MIT’s Task Force on the Work of the Future has been providing perspectives, responding to media inquiries, and participating in virtual events to share viewpoints on the economy, government response, worker voice, and technological advancements.
Twenty years ago, U.S. distribution networks were built to deliver products in bulk to retail stores. Today, large parts of distribution networks are built to deliver individual items to home residences. The shift has been driven by technology, working through e-commerce, and recently reinforced by the COVID-19 pandemic.
This brief describes how technology has affected three supply chain industries—warehousing and storage, general and specialized freight trucking, and freight transportation arrangements (i.e., freight brokers and third-party logistics providers).
In many future-of-work studies, technology operates only on the supply side of the market, replacing people in the production of goods and services. In the case of logistics, technology also works on the demand side of the market. By enabling e-commerce, internet technology has sharply increased the demand for two kinds of logistics services:
1.) The warehouse industry, built around bulk packaging, now handles huge numbers of individual items, such as a bottle of hand sanitizer or a single toy.
The trucking industry, built around large shipments to distribution centers and retail stores, must now make many more small deliveries to individual homes.
2.) Greater reliance on logistics has increased demand for the services of the freight transportation arrangements industry—more efficient scheduling, in-transit updates on shipment status, and handling of shipping paperwork.
The high demand for warehousing and trucking has also stimulated work on cost-reducing innovation, including varieties of warehouse automation and the development of autonomous trucks that can run on interstate highways. In practice, however, these innovations have either not yet come to market or are only slowly being adopted.
If we think of logistics employment as a tug of war between job gains from e-commerce and job losses from automation, thus far job gains are winning decisively. In eight to ten years, however, automation will likely be significantly stronger, both reducing the total number of jobs and shifting the mix of remaining jobs toward technicians, analysts, and other skilled occupations.
The challenge is to design labor market policies that handle automation-induced transitions better than current policies have handled the collapse that comes when manufacturing jobs suddenly leave a local labor market. In designing policy, the automation case begins with two advantages. Where manufacturing plant shutdowns are often sudden, the automation described in this brief is proceeding relatively slowly; and where manufacturing plant shutdowns are highly concentrated in particular communities, warehousing and trucking jobs are dispersed throughout the country.