A massive e-commerce shift has led to a mad dash for industrial space and delivery drivers
People simply aren’t going out to shop anymore. The COVID-19 health crisis has forced businesses to reevaluate how to get products to consumers, who either don’t feel comfortable going to the store or just don’t want to deal with the hassle of going to buy something they can get delivered.
This explosion in e-commerce, the buying or selling of good’s online, has been perpetuated by the global health crisis and has left businesses scrambling to keep up with an increased demand for shippable merchandise.
One major beneficiary of the collective shift to purchasing online is big box warehouse distribution centers, which have been constructed at a rapid pace all around the country in order to keep up with the growing demand for products to be delivered directly to doorsteps.
Global commercial real estate company Jones Lang LaSalle Inc. (JLL) reported a record 97.4 million square feet of new industrial space was constructed by the end of the third quarter of 2020 alone, with that number expected to reach 107 million once end of the year numbers are officially tallied.
“We have seen a speed associated with innovation that was never known to us before COVID,” said Matt Powers, executive vice president at JLL, in an interview with Logistics Management. “Supply chain models are being transformed in days instead of months or years.”
The demand to buy goods online has been dramatic, with online spending reaching an estimated $209.5 billion in the third quarter of 2020, an increase of nearly 37% from the same period a year before.
Big companies like Amazon and Walmart are certainly helping to drive the market, with Walmart specifically known for running one of the world’s largest distribution operations and boasting more than 143 million square feet of total industrial warehouse space.
The desire for more-and-more space has led businesses to get creative in finding areas to build new distribution centers to house their products, including abandoned shopping malls or shuttered retail establishments in busy metropolitan areas.
“The immediate occupancy options may be dated, such as a lack of dock doors, lack of parking, and lack of clear heights,” said Powers. “But, due to demand and proximity to customers, retailers are taking the space.”
Another ripple effect from the mad dash to e-commerce is an increased need for workers to deliver products from the warehouses. Whether this be long-distance truckers or last-mile box truck operators, the demand for delivery drivers is at an all-time high.
John Kearney, founder and CEO of Advanced Training Systems, which manufacturers truck driver simulators in addition to offering simulator training, told BOSS the need for drivers is there, but it isn’t as simple as signing up and immediately jumping behind the wheel.
“We need more employees, we need more truck drivers, we have a huge shortage of truck drivers. And we need training in order to do that,” Kearney said. “As we come out of the virus situation, we are seeing the government shops opening where you can register to take the training and get your permit. So, we have the ability to do that, but we just don’t have enough drivers.”
Kearney manages his business from its headquarters in St. Petersburg, Florida, while his simulators are manufactured on the other side of the country at a factory in Vista, California.
While the simulators don’t offer the same experience as driving out on the road, according to Kearney, they provide more efficient training in a safer environment that allows for mistakes to be made without potentially disastrous results.
“If you make a mistake on a simulator… number one there’s no real accident, there’s no insurance claim, there’s no lawsuit, there’s no life loss, so those things are quite significant,” Kearney said. “In addition to that, the system itself knows exactly what you did, and it asks you to do it again. And it retrains you until you learn it. Without a simulator you cannot gain that experience.”
Initially, the pandemic presented major challenges for the business, with schools, one of its main customers, forced to shut down entirely on account of quarantine measures.
Kearney, who has 25 years of experience in driver training, stressed the importance of young people getting comfortable with the profession while still in a high school classroom.
“What happens today is that they go to work outside of high school, they can’t be a driver in that large sense, so they go to work for a retail store, a McDonalds or something like that. By the time they’re 21, they’re not thinking about driving,” he said. “So, if we can train them at 18, and select those ones that don’t increase the accident rate, then we are really looking ahead both for the student and for the industry.”
There are currently around 3.6 million professional truck drivers in the U.S., according to the American Trucking Association. While this may sound like a large number, the reality is that companies are facing a severe shortage in drivers, with statistics showing that while demand for the profession is rising, the number of year-over-year truck drivers is dropping.
Kearney said this could be due to a negative stigma surrounding the trucking industry as a whole, something he believes has little merit in the field today.
“The old idea of trucking was of a greasy guy on the side of the road with a broken-down truck. So, a lot of fathers would tell their sons and especially their daughters, don’t become a truck driver because they didn’t see a future in it,” he said. “Today, you don’t see many trucks on the side of the road broken down… because those trucks are very dependable and trustworthy. So, we have a different situation, and we would encourage people to look at the industry as a great potential for the future.”