Why Nearshore Staff Augmentation is Necessary for Logistics Companies

Logistics companies find themselves amid a surge in demand for external collaboration, seeking solutions to streamline operations, reduce cost per load, improve customer experiences, and meet industry challenges head-on.

There are instances when internal teams in the logistics sector confront operational hurdles beyond their capacity.Whether it's tackling specific tasks or expanding team capacities, an exclusive reliance on in-office and local staff may prove insufficient. Fortunately, a solution tailored to the unique needs of the logistics industry exists: the staff augmentation model.

As the industry explores various options offered by freight staffing companies, a big question comes up: How can they figure out the best solution for their needs? The key is to carefully look at their current situation, what they need to do, and the different ways they can team up with others.

In this blog, we will delve into the current market trends that underscore the necessity of staff augmentation for logistics companies, shedding light on the factors driving this demand and the strategic advantages it brings to the logistics industry.

A Closer Look at the Logistics Industry in 2023

A recent study conducted by UberFreight shed slight on the key numbers and trends that have defined the industry over the past year. In a market where volatility is the only constant, understanding the intricacies of these key indicators becomes necessary for businesses navigating the challenges of the logistics landscape.

Let's delve into the key findings fromUber's research to uncover the forces that have molded the present and will inevitably sculpt the future of freight in 2023.

Freight Statistics in 2023

1. Economic Landscape:

• GDP Increase: The USGDP grew by 4.9% in Q3, signaling overall economic growth.

2. Labor Market and Carrier Population:

• Labor Market Softening: In October, the labor market softened, and the manufacturing economy contracted.
• Number of Active Carriers: Over the last year, the carrier population decreased by over 20.5K, the sharpest decline in history.
• Driver Employment:Trucking employment shed 5K jobs in October, and the carrier authority revocations rose to 7,433, contributing to the decrease in the carrier population. 

3. Supply/Demand Dynamics:

• Demand Increase: Truckload demand rose 0.75% in September, marking the third consecutive monthly increase.
• Supply Constraints: Supply only rose 0.2%, indicating potential tightening or stabilization in the market.
• Historically High Gap: The gap between supply and demand indicators, while historically high, appears to be closing.

Q4 Market Update:

• Positive Truckload Demand: After a 9-month decline, truckload demand turned positive year-over-year in Q4.
• Normalized Capacity:Capacity seems to be normalizing as new entrants recede, but low rates and rising operating costs pose challenges.
• Nearshoring Trends: Nearshoring and Staff Augmentation is escalating, driven by incentives and potential investments.

Challenges Logistics Companies Faced in 2023

The challenges faced by companies in 2023 are determinants of their survival and success in the years ahead.

A striking trend, as revealed by surveys from FreightWaves, sheds light on the precarious state of owner-operators. The possibility of over a third of owner-operators contemplating an exit from the industry by the end of the year underscores the severity of the challenges at hand.

There are currently lots of companies going out of business and among the main reasons for this pitfall is the lack of control they might have over the market and its prices. This could significantly reshape the industry, posing a unique set of obstacles for brokers and carriers alike.

The freight market in 2023 experienced asevere recession, with household names in the industry, such as Yellow Corp. andConvoy letting employees go and even going out of business.  

Bankruptcies, closures and layoffs have been piling up, and the financial and human capital losses are notable, but not the only problems plaguing industry. Let’s explore some of the other pressing issues currently facing logistics companies:

• Higher Transportation Costs: The shortage of drivers contributes to rising trucking costs, compounded by escalating fuel prices. This also affects commodity prices, creating a market dynamic where larger, well-capitalized companies have a competitive advantage.
• Lack Of Digitized Operations: Cargo delays, unclear order statuses, and theft are persistent issues in the industry. The slow adoption of digital solutions, such as cargo tracking platforms, poses a challenge in improving security and enhancing customer service.
• On-Time Delivery: Unprecedented delays in goods delivery pose a threat to customer retention.On-time delivery is a critical aspect of the customer experience, impacting customer satisfaction and future orders.
• Keeping Goods Protected: Ensuring the safe transportation of goods is a fundamental task for logistics companies. Unforeseen challenges on roads can jeopardize deliveries and damage transported goods, emphasizing the need for trained professionals to handle these situations with care.
• Lack Of Trained Professionals: The shortage of trained professionals in the logistics sector necessitates comprehensive training initiatives and access to new technologies. A strategic training plan is essential to meet the varying technical requirements across the supply chain. 

How Can the Logistics Industry Combat Uncertainty and Economic Headwinds?

• Margin Compression:
  • Negotiate Contracts: Renegotiate contracts with carriers and suppliers to secure better rates and terms.
  • Focus on Efficiency: Implement cost-saving measures throughout the supply chain to reduce operational overhead.

• Cost Per Load:
  • Optimize Routes and Fleets: Utilize data analytics to plan efficient routes that minimize travel time and fuel consumption.
  • Embrace Intermodal Transportation: Explore combining different transportation modes (truck, rail, ship) to leverage cost advantages for specific routes.

• Efficiencies:
  • Invest in Technology: Implement warehouse management systems (WMS) and transportation management systems (TMS) to automate tasks and streamline operations.
  • Standardize Processes: Establish clear and consistent procedures across all departments to improve efficiency and reduce errors.

• Customer Retention:
  • Enhance Communication: Proactively communicate with customers about potential delays or disruptions and provide real-time shipment tracking.
  • Offer Value-Added Services: Go beyond basic transportation by providing additional services like inventory management or last-mile delivery solutions.

As logistics companies continue to navigate the challenges of an evolving market, the relationship between nearshoring and staff augmentation becomes vital. It offers the relationship between nearshoring and staff augmentation becomes vital, offering a unique solution for those seeking ways to stay in business.

Nearshore StaffAugmentation’s Crucial Role for Logistics Companies

Nearshore Staff Augmentation for logistics companies involves strategically collaborating with external teams or professionals to supplement and enhance their existing workforce. These professionals will join your team to fill in existing gaps and share the skills and knowledge that you require to finish your projects.

"What exactly is meant by 'nearshore?' you may wonder. This term is versatile, finding application in a broad context, and often employed to describe countries in close proximity.

The concept involves the remote hiring of employees from neighboring countries, aligning with the principles of the staff augmentation model. For instance, if your business operates in the US, engaging in nearshore staff augmentation implies collaborating with experts from the LATAM region. 

Benefits ofNearshore Staff Augmentation for Logistics Companies

Access to a Diverse Talent Pool: Staff augmentation in the logistics industry provides access to a diverse and specialized talent pool. As logistics operations demand specific skills, this model allows companies to tap into a global workforce with expertise in supply chain management, back-office operations, and technology platforms.

Whether it's addressing unique challenges or implementing innovative solutions, accessing a specialized talent pool becomes instrumental in optimizing logistics operations.

Sustainable and Affordable Growth through Strategic Staffing: Instead of maintaining a large in-house team with high variable costs for recruiting, training, and attrition, logistics companies can bring dedicated nearshore staff to address specific operational needs for long-term sustainability.

This approach significantly reduces over head costs associated with full-time employees, allowing businesses to allocate resources efficiently and achieve operational success in the long run.

Expedited Speed-To-Green with Job-Ready Talent: Collaborating with skilled professionals through staff augmentation expedites operational efficiency in the logistics sector. Logistics companies can leverage top talent, enhancing productivity and reducing time-to-market.

The productivity brought in by these professionals accelerates project timelines, allowing companies to navigate complex logistics initiatives without extensive internal training.

Strategic Resource Utilization in Logistics Operations: Choosing to leverage nearshore staff augmentation allows companies to eliminate long-standing attrition and flexibility issues. Instead, they can effectively distribute teams for a more favorable cost-structure and reallocate time, effort, and money to the most impactful initiatives for survival and growth.

Nearshore Staff Augmentation with Lean Solutions Group  

As we conclude our exploration of the advantages of nearshore staff augmentation in the logistics industry, it's key to highlight the distinctive approach offered by Lean Solutions Group. Our commitment goes beyond providing staff augmentation services; we become partners in your growth journey, offering solutions that resonate with the specific needs of the logistics sector.

We guide our clients through every step of the process, offering insights into which positions need to be filled and meticulously selecting each employee through a thorough interview process. Our unwavering promise is simple: let us handle the complicated and tedious aspects, allowing you to concentrate on expanding your business.

In our unique co-management approach, our employees not only possess the required skills but also share the cultural fabric of our clients' organizations.

Our suite of services encompasses Operations, Tech, Sales, Marketing, and BPO, offering multifaceted growth solutions for businesses. With over 500 satisfied clients and a team of more than 9,000 exceptional employees, Lean Solutions Group has earned accolades such as ranking five years in a row on the Inc. 500 list for the fastest-growing private companies in America. We've been recognized as the Best Place to Work and secured a spot on the FreightTech List of the most innovative companies in the Transportation and Logistics industry.

Partner with us as we continue to redefine excellence and innovation in the realm of staff augmentation tailored for the logistics industry.