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Labor Shortage Hindering Logistics Sector

The logistics sector in Hungary suffers from a serious labor shortage, which is not a novelty but rather a tendency of the past few years. With talent with the appropriate skills missing from the market, wages are hitting stellar heights. Budapest Business Journal discusses the market sentiment with industry insiders.

The labor shortage is not unique to the logistics sector, nor to Hungary. The lack of talent puts immense pressure on sectors all around the country, as well as in the European Union.

Industry insiders, more often than not, mention that once the hardship of recruiting good talent is tackled, a company must work hard on keeping their employees, who can be poached by competitors at any time. The Hungarian logistics sector is one of those trying to march forward in these scarce times.

“The labor shortage is a two-to-three-years-old topic and the tendency remains the same. The logistics sector struggles with both blue collar and white collar shortage,” Tamás Tanárki, CEO of Yusen Logistics (Hungary) Kft. tells the BBJ.

“I can confirm that there is a severe shortage of labor in the freight forwarding industry in Hungary,” Endre Gál , deputy CEO of Airmax Cargo Budapest Zrt., confirms.  

“We find it very hard to recruit qualified personnel for our customer service positions. Airmax Cargo has multiple job openings that have not been filled for more than a year. This is especially true in case of personnel needed to provide specialized services like 24/7 time-critical shipping, which comes with an out-of-hours work schedule, or sea freight; since we are a landlocked country this is wrongly considered by the general public as exotic, decreasing the potential labor pool,” Gál adds.

This lack of talent puts immense pressure on market players, in terms of salaries and a battle to keep their staff.  

Skyrocketing Wages

“Wages have skyrocketed in the last two years, squeezing the profitability of forwarders. Employees are regularly hunted down and many times there is an actual bidding war between competing freight forwarders to hire experienced customer service personnel,” Gál explains.

At the same time, the labor shortage in the sector cuts into operations deeply. It can result in lost business due to inadequate response times, has a negative impact on service quality, and hampers freight forwarders’ growth, Gál explains. Last but not least, it can cause mental health and social problems for employees.

Due to the market being highly international, employees who already speak foreign languages well are often ready to move beyond Hungary’s borders in search of better conditions.  

“Freight forwarding operators are highly mobile and susceptible to moving abroad as they are already working in a multinational environment day-to-day and are proficient in at least the English language,” Gál explains.  

Tanárki of Yusen confirms this: “On the top of European general tendency, Hungary and the CEE countries have an additional pressure due to a migration tendency towards the West.”

Generation Gap

The truck driver segment is also seeing hard times. A generation gap now appears to scar the profession, which is chiefly caused by a sharp decline in the general attraction of the profession, which shows itself in a greatly reduced influx of new talent.

Factors contributing to the perceived lack of attraction of the truck driver’s career are plenty. “Decreased social status of the jobs due to vanishing borders, vastly increased traffic in Europe, changing preferences concerning working hours and changing labor market trends resulting in the appearance of other, more attractive jobs” are just a few of the challenges that the sector faces, according to Gál of Airmax Cargo.  

“As the market for truck drivers is changing into an overbought market, drivers are cherry-picking between assignments and will only accept freight that suits their preferences; timely payment, good customer relations, reliable, steady flow of assignments for a longer period of time, etc.,” the Airmax Cargo deputy CEO says.

Businesses operating in the logistics sector therefore need to strike early reach out to talent before they would even enter the labor market.  

“Market players try to identify talents already in the schools and/or provide training themselves to upgrade the knowledge of new employees. Logistics education in our schools and universities seems to be behind European standards: closer cooperation between industry and academia is more than welcome,” Yusen CEO Tanárki adds.