by Littler’s Workplace Policy Institute (WPI), the firm’s government relations and public policy arm.
“We continue to see a labor shortage and an urgent need to upskill the current workforce to adapt to the new world of work,” said Michael Lotito, Littler shareholder and co-chair of WPI. “As corporate executives and business leaders look to the future, they are focused on realizing the many benefits of AI to streamline operations and guide strategic decision-making, while cultivating a talent pipeline that can support this growth.”
But while the need is clear, solutions may be complicated by public policy changes such as the upcoming U.S. general election and the proliferation of employment-related legislation at the state and local levels amid Congressional gridlock.
“We are heading into a contentious election that has already proven to be unpredictable and is poised to create even more uncertainty for employers, no matter the outcome,” Shannon Meade, WPI’s executive director, said in a release. “At the same time, the growing patchwork of state and local requirements across the U.S. is exacerbating compliance challenges for companies. That, coupled with looming changes following several Supreme Court decisions that have the potential to upend rulemaking, gives C-suite executives much to contend with in planning their workforce-related strategies.”
Stax Engineering, the venture-backed startup that provides smokestack emissions reduction services for maritime ships, will service all vessels from Toyota Motor North America Inc. visiting the Toyota Berth at the Port of Long Beach, according to a new five-year deal announced today.
Beginning in 2025 to coincide with new California Air Resources Board (CARB) standards, STAX will become the first and only emissions control provider to service roll-on/roll-off (ro-ros) vessels in the state of California, the company said.
Stax has rapidly grown since its launch in the first quarter of this year, supported in part by a $40 million funding round from investors, announced in July. It now holds exclusive service agreements at California ports including Los Angeles, Long Beach, Hueneme, Benicia, Richmond, and Oakland. The firm has also partnered with individual companies like NYK Line, Hyundai GLOVIS, Equilon Enterprises LLC d/b/a Shell Oil Products US (Shell), and now Toyota.
Stax says it offers an alternative to shore power with land- and barge-based, mobile emissions capture and control technology for shipping terminal and fleet operators without the need for retrofits.
In the case of this latest deal, the Toyota Long Beach Vehicle Distribution Center imports about 200,000 vehicles each year on ro-ro vessels. Stax will keep those ships green with its flexible exhaust capture system, which attaches to all vessel classes without modification to remove 99% of emitted particulate matter (PM) and 95% of emitted oxides of nitrogen (NOx). Over the lifetime of this new agreement with Toyota, Stax estimated the service will account for approximately 3,700 hours and more than 47 tons of emissions controlled.
“We set out to provide an emissions capture and control solution that was reliable, easily accessible, and cost-effective. As we begin to service Toyota, we’re confident that we can meet the needs of the full breadth of the maritime industry, furthering our impact on the local air quality, public health, and environment,” Mike Walker, CEO of Stax, said in a release. “Continuing to establish strong partnerships will help build momentum for and trust in our technology as we expand beyond the state of California.”
That result showed that driver wages across the industry continue to increase post-pandemic, despite a challenging freight market for motor carriers. The data comes from ATA’s “Driver Compensation Study,” which asked 120 fleets, more than 150,000 employee drivers, and 14,000 independent contractors about their wage and benefit information.
Drilling into specific categories, linehaul less-than-truckload (LTL) drivers earned a median annual amount of $94,525 in 2023, while local LTL drivers earned a median of $80,680. The median annual compensation for drivers at private carriers has risen 12% since 2021, reaching $95,114 in 2023. And leased-on independent contractors for truckload carriers were paid an annual median amount of $186,016 in 2023.
The results also showed how the demographics of the industry are changing, as carriers offered smaller referral and fewer sign-on bonuses for new drivers in 2023 compared to 2021 but more frequently offered tenure bonuses to their current drivers and with a greater median value.
"While our last study, conducted in 2021, illustrated how drivers benefitted from the strongest freight environment in a generation, this latest report shows professional drivers' earnings are still rising—even in a weaker freight economy," ATA Chief Economist Bob Costello said in a release. "By offering greater tenure bonuses to their current driver force, many fleets appear to be shifting their workforce priorities from recruitment to retention."